***Guest Appearance
Credits to:
https://www.youtube.com/@redknightproperties
“Using Private Money Lending In Real Estate With Jay Conner: Discovering Multifamily Episode 219”
https://www.youtube.com/watch?v=ZZTkJJ-_osE&t=2s
In the world of real estate investing, access to capital is often the deciding factor between missed opportunities and closing profitable deals. Traditional institutional lenders—banks and credit unions—have long been the go-to sources for financing. However, a growing number of investors are discovering the unique advantages of private money, a strategy that shifts the power dynamic, puts the borrower in the driver’s seat, and opens doors to greater financial success.
What Is Private Money?
Unlike institutional lenders, private money comes from individuals—friends, family, business associates, or even strangers you meet through networking events—who have capital they’re looking to invest for solid, predictable returns. As described by Jay Conner, private lending isn’t about seeking out banks; it’s about finding people who want their money to work as hard as they do. This capital can be sourced from investment funds or retirement accounts, such as self-directed IRAs, making it accessible to a wider pool of interested lenders.
Why Choose Private Money Over Banks?
The benefits of using private money are compelling and multifaceted:
1. You Make the Rules
When working with private lenders, the borrower sets the interest rate, the term of the note, and other critical terms. This is a stark contrast to banks, where all the rules—including interest rates and loan terms—are dictated by the lender. Greater flexibility means deals can be structured in a way that best serves the investor’s needs and decouples real estate growth from the constraints of rigid institutional processes.
2. No Lending Limits
Banks often impose “caps” on how much they’ll lend to a single investor—sometimes severely limiting growth. Jay Conner recounts only having a $1 million line of credit from his bank, which quickly hamstrung his ability to scale. With private lenders, there’s no institutional ceiling. Jay grew his network to 44 private lenders and now manages $8.5 million in private money, rapidly recycling it across multiple deals.
3. No Money Out of Pocket at Closing
A major advantage of private money is the ability to finance 100%—or even more—of project costs, including renovations. Banks typically require down payments (“skin in the game”), but private lenders can fund the full purchase price plus rehab costs, often providing the borrower a check at closing to cover renovations and other needs. This allows for improved cash flow and removes the hurdle of large upfront capital requirements.
4. Speed and Simplicity
Private lending can move much faster than banks, which often get bogged down in paperwork, appraisals, and long approval processes. This agility lets investors act on deals quickly and beat out competitors.
5. No Personal Guarantees
Perhaps one of the most overlooked benefits is the lack of personal guarantees with private money; the property itself is the security, which means your personal assets are protected. This is a crucial risk-reducer for investors building a portfolio.
Who Uses Private Money?
Private money is remarkably versatile—it’s not just for those rejected by banks. In fact, seasoned investors with stellar credit use private money to keep themselves in control, move quickly, and maximize leverage, whether they’re securing single-family homes or syndicating multimillion-dollar apartment complexes.
How To Find Private Lenders
Building a private lender network is less about pitching deals and more about education and relationships. Start with your “warm” network—people you already know through business, community groups, social connections, or local organizations like Rotary. Expand your network by attending community events, joining local clubs, and participating in self-directed IRA networking opportunities.
As Jay Conner emphasizes, the key is to educate, not sell: teach contacts about private lending, show them how they can earn attractive, secure returns, and let their interest naturally lead to funding. By putting on your “teacher hat,” you’ll build trust and create win-win relationships.
Conclusion
Private money has the power to skyrocket your real estate investing business while granting you unparalleled flexibility and security. By taking control of your financing and cultivating a robust private lender network, you can seize more opportunities, solve your cash flow challenges, and accelerate your journey to wealth. Ready to get started? Download Jay Conner’s free guide, “7 Reasons Why Private Money Will Skyrocket Your Real Estate Investing Business,” at www.JayConner.com/MoneyGuide.
10 Discussion Questions from this Episode
- What are the main reasons cited for using private money over traditional bank financing in real estate investing?
- How does the flexibility of private money, such as setting your own interest rates and loan terms, compare to the restrictions imposed by banks?
- Can you discuss the pros and cons of never needing to bring your own money to the closing table when using private money?
- In what real estate asset classes can private money be utilized effectively, and how might deal structuring differ between single-family and commercial properties?
- How does the process of raising private money through syndication for commercial projects differ from funding single-family properties individually?
- What are the common sources or networks for finding new private lenders, and how important is personal relationship-building in this context?
- How does educating potential lenders about private money differ from “pitching” them, and why does Jay Conner believe teaching is more effective?
- What are the typical interest rates offered to private lenders, and how do these rates compare with those of institutional or bank financing today?
- Discuss the role of self-directed IRAs in private lending, including the advantages for both lenders and borrowers.
- What are the key risks and rewards for both real estate investors and private lenders in private money deals, including considerations of personal guarantees?
Fun facts that were revealed in the episode:
- Control Over Lending Terms: Jay Conner reveals that when using private money for real estate deals, the borrower sets the interest rate and loan terms—unlike borrowing from a bank, where the institution sets the rules.
- No Limit to Private Money: There’s essentially no ceiling to the amount of private money you can raise for your real estate projects; Jay Conner currently works with 44 private lenders and moves about $8.5 million from project to project.
- Education First, Sales Second: Instead of pitching deals, Jay Conner wears his “teacher hat” to educate potential private lenders about the benefits and security of private lending—a strategy that naturally attracts funds without any hard selling.
Timestamps:
00:00 Why choose private money
04:58 Using private lenders for deals
08:44 Difference between single-family and commercial deals
13:01 Explaining private lending strategy
13:35 Finding Private Lenders with IRAs
18:51 Free Private Money Guide Download
20:42 Download your free money guide
Connect With Jay Conner:
Private Money Academy Conference:
Free Report:
https://www.jayconner.com/MoneyReport
Join the Private Money Academy:
https://www.JayConner.com/trial/
Have you read Jay’s new book, Where to Get the Money Now?
It is available FREE (all you pay is the shipping and handling) at https://www.JayConner.com/Book
What is Private Money? Real Estate Investing with Jay Conner
http://www.JayConner.com/MoneyPodcast
Jay Conner is a proven real estate investment leader. Without using his own money or credit, Jay maximizes creative methods to buy and sell properties with profits averaging $67,000 per deal.
#RealEstate #RealEstateInvesting #RealEstateInvestingForBeginners #Foreclosures #FlippingHouses #PrivateMoney #RaisingPrivateMoney #JayConner
YouTube Channel
https://www.youtube.com/c/RealEstateInvestingWithJayConner
Apple Podcast:
Facebook:
https://www.facebook.com/jay.conner.marketing
Twitter:
https://twitter.com/JayConner01
Pinterest:
https://www.pinterest.com/JConner_PrivateMoneyAuthority
Insider Tips for Finding and Using Private Lenders in Real Estate
Jay Conner [00:00:00]:
You ask why private money? Well, first of all, we make the rules as the borrower; we set the interest rate, and we set the length of the term of the note. Whereas when you borrow money from the bank, they make the rules, they set the interest rate, and they set the term. Another big reason is tthat here’s no limit to the amount of private money that you can use. You know, when I was doing business with the local banks, there was a limit. I only had a $1 million line of credit, which isn’t going to last long anyway. And so now I’ve got 44 private lenders that either use their investment capital or their retirement funds to loan out funding and money to us on our deals. And we’ve got right at eight and a half million dollars that we move on projects to projects to projects. So there’s no limit.
Jay Conner [00:00:49]:
You set the interest rate, you make the rules. Another big one is that I never have to bring any of my own money to the closing table when I purchase a property. You know, when I was borrowing money from the banks, they wanted what’s called skin in the game; they wanted some type of down payment. Whereas in this world, not only do I not bring any money to the closing table, but I always bring home a big check. I’m always able to borrow more money than I need to buy the house. If there’s going to be renovations involved, I get all that money up front. So private money just puts you in control, puts you in the driver’s seat, and, you know, just fixes your cash flow problems.
Narrator [00:01:33]:
If you’re a real estate investor and are wondering how to raise and leverage private money to make more profit on every deal, then you’re in the right place. On raising private money, we’ll speak with new and seasoned investors to dissect their deals and extract the best tips and strategies to help you get the money. Because the money comes first. Now here’s your host, Jay Conner.
Anthony Scandariato [00:02:03]:
All right, everybody, welcome back to another episode of the Discovering Multifamily podcast. I’m one of your hosts, Anthony Scandariato, with Red Knight Properties. And today we have a special guest here with us, Jay Conner. And Jay’s been around for a while. He’s been buying and selling homes since 2003 within populations of only 40,000 people. So kind of mid-sized markets with profits averaging around 71,000, and that’s an exact number. He’s rehabbed over 450 houses and been involved in over $52 million in real estate transactions. And for the past seven years.
Anthony Scandariato [00:02:38]:
He’s pretty much automated his seven-figure income business, where he works in his business less than 10, 10, 10, 10 hours per week. And he’s a consultant,t and he’s, you know, a national speaker. He’s the best-selling author of Where to Get the Money. Now, we could talk about that a little bit, but Jay is kind of known as a leading expert in private lending, marketing, and business development. So we’re going to kind of focus on what private lending is. How does that, you know, relate to real estate? You know, how do you find private lenders? What exactly does that even mean? Why would you even need a private lender, you know, versus a traditional lender? So definitely going to get into some of that. And what asset class in real estate is this really utilized for? So, yeah, thanks for coming on the show, Jay.
Jay Conner [00:03:27]:
Absolutely. Anthony, thank you so much for inviting me to come along to talk about my favorite subject, which is private money.
Anthony Scandariato [00:03:35]:
Yeah, so, yeah. So what are your top reasons to use private money in real estate?
Jay Conner [00:03:41]:
Well, the list is very long. I can tell you. The first six years that I was investing in real estate here in eastern North Carolina, I relied on institutional lenders, you know, just the local banks, etc. And I, along with everybody else in the world. You know, banks stop lending to real estate investors during that time period. And so I knew I had to find a better way and a quicker way to fund my deals. And so I learned about this world of private money and private lending. Well, first of all, a private lender- we’re not talking institutional money.
Jay Conner [00:04:19]:
We’re talking about getting funding from individuals. And you can use this same money for commercial deals. You can use it for single-family houses. I focus on single-family houses here in eastern North Carolina. But it’s all the same money. We just structure the deals differently, depending on whether it’s a single-family house or, say, it’s a commercial deal, such as an apartment complex. But you ask, why private money? Well, first of all, we make the rules as the borrower; we set the interest rate, and we set the length of the term of the note. Whereas when you borrow money from the bank, they make the rules, they set the interest rate, and they set the term.
Jay Conner [00:04:58]:
Another big reason is tthat here’s no limit to the amount of private money that you can use. You know, when I was doing business with the local banks, there was a limit. I only had a $1 million line of credit, which isn’t going to last long anyway. And so now I’ve got 44 private lenders that either use their investment capital or their retirement funds to loan out funding and money to us on our deals. And we’ve got right at eight and a half million dollars that we move on projects to projects, to projects. So there’s no limit. You set the interest rate, you make the rules. Another big one is that I never have to bring any of my own money to the closing table when I purchase a property.
Jay Conner [00:05:43]:
You know, when I was borrowing money from the banks, they wanted what’s called skin in the game; they wanted some type of down payment. Whereas in this world, not only do I not bring any money to the closing table, but I always bring home a big check. I’m always able to borrow more money than I need to buy the house. If there’s going to be renovations involved, I get all that money up front. So private money just puts you in control, puts you in the driver’s seat, and you know, just fixes your cash flow problems.
Anthony Scandariato [00:06:14]:
Yeah, yeah. So when you’re talking about private money, and you’re taking out, you know, as a borrower or even sitting in the, you know, the lender seat,t which you drive, is this really more used for short-term type of financing, or do you have different products for different situations? Talk to us about that.
Jay Conner [00:06:37]:
Yeah, so typically you’re going to use private money for, you know, if you’re doing a commercial project, let’s say you’re buying an apart, an existing apartment complex and you’re wanting to, you know, renovate the apartment complex, raise the rents, get it seasoned at the new rent amounts, then you would only be using private money in that case for maybe two years, three years or four years and then you need to sell it or after you’ve had it for a couple of years, then you would want to refinance it with institutional money. But initially, when you make that purchase, and you’re doing renovations, that’s the time period that you’re going to be using private money for.
Anthony Scandariato [00:07:18]:
Right. And in terms of using private money versus institutional, because institutions offer shorter-term financing as well. There are different terms and conditions and interest rates, I guess you know what they would be. And obviously, you’re dealing with residential. So my show focuses on multifamily. So some of these loans are, you know, in excess of 5 million. So a lot of it, you know, you can get shorter-term financing. You’ve got to be careful with that, too, depending on the market cycle when you come to pay it off.
Anthony Scandariato [00:07:55]:
So you know, what would be, you know, is it primarily, let’s talk about, you know, an apartment building. For, as an example, when you go the private money route, it’s typically for, let’s say, real estate sponsors or borrowers who may have had a couple of deals in the past not go the way they planned, and they can’t get that type of financing from the traditional institutional lenders, so they have to go the private money route. Or do you see private, you know, people going in, you know, that have a situation, want to take the private money even if it’s, I don’t know if it’s higher cost, is it lower cost? I don’t know what it’s based on. Is it fixed? What, you know, what do you usually, you know, tell your clients that have, you know, been in that situation?
Jay Conner [00:08:44]:
Yeah. So the main difference between single-family houses and using private funding and commercial deals with single-family houses, we do what’s called one-offs. So what a one-off is, is you have a house, you have a property, and you have a private lender or maybe a couple of private lenders that are funding that particular deal. In contrast to commercial, then we’re going to do what’s called syndication, right? So we will, as the borrower, we will create a fund, right? And whereas with a single family house, we borrow secured money, we’re going to back that note with the real estate that’s being purchased with either a deed of trust or a mortgage, and contrast that to commercial properties, then we will syndicate it or create a fund and then several private lenders will invest into the fund and then it’s that fund that will fund the project. It could be a new build; it could be, you know, an existing property that you’re going to, you know, buy, renovate, raise rents, etc. And with the. In answer to your question, syndication is used all the time with people who have good credit and could go to the local lender. But again, when you are creating a fund, and you’re syndicating the raising of the funds, then again, I mean, do you want the bank to make the rules that you’re borrowing from,m or do you want to make the rules that you are creating for the fund to have your investors invest in? It just gives you a whole lot more flexibility.
Jay Conner [00:10:26]:
The interest rates are the same as the loans when it comes to commercial. Like, you know, right now I’ve got friends that are doing syndication, and they’re paying around 7%. Right. With the rise in interest rates, depending on your relationship with an institutional lender, I would say the rates would be about the same as those today, maybe a little bit less, but it’s worth paying even a little bit more to put you in so much more control.
Anthony Scandariato [00:10:58]:
Right. Okay. And typically, those loans that you give out are they 100% personally guaranteed, or do you have situations where it’s, you know, called non-recourse?
Jay Conner [00:11:10]:
Yeah. So it’s no personal guarantees. That’s another big benefit. So on single-family houses, the pr, every deal stands on its own. The property backs it. And with the syndication, you typically don’t have personal guarantees involved there as well. You see what people are investing in primarily, whether it’s syndication for commercial or it’s single-family houses; what they’re really investing in is who is running the fund they’re really investing in. Okay.
Jay Conner [00:11:41]:
What kind of experience does that person have? So there’s a lot of trust that is built into those types of transactions.
Anthony Scandariato [00:11:52]:
All right, all right. No, that. That definitely makes sense. So,o how do you find private lenders? Obviously, you’re one, so if anyone’s interested, reach out to Jay. B, nd just in general, how do you find people like you?
Jay Conner [00:12:07]:
Yeah. So there are primarily three categories of where you find private lenders. The first category is what we call your warm market. Who are people that you have some kind of association with, some kind of relationship? You know, are they in your cell phone, on your email list, social media, LinkedIn connections, etc? So your own network. Right. And then there’s what’s called your expanded network. I teach real estate investors all the time how to.
Jay Conner [00:12:36]:
I say, go to where the money is. The more money you wallow in, the more money sticks to you. So how do you expand your warmth? Get involved in the local community, and get involved in your Rotary Club. That’s locally. Right. Where do you go to church? Get involved in the chamber of commerce? Expand your market. And it’s all about having the teacher hat that you put on, like, as a borrower. And I’ve borrowed a lot of private money over the years.
Jay Conner [00:13:01]:
You know, it’s interesting, Anthony. I’ve never asked anybody for money. I’ve never asked anybody to fund a deal. I’ve never pitched a deal in my life. They say, ” Jay, how do you do that? I put on my teacher hat, and I teach people what private money is, what the private lending program is, and how they can get high rates of return safely and securely. And then we’ll come back with the deal and not pitch it. We just tell them that we’ve got a deal ready for them to fund. What’s the after-repair value? Where is it located? What funding is required? We’re going to be closing next week, and they’re going to wire the funds.
Jay Conner [00:13:35]:
So again, this just puts so much more control in your hands, puts you in control, and sleeps back. Where do you find them? Existing relationships expand your warm market. And then there are existing private lenders. Where do you find individuals who are already loaning money out, either from their investment capital or their retirement funds? Well, one great place to find them is, is at self-directed IRA networking events. You know, I never heard of self-directed IRAs until 2009 when I first started learning about private money. And you know, that’s a really, really important, that’s an important thing to understand. A self-directed IRA company is an IRS-approved institution that allows people who have current retirement funds to transfer them to a self-directed IRA company. It could be a 401k, could be a pension, could be, you know, retirement funds that are in the stock market, and they can transfer those funds over to a self-directed IRA company.
Jay Conner [00:14:45]:
It’s also called a third-party custodian, penalty-free, tax-free. And they can loan money out on these types of deals as a private lender. And the returns they get, there’s no limit to them. Depending on the type of retirement account they’ve got, it’s either tax-deferred or tax-free. So, back to your question. Where do you find private lenders? Well, 70% of people who have a self-directed IRA account are looking to loan money out to real estate investors. In fact, I just went to a networking event a few weeks ago. There were 700, over 700 people there with retirement accounts at this particular company’s event, looking for real estate investors to loan money out.
Jay Conner [00:15:33]:
Now I have put together what’s called the private lender data feed. And that’s where my clients can go into the data feed and search by zip code. We get every private lender loan that’s closed in the nation every month, with the private lender’s contact information. Now, when I started, Anthony, I hired my real estate attorneys, a paralegal to search local public records at the courthouse, looking for individuals who are lending money out backed by real estate. Well, in this small area, in 90 days, I only found two people. So I knew there had to be a better way to locate these people to fund our deals. So that’s why we put the private lender data feed together. So again, it’s your own network; it’s growing your network, getting involved with self-directed IRA companies.
Jay Conner [00:16:22]:
They have virtual events that you can attend and network at as well. So that would be in the category of existing private lenders.
Anthony Scandariato [00:16:30]:
That’s. That’s really interesting. Yeah, we deal personally; we deal with a lot of IRA clients of ours, but not on the lending side, on the equity side. So it’s interesting to see that there’s a dual facet to that. So can you talk about when you’re, like, you mentioned, you know, you kind of talked about, okay, you know, IRA clients, and then, you know, and then I love the education piece because when you educate, you know, you’re not selling anything. You’re just, you know, like you said, educating. And at the. If you have a deal that comes up and they want to, you know, land with you, then that’s great.
Anthony Scandariato [00:17:13]:
If not, no big deal either. So I kind of. I kind of love that approach. But that seems the education piece for you, is that your most effective method for, you know, getting your deals funded when they come across your desk?
Jay Conner [00:17:29]:
Absolutely. You know, the worst time in the world to be raising private money is when you need it for a deal. Right. I mean, I’ve got some friends who teach, and it drives me crazy. They’ll say, ” Oh, go get the deal under contract. Go get the deal under contract. The money will show up. I’m going where? I mean, is it going to rain out of clouds or whatever? So, again, as you just said, the teaching aspect of this program is that you inform people how they can earn high rates of return safely and securely, how they can use retirement funds, investment capital, etc.
Jay Conner [00:18:05]:
We actually also teach what’s called arbitrage or leveraging assets. You know, how can you as an individual borrow against your whole life insurance policy and now get a return on that money when you’re loaning out money from the insurance company? Or they can use equity lines of credit, and they can leverage that. So, yeah, the teaching aspect, I say, the money comes first. Teach people about this opportunity of being a private lender, and then they tell you how much they’ve got to work with, and then as soon as you can, you put their funds to work on a deal.
Anthony Scandariato [00:18:40]:
I love it. I love it. So speaking of education, you run a YouTube channel, right? Real Estate Investing with Jade Conner, and you have some other platforms. So how can my audience find those platforms,s and what are they?
Jay Conner [00:18:51]:
Sure. Thank you, Anthony. Well, first of all, I’m so excited about the Private Money guide that I just recently finished writing, and it’s downloadable for free. The guide is called 7 Reasons Why Private Money Will Skyrocket Your Real Estate Investing Business and will help you build incredible wealth. This guide is downloadable for free. It’ll get you on the fast track to private money at www.JayConner.com/MoneyGuide. So I’m an er, not an or. That’s www.JayConner.com/MoneyGuide. Download that for free to get on the fast track to private money.
Jay Conner [00:19:38]:
And my podcast and also YouTube channel is titled Raising Private Money with Jay Conner. So wherever you listen to podcasts, you can go to your Apple Podcasts, or you can go to Spotify. Just search Raising Private Money with Jay Conner, and you can easily find me. And what do we talk about twice a week? Private money. And I interview people who have raised a lot of private money and, you know, pick their brains as to how they’re doing it.
Anthony Scandariato [00:20:06]:
Yeah, absolutely. I’m going to listen to myself, and if you liked what you heard and/or saw for the audience, give us a rating and review on iTunes. Check out Jay’s podcast as well. Give him a rating and review after listening to an episode or two. And we’ll also have a link to Jay’s website as well as his promotion he’s giving out regarding the book on our social media and on our iTunes description as well. So feel free to connect with him that way. And again, Jay, thank you for your time, and I hope to talk to you again soon.
Jay Conner [00:20:37]:
Awesome. Anthony, thank you for having me on.
Anthony Scandariato [00:20:40]:
Thank you.
Narrator [00:20:42]:
Are you feeling inspired by the knowledge you gained in this episode? Then head over to www.JayConner.com/MoneyGuide– that’s www.JayConner.com/MoneyGuide– and download your free guide that shares seven reasons why private money will skyrocket your real estate investing business right now. Again, that’s www.JayConner.com/MoneyGuide to get your free guide. We’ll see you next time on Raising Private Money with Jay Conner.