Credits to:
https://www.youtube.com/watch?v=cuk5O6Cgikk&t=8s
“How to get Unlimited Funding for Your Deals! – Jay Conner ”
https://www.youtube.com/@AndrewSchlag
If you’re a real estate investor—new or seasoned—you’ve likely faced one persistent challenge: access to funding. Traditional banking can leave you scrambling for appraisals, jumping through endless hoops, and losing deals because the money just isn’t there fast enough. But what if you could flip the script, be in the driver’s seat, and have money chasing you instead of you chasing it? That’s exactly what Private Money can do for your real estate business, as revealed in the insightful conversation with Jay Conner and Andrew Schlag.
What Is Private Money?
Private Money, as Jay Conner explains, is not institutional lending, nor is it hard money with steep rates and heavy fees. It’s about working with individuals—everyday people looking to grow their wealth—who lend you funds, backed by real estate, on mutually agreed-upon terms. And the advantages over bank financing or hard money are huge.
Why Private Money Changes Everything
The biggest shift with Private Money is a change in power dynamics. As the borrower, you make the rules for deals. That might sound radical, but as Jay Conner shares, “You set the interest rate. You set the length of the note. You set the loan-to-value. You set the frequency of payments.”
This control yields clear advantages:
- Faster Closings: Private Money allows you to close deals in as little as seven days, giving you the competitive edge to snap up more opportunities.
- No Down Payments or Application Hassles: No credit check, no income verification, and no traditional approval process. In Jay Conner’s system, you can even bring home a check at closing, using borrowed funds to cover the purchase and rehab—sometimes more than the purchase price itself.
- Cash Flow Relief: Structure deals so you make no monthly payments during renovations—the interest simply accrues until you sell or refinance.
- No Appraisals or Points: Unlike hard money lenders, private funding doesn’t typically require appraisals, loan origination fees, or heavy points.
Attracting Money Without “Begging”
A huge mindset block for many is how to actually raise Private Money. Won’t you have to pitch desperate deals to friends or family? Won’t you face rejection? Not with Jay Conner’s approach.
Rather than asking for money, Jay Conner puts on his “teacher hat.” He educates potential lenders about what Private Money is, how it works, and how they can earn attractive returns, often tax-deferred or tax-free through self-directed IRAs.
The result? People are eager and waiting for him to put their money to work. “[I] have more Private Money chasing me than ever before. In fact, I have a big problem—I can’t even put all the money to work that I’ve got pledged to me,” Jay Conner quips.
Protecting Your Private Lenders
But what if you’re new? Why would anyone loan you money? The key, Jay Conner explains, is that the loan is secured by real estate at a safe loan-to-value—typically no more than 75% of the after-repair value (ARV). If the borrower defaults, the lender actually gets the property—a much stronger position than an unsecured investment.
Systematizing the Process
Once a private lender is on board, closing is a breeze. The paperwork is minimal: a promissory note, a deed of trust (or mortgage, depending on your state), and proof of insurance naming the lender as mortgagee. As Jay Conner puts it, “Closing is less than five minutes when you’re doing a Private Money deal.”
A Final Word: Get a Mentor
If there’s one thing Jay Conner would do differently, it’s this: start with a mentor, not alone. The knowledge, mindset, and systems to raise and manage Private Money aren’t difficult—but they are crucial, and best learned from someone who’s already blazed the trail.
Private Money isn’t just a way to fund more deals—it’s a way to scale, serve others, and achieve financial freedom in your real estate investing business.
10 Discussion Questions from this Episode
- What are the key differences between Private Money and hard money lending as outlined by Jay Conner, and why do these differences matter for real estate investors?
- Jay Conner emphasizes teaching over asking when it comes to raising Private Money. How does this approach change the dynamic between investor and lender?
- How does Jay Conner’s strategy for using Private Money put investors “in the driver’s seat” of their business, and what practical advantages does this provide?
- Reflect on the “good news phone call” strategy described by Jay Conner. Why is this step crucial in his process, and how does it differ from traditional funding requests?
- What are some of the most important protections offered to private lenders in this model, and how does loan-to-value impact their risk?
- According to the episode, what common fears do new real estate investors have about raising Private Money, and how does Jay Conner suggest overcoming them?
- Discuss how Jay Conner’s business model allows him to provide “excess cash to close” and not use his own money at closings. How might this affect cash flow and deal volume?
- Why does Jay Conner discourage borrowing unsecured funds from private lenders, and what documentation does he recommend for securing the loan?
- Consider the impact of market size and competition on Jay Conner’s investing model. How does operating in a smaller market shape his strategies and outcomes?
- Jay Conner credits mentorship for accelerating his success. Based on the episode, how might a mentor have helped him avoid early mistakes, and do you agree with his advice for new investors?
Fun facts that were revealed in the episode:
- Small Town, Big Profits: Jay Conner consistently averages 6-digit profit per real estate deal—even though he works in a market with just 40,000 people—and insists that you don’t need to be in a large city to achieve six-figure months in real estate investing.
- Never Ask, Always Teach: Jay Conner claims he’s never once asked someone for money when raising private funds. Instead, he wears his “teacher hat,” educates people about private lending, and lets them come to him, flipping the traditional money-raising approach on its head.
- The “Good News Phone Call”: Instead of pitching deals to private lenders, Jay Conner makes a “good news phone call,” letting people know he can now put their money to work—because he’s already educated them and confirmed their interest. This eliminates rejection and keeps a waiting list of lenders ready to participate.
Timestamps:
00:00 Using Private Money for real estate
03:47 Small market real estate investing
08:41 Learning about Private Money options
10:43 Teaching private lending basics
14:01 Flexible loan terms advantage
19:56 The myth of money chasing deals
22:42 Discussing funding strategies
27:09 Discussing self-directed IRAs
29:57 Establishing Real Estate Attorney Relationships
34:35 Discussing hard money vs Private Money
35:26 Understanding hard money lenders
39:36 The importance of a mentor
Connect With Jay Conner:
Private Money Academy Conference:
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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
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Closing More Deals with Private Money: Jay Conner’s Real Estate Masterclass
Jay Conner [00:00:00]:
I mean, it’s a win-win for everybody. I mean, we’re truly serving these people, making a difference. You know, the only complaint that I have received from my private lenders is they would say, Jay, why in the world didn’t you tell me about this, you know, long before you did?
Narrator [00:00:17]:
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.
Jay Conner [00:00:45]:
Our average profit is $78,000 per deal that we do. You know, you don’t have to do many deals when you’re doing business like that.
Andrew Schlag [00:00:56]:
Hello and welcome to the Real Estate Level Up Podcast. Today we have a very special guest; my great friend and one of my mentors from 2014, actually, is when we first met. And he’s been buying houses since, what, 2003, I believe, in a little town of 40,000 people.
Jay Conner [00:01:17]:
That’s right.
Andrew Schlag [00:01:18]:
And averaging $78,000 profit per deal right now. So I don’t know about you, but that’s a guy I like to learn from. And done over $118 million of transactions, a national speaker, twice bestselling author, and a whole bunch of other cool stuff. Private Money Authority- that’s where we met, actually. You started helping me raise Private Money and learn how to do it the right way. And so within 90 days of learning it, Jay raised over $2 million, over $2 million, $2,150,000, and a whole bunch of other cool stuff. So Jay, tell us about yourself. Thank you for being here with us, brother.
Jay Conner [00:01:59]:
Absolutely, Andrew. Thank you so much for inviting me along to talk about my favorite topic, and that is Private Money. And the reason it is my favorite topic is that there’s no other strategy, there’s no other way of doing business that has had this kind of impact on our business. I mean, you know, we, you know, Andrew, you and I know how to buy houses on terms. Uh, we know how to buy houses subject to the existing note. Uh, but it’s been my experience that out here in the real world of doing real estate business, most of the buyers at the end of the day, they— or the beginning of the day, they’re going to require all the money. They want all the cash. And so the beautiful thing about using Private Money and working with private lenders, and of course we’re not talking about institutional money, we’re not talking about hard money lenders, but when you’re doing business with individuals and you’ve got the cash available, ready to go and ready to close, then, you know, you’re just not going to miss out on any opportunities that come along on investing in real estate.
Andrew Schlag [00:03:08]:
It opens up a whole new door. That’s one thing that stuck out to me when I met you, because I wanted to have a terms business. I do have a terms business today. Most of the deals I do are on terms, except there are still a lot of deals that you are either going to have to pass over or pay cash for. And they’re really great deals. And you can either leave them or, with your tools and strategies, learn how to scoop those up. So I know our listeners are going to get a lot out of that today. But tell us about it.
Andrew Schlag [00:03:38]:
Starting, tell us a little bit more about what your investing business looks like, where you are, and what you currently are doing.
Jay Conner [00:03:47]:
Sure. So I’m here in Eastern North Carolina in a very, very small market. We only invest in 2 counties or parts of 2 counties. The total target market that we invest in has only got about 40,000 people. Uh, we only do 2 to 3 deals a month, but as you said a moment ago, our average profit is $78,000 per deal that we do. And so, you know, you don’t have to do many deals when you’re doing business like that. And, and I don’t say that at all to brag about what we’re doing. The point I’m making is you don’t have to be in a huge, large market to make significant income.
Jay Conner [00:04:31]:
In fact, there’s a case to be made. That when you’re in a smaller market, or you’re investing in the outlying areas, you don’t have all that competition that you do in the big cities. And I hear it all the time as I travel and I speak that, you know, the competition is so fierce. Well, I say, well, maybe you want to think about going where the competition is not right now.
Jay Conner [00:04:57]:
Are there other real estate investors here in our market? Of course there are. But I don’t know any other consistent day in and day out, uh, real estate investors here in our market that are doing the marketing, you know, consistently to where we have seller leads that are coming in every day. And I tell people all the time, unless you have got consistent leads coming in from potential motivated sellers, then you’re really that is very important.
Andrew Schlag [00:05:36]:
That’s the differentiator between doing a business, making, as you do, 6 figures a month, or whether it’s a hobby and you do a deal on the side and say, hey, I got, you know, I got some extra vacation money for the year. And that is the make-or-break difference.
Jay Conner [00:05:52]:
And you know, there’s nothing wrong with having a hobby. I mean, if you want to have a hobby, have a hobby. But the important thing to know is real estate is a business. Realize what you’re doing.
Andrew Schlag [00:06:02]:
Absolutely.
Jay Conner [00:06:02]:
At least be aware as to whether you’re running a business or a hobby. And, you know, what does it take to have a successful business?
Andrew Schlag [00:06:12]:
So how did you come to get involved originally? I love this story. You know, we’ve been friends now for many years, and I’ve heard you tell this story. So tell everyone how you got involved in Private Money in the first place.
Jay Conner [00:06:26]:
Well, I can tell you how I did not get involved. I just didn’t wake up one morning and say, hey, I think I’ll go raise me some Private Money. In fact, I never heard of Private Money. I never heard of self-directed IRAs and that whole world until January of 2009. I started investing in single-family houses here in Eastern North Carolina in 2003. So the first 6 years, all I knew to do was rely on the local bank.
Jay Conner [00:06:54]:
To fund my deals. I didn’t know anything about the terms business. I didn’t know anything about subject-to. I didn’t know anything about seller financing. I knew— I never even heard the word wholesaling. I didn’t even know what wholesaling was. All I knew was that you go find, negotiate a deal, and you get the local bank to fund, you know, that investment. Well, that worked out fantastic for 6 years.
Jay Conner [00:07:16]:
But then in January 2009, I actually picked up my telephone. Andrew, I know you’ll find it hard to believe, but here in Eastern North Carolina, we actually still have handsets, and we have cords that are attached. You know, I know a lot of your viewers and listeners don’t even know what this is, right?
Andrew Schlag [00:07:32]:
Does it have the round rotary dial on it, Jay?
Jay Conner [00:07:35]:
No, it’s actually just push button, believe it or not. But, um, anyway, I picked up this exact telephone handset. I called my banker in January of 2009, and I told him about a couple of deals that I had under contract to invest in. And I learned very, very quickly during that conversation that I’d lost my line of credit. Um, nothing on my part. I mean, I had a great credit score, had a great relationship, making payments on time on deals for 6 years. But when my banker told me that, uh, my line of credit had been shut down, I said, what are you saying? Why in the world are you shutting it down? And my banker’s name at the time, his name was Steve. I said, uh, Steve, why are you doing this? He says, Jay, don’t you know there’s a global financial crisis going on right now? And I said, no, but now I got a financial crisis going on because I got these 2 deals under contract and no way to fund them.
Jay Conner [00:08:36]:
So my definition of coincidence is God’s way of staying anonymous.
Andrew Schlag [00:08:41]:
That’s good.
Jay Conner [00:08:41]:
And so in less than 2 weeks, I learned about Private Money, private lending, and how that works. So what I did is I put my program together. In other words, when I say I put my program together, what I mean by that is I decided what I was going to, um, offer people as far as interest rates, what the length of the note was going to be. And you know, the thing that I learned so quickly about this pro— this world of Private Money is that it’s a 180-degree shift from the way you traditionally borrow money. Traditionally, you know, you go to the bank, you get on your hands and knees, and you put your hands underneath your chin, and you look at Miss Banker or Mr. Banker, and you say, please fund my deal, please fund my deal, right? Well, in this world of Private Money, I’ve never asked anybody for money. I’ve never pitched a deal. And people ask me all the time; they say, Jay, how in the world do you have all this Private Money and you’ve never asked anybody for a deal? I don’t ask anybody for money, rather.
Jay Conner [00:09:45]:
And well, the answer is, I put on my teacher hat. You see here, I put on my teacher hat, my Private Money teacher hat, and I started— started, and I still do- teaching people what Private Money is, um, how they can earn, how individuals can earn high rates of return safely and securely.
Andrew Schlag [00:10:06]:
And your hair still looks perfect. Of course.
Jay Conner [00:10:11]:
I like that. That’s ’cause I got hurricane hairspray. What are you talking about? So, so anyway, the thing of it is, is I’ll hear real estate investors that have never raised Private Money. They’ll talk about this fear of rejection, right? They fear they’re gonna be rejected when they go to ask people for money. Well, here’s the question. How in the world can you be rejected when you’re not asking anybody for anything? I’m not asking anybody for anything. I’ve got on my teacher hat.
Jay Conner [00:10:43]:
You say, here’s the interesting thing. I got 47 private lenders, and none of them ever heard anything about Private Money, private lending, or self-directed IRAs- how they can use their retirement funds to invest in real estate, or loan, or be a private lender. They never heard any of that. And so I teach them my program at the end. It takes them— it’s about a 20-minute conversation to teach how the program works. When I teach it to them, all I do is shut up. I don’t have to ask, do you want to get involved or anything like that? They, I mean, they automatically say, well, how do I get involved? And by the way, they don’t write us any checks, right? They just tell us how much they have to work with. Is it investment capital? Is it retirement funds? And, uh, if it is retirement funds, of course, I’m going to introduce them to the self-directed IRA company that I recommend.
Jay Conner [00:11:38]:
And so it’s like I got on my teacher hat; I’m teaching them. And so as a result of taking that approach, they’re chasing me, and I’m not chasing them. In fact, in this market, I’ve got more Private Money chasing me than ever before. In fact, I got a big problem. I can’t even put all the money to work that I’ve got pledged to me.
Andrew Schlag [00:12:00]:
That’s a good problem to have. And I want to point out something you said, uh, and it’s amazing. And I know you’ve got a gift for everybody at the end, uh, as well. So that’s exciting. And I have a signed version of the gift you’re going to give out. So thank you for that. But something you said is you’ve never pitched a deal. You’ve never asked for money. And that’s such a total opposite shift from what most people coming into this world think.
Andrew Schlag [00:12:31]:
It’s different from what I thought when I started, like, well, how am I gonna get Private Money without asking? Or how am I— and so to be able to just attract it, and I know you talk a lot about that, and we’ll get to more of that. That was 2 huge takeaways that I remember when I first met you that rocked my world was, wait a second, there’s a different way to do this. And it works way better. So what are some of the advantages when it comes to Private Money?
Jay Conner [00:13:01]:
Well, the list is very long. So I’m going to talk about the advantages of using Private Money in contrast to borrowing what we call institutional money, say from hard money lenders, or, you know, banks or, you know, anything like that. By the way, nothing against hard money lenders. I’ve got some of my best friends who are hard money lenders that actually use my strategies to raise money for their hard money lending fund that they lend out to real estate investors. But what are some of the advantages? Well, the biggest advantage is that it puts you, as the borrower, it puts you as the real estate entrepreneur,r in the driver’s seat of your company. In other words, it puts you in the driver’s seat because you, as the borrower, make the rules. Wow, isn’t that a change, right? You set the interest rate. You set the length of the note.
Jay Conner [00:14:01]:
You set the loan-to-value. You set the frequency of payments. Converse to that, you know, borrowing traditionally, the lender typically makes the rules, but in this program, we make the rules. So instead of asking for a mortgage or asking to borrow money, you’re offering a mortgage, right? Which is very, very different. There’s no asking; you’re offering. And so what are the advantages? You make the rules, you set the interest rate, you set the length of the note, putting you in the driver’s seat. Uh, part of the program is that we don’t borrow typically when there’s a rehab involved. We don’t borrow more than 75% of the after-repaired value.
Jay Conner [00:14:50]:
I didn’t say 75% of the purchase price. I said 75% of the after-repaired value. Well, when you buy a deeply discounted property or a house, let’s say you got a $200,000 after-repaired value house. Well, if you borrow, uh, 75% of the after-repaired value, you can borrow $150,000. But guess what? I buy houses all the time that need renovation. I’ll buy them at 50% of the after-repaired value. Well, I get all the money loaned up front when I purchase. Well, if I’m buying it for $100,000, I can borrow $150,000 because that’s 75% of the $200,000.
Jay Conner [00:15:34]:
Guess what? I’m bringing home a $50,000 check, less some closing costs, when I buy the property. I mean, who wants to get paid to buy properties, right? So I love the phrase— yeah, you do, Andrew.
Jay Conner [00:15:48]:
I mean, I love the phrase on my real estate attorney’s, uh, check stub. It says excess cash to close, and I love me some excess cash. So that’s another big advantage. Every private lender loan that I do actually is a no-down-payment proposition or deal. I’m not taking any of my money to the closing. What’s another advantage? You can structure the deals to where you’re not making any monthly payments. You can just let the interest accrue if you’re doing a renovation and a flip. Now stop and think about that.
Jay Conner [00:16:23]:
How much do you think this is going to fix your cash flow? You take no money to the closing table. You bring home a big check when you buy, and you make no payments until you cash out. You think that’ll help your cash flow? Absolutely. In addition to that, what are the other advantages? No credit check. Your credit score’s got nothing to do with how much Private Money you can get. No verification of income, right? Um, so your credit score, your verification of income’s got nothing to do with it. And another big advantage is closing quickly. So I make offers where I’ll close within seven days.
Jay Conner [00:17:02]:
Well, you know, if you’re borrowing institutional money, quite frankly, I’m surprised anything ever closes. I mean, what do they do with the verification of income that they lost three times? I don’t know. But I’m able to close quickly. Well, I actually get more offers accepted because I’m able to close quickly. I’ll actually buy a house. I mean, talk about. Putting you in the driver’s seat. I’ve recently bought 3 houses in the past couple of months where the sellers didn’t want to sell for a few months down the road.
Jay Conner [00:17:33]:
Guess what? We went ahead and closed on it, got them their money, and I’m letting them live rent-free, right, until they move out. Well, the reason I want to go ahead and close now and close quickly using Private Money is that time kills deals. The more time that goes by between you talking with a seller or negotiating with a seller and actually closing on the deal, the less likely that deal is even going to happen. So the bottom line is it really, really puts you in control of your business.
Andrew Schlag [00:18:07]:
That’s an excellent point. And something that really stands out about the Private Money and the way you do it, Jay, is I get that question all the time from people. They go, well, how much do you have to bring to closing? How much down do you have to put with a private loan? What everything you just said solves every challenge a real estate investor has, as long as they have the right knowledge, of course, to do the deal. You just solved every money challenge they had. And—
Jay Conner [00:18:35]:
Yeah, absolutely. And you know what goes along with that? When I say I’ve never asked for money, well, here’s an example of that. Using Private Money, there’s no application, right? There’s no application process. You’re already approved. Right? There’s like no— there’s no approval process from the lender because, then again, you’re offering this mortgage to them. And now here’s another example, Andrew, as to how we never ask for money. They say, well, Jay, okay, I understand you’re teaching the program, you’re not asking for money. They tell you how much they got to work with, but now you got a deal.
Jay Conner [00:19:13]:
How in the world are you going to get your deal funded without quote-unquote pitching the deal? Well, it’s real simple. I pick up that handset again with the cord attached to it, and I call up the private lender with what I call the good news phone call. Well, what in the world is the good news phone call? Well, here’s the exact script. I call them up. I say, I’ve got great news for you. I can now put your money to work. Now, by the way, when I call them up with the good news phone call, they’re already sitting by the phone waiting for the phone call because I’ve already taught them the program. They’ve already told me how much they’ve got to work with.
Jay Conner [00:19:56]:
I mean, by the way, Andrew, I’ll tell you something that just drives me flipping crazy, and I know you’ve heard it, but I’ve heard some educators out there say, just get the deal under contract, the money will show up. And I want to go, where, where is the money going to show up? Is it just like going to rain out of clouds? And I’ve heard people say, oh, money chases deals, money follows deals. And I just want to throw up. Right. It’s like, come on, folks. I mean, think about how much more confident and how many more offers you’re going to make when you’ve got the money burning a hole in your pocket. Back to my example. So an example of how we don’t ask for money and we don’t pitch deals.
Jay Conner [00:20:42]:
We call up the private lender. They’ve already told us how much they’ve got to work with, or if they’ve got retirement funds, they’ve moved their retirement funds or a portion of them over to the self-directed IRA company. Well, they’re not earning any money until they put that money to work, and they are counting on you, the real estate investor that told them about this. They’re counting on you to put their money to work. So they’re waiting for the phone call. So I call them up with the good news phone call. I say, I got great news. I can now put your money to work.
Jay Conner [00:21:18]:
And I tell them 4 things about the deal. And quite frankly, this is more than they even want to know, but I’ll tell them 4 things about the deal. I said, look, I got a house over in Newport. I don’t tell them the physical address. Theycouldn’td care less what that is. Uh, it’s got an after-repair value of $200,000. The funding required is $150,000. Now let’s stop right there.
Jay Conner [00:21:38]:
I know they got $150,000 because they already told me. They’ve been waiting on the phone call. And notice the $150,000 is 75% of the after-repaired value. So I’ll say, hey, I got great news. I can now put your money to work for you. I got a house in Newport under contract to purchase. It’s got an after-repaired value of $200,000. The funding required for the deal is $150,000.
Jay Conner [00:22:03]:
Closing is next Wednesday, so you’ll need to have your funds wired to my closing attorney by next Tuesday. End of conversation. I didn’t ask them if they wanted to do the deal. Of course they want to do the deal. They’ve been waiting for the phone call. And if I ask them, they want to do the— if they want to do the deal, that’s the most stupid question in the world I could ask them. Of course they want to do the deal. I’m not going to bring them a deal unless it matches the program that I already taught them about.
Jay Conner [00:22:32]:
When I had my teacher hat on, right? And I was teaching them the program. So I call them up with the deal, matches the program, and they’re ready to go.
Andrew Schlag [00:22:42]:
That’s a huge takeaway. And backing up, of course, I had to laugh when you said, uh, you made me feel slightly hypocritical because I’ve said before, if you get a good enough deal, the money will be there. But I didn’t say that till after I had money lined up. So I felt like a hypocrite. And so I had to laugh uncomfortably when you said that. But secondly, it’s a really good point, and I think this is where I got hung up, and I think this is where a lot of people get hung up, is thinking, oh, I need to go tell them, you know, I— because that’s what we’re all programmed when we, quote, borrow money. I need to go beg this person to please loan me $150 grand on this house and give them the street name, and if I can convince them there’s enough profit, maybe they’ll fund it. And what you just said flips the whole script on its head.
Andrew Schlag [00:23:31]:
And that’s how you’ve been raising money for many years. And that’s how I’ve been raising money since meeting you: learning to do exactly that, sell the program, not the property. That’s, that’s—
Jay Conner [00:23:43]:
Well, you know, and Andrew, I remember way back when you came to one of my Private Money events, I remember you saying one of your big takeaways was what ties in with this, not asking for money, is you’re actually serving these people. You’re actually serving these private lenders that they don’t even know what Private Money is until you tell them about it. But, you know, I’m sure you’ve experienced the same thing. Carol Joy and I have as well. We have received verbal, in-person, and handwritten notes from some of our private lenders. Talking about how we have changed and just transformed their retirement years to where they could not have traveled and done some of the, some of the stuff they’ve done.
Andrew Schlag [00:24:32]:
Isn’t that a good feeling?
Jay Conner [00:24:34]:
Yeah, I mean, it’s a win-win for everybody. I mean, we’re truly serving these people, making a difference. You know, the only complaint that I have received from my private lenders is they would say, Jay, why in the world Didn’t you tell me about this long before you did?
Andrew Schlag [00:24:50]:
Absolutely. And I think that’s a very important takeaway. And when I started, after meeting you and starting to raise Private Money and do it your way, that was one of the biggest breakthroughs for me that convinced me that everything you were saying, I believed you, but when it became my reality was when I started getting those notes and the phone calls, just the thank-yous. That’s, that’s amazing. So maybe somebody’s listening to this going, but why would anybody loan me money? What do you say to them?
Jay Conner [00:25:23]:
Well, that’s a common question I get, particularly from new real estate investors. They’ll say, why in the world would somebody loan me money? And I’ve never done a deal, right? Why would they loan me money? And here’s the answer. If you, as the borrower,r do not pay the private lender, the property does. That’s why we’re not borrowing unsecured funds. Can you borrow unsecured funds? Yes, you can legally, but don’t do it. Back that promissory note with the real estate that you are purchasing. And so now you’re going to be giving your lender either a mortgage or deed of trust. It’s the same thing, just called a different thing based on the state that you’re in, but it collateralizes the note.
Jay Conner [00:26:11]:
And another way that you’re going to protect your private lender is back to that maximum loan-to-value of 75% of the after-repaired value. So if you don’t pay them, they’ve got the legal right, and they’ve got that property that they would actually own. And quite frankly, they would make more money doing that than the interest that you’d be paying them. Now, of course, no private lender is going to want the property. They don’t want the property. That’s why they’re passive. They want you to do it. But that is their protection just in case.
Andrew Schlag [00:26:47]:
That’s good protection. And it definitely is a way that everybody wins. Another question I wanted to ask you is, what do you say to potential private lenders? This is a question I get a lot.
Jay Conner [00:27:01]:
So like, if I’m just like introducing this, this concept and this world of Private Money, how do you start a conversation?
Jay Conner [00:27:09]:
I love did you know questions. Did you know questions? They’re like curiosity questions. So I can just be like in a casual conversation with a friend or, you know, at a networking event or whatever. And one of my favorite did you know questions is, Did you know there’s a way that people can actually earn unlimited money per year tax-free? Well, they’re not going to know the answer to that question, but you got their attention when you said unlimited money tax-free. Well, the answer to that question is, of course, you’ve got to be familiar with self-directed IRAs. Um, and so my follow-up question to that— first, I start the conversation with, or I start the topic of conversation with, did you know there’s a way people can earn unlimited money per year tax-free? Of course, they’re going to say no. And then I’ll say, well, have you ever heard of self-directed IRAs? And in all likelihood, even a financial planner is going to say no, they never heard of it. And so now this opens up a way for me to have a conversation about self-directed IRAs.
Jay Conner [00:28:17]:
And so now I’ll— and of course, the specific answer to that question is that when someone opens or has a Roth IRA, self-directed IRA, they can invest that money. And a Roth IRA is opened up with after-tax dollars. So whatever the return is on that Roth IRA is already tax-free. But even if they have just traditional retirement funds, it’s at least going to be tax-deferred. So I love that way to start. Another way: how do you start conversations on Private Money? I like starting conversations by saying, by the way, are you investing in anything these days? Um, like, are you in the stock market? Are you into crypto? Do you invest in anything? And regardless of their answer, particularly if it’s the stock market, my next question is, well, how’s that working out for you in this market? Well, you know what that answer is. Right? Because the stock market is so volatile.
Jay Conner [00:29:20]:
And so that opens up a door to now talk about the private lending program.
Andrew Schlag [00:29:27]:
That’s— I love that. And the did you know questions- that’s a writer downer. Because that goes back to not asking for money. You’re just putting on your teacher hat. And I’m still amazed that your hair looks the same after you put that on 4 times. What kind of, uh, what kind of documents or documentation do you need, and how do you close these? So you’ve got the deal, you’ve got the person who is going to be your private lender. What’s, what’s next?
Jay Conner [00:29:57]:
Yeah. So actually, before we’re actually raising Private Money and having a deal to close, you know, the worst time to be looking for Private Money is when you need it for a deal, right? That’s why I teach and practice the money comes first. Well, that’s the same, uh, it goes the same for your team members. Your real estate attorney— the worst time to be looking for a real estate attorney is when you need one to close a deal. So you want to establish a relationship and have your relationship in place with your real estate attorney that can draw up your documents. So you got a deal under contract, you got your private lender lined up, ready to go. So what happens next? Well, what happens next is for your real estate attorney Not you or somebody in your office, but for your real estate attorney to draft the closing documents. Well, there are only a couple of documents.
Jay Conner [00:30:52]:
There’s the promissory note, which is going to lay out who the borrower is. That’s your private lender. Excuse me, who’s the lender? That’s your private lender. Who’s the borrower? That’s your entity, your land trust or your LLC, or whatever entity that you’re investing in. The promissory note, of course, is going to lay out what the interest rate is, the frequency of payments, right? So it’s a very, very short document. And then you have either the mortgage or the deed of trust, which is going to collateralize the promissory note. And then you have a HUD settlement statement. Well, the only documents that the private lender is going to get are the original promissory note.
Jay Conner [00:31:30]:
By the way, there’s nothing for the private lender to sign. They approved the deal when they wired the funds to your closing agent.
Jay Conner [00:31:38]:
Right. So they’re not promising anything. You’re doing all the promising. They wire the funds into your, uh, closing agent’s trust account. You sign the promissory note that your attorney drew up. You sign the deed of trust that your attorney drew up. And then outside of closing, we also have the insurance policy. So the insurance policy is going to name your private lender as the mortgagee.
Jay Conner [00:32:06]:
On that insurance policy. That gives them an additional layer of protection. So if you ever file a claim on that property, the check is actually made payable to the lender, private lender, and to your entity as well. And I’m going to name them on the title policy as an additional insured. So very, very few documents are used for a closing with a private lender. In fact, I have given my real estate attorney— since I travel so much, I’ve given my real estate attorney power of attorney. My real estate attorney can buy and sell any property I’ve got with just an email authorization. But if I happen to be in town and go to the closing, literally the closing is less than 5 minutes when you’re doing a Private Money deal.
Andrew Schlag [00:32:55]:
I like that. And that was one of the amazing things to me coming from, you know, I remember starting out trying to get a loan through Quicken Loans, and after they had lost my income verification for the 3rd time, I was blown away. I was shocked when I started duplicating your model because it just was so simple. It was really unbelievably simple, and everyone’s protected, and that’s what I love about it. So what did your business look like before finding Private Money? And how did your profit change after?
Jay Conner [00:33:34]:
Well, what my business looked like before Private Money is I was playing by everybody else’s rules. And I had to get appraisals. That’s another benefit. There are no appraisals involved as required by the lender. So I get, you know, I didn’t get as many offers accepted. Because I couldn’t close quick enough. Um, I actually had to turn down some opportunities because I was maxed out on my line of credit. That’s another big benefit in this world of Private Money.
Jay Conner [00:34:05]:
There’s no limit to the number of private lenders you can have. There’s no limit to the amount of Private Money you can have available to you. So again, you’re playing by your rules and not by everybody else’s rules. So what looks different? I do more deals and more profitable deals.
Andrew Schlag [00:34:24]:
That’s awesome. I like more deals, and I like more profit.
Jay Conner [00:34:28]:
I don’t know. I don’t know who said less is more. Thatdoesn’tt even make sense. I say more is more.
Andrew Schlag [00:34:35]:
That, that makes more sense. Now, something I get a lot of, and, um, and I got some questions listed down here that I’m, I’m reading off of my beautiful MacBook. Normally I just go with the flow, but there were some very specific things I want to cover because every time that we hang out and you’ve been on, you know, various of my trainings or I’ve been on your podcast and other things, you just give so much value and you answer so many questions that I get a lot. And I appreciate again so much you spending this time with us today. Another question I get a lot is, I talked to a Private Money lender, and they wanted 20% down and 12% interest. And I said, that wasn’t a Private Money lender. So explain to us the difference between hard money and Private Money.
Jay Conner [00:35:26]:
Yeah, so typically a hard money lender is usually a broker of money. Typically,y a hard money lender is not loaning out their own money, right? Typically. So typically a hard money lender is an institution. It’s institutional money that goes out and raises money for their fund, their hard money lending fund. Then they turn around and they loan the money out at a higher interest rate than the amount that they’re borrowing at. They’re going to charge origination fees or points. So when you’re doing business with an individual, there are no origination fees, there are no points. They are making the rules, so they’re typically not going to loan you more than 65 to 80% of the purchase price.
Jay Conner [00:36:14]
You’ve got to come up with the difference. But then they may loan you 100% of the rehab, but you still have to do a down payment. Um, the length of the note is typically, with a hard money lender, going to be either 6 months or 9 months. They will do extensions, but guess what? If they do an extension, they want this thing called extension fees. Well, in this world of Private Money, there are no extension fees. They don’t want the money back. They just want you to keep the money if you can and keep putting it to work. So again, hard money, interest rates are much higher.
Jay Conner [00:36:48]:
Right now I’m paying my Private Money lenders, and I have for years, even in this market of higher interest rates; I’m still paying my Private Money lenders 8%. I got a, I got a phone call and an email yesterday from one of my hard money lenders. Right now they’re at 12% and 3 points. I got another friend in a mastermind that I’m in; he’s charging 15% and 3 points right now. So that’s hard money. But here in the world of Private Money, since you’re making the rules as the borrower, We’re paying a straight 8% and no fees, no extension. I mean, no origination fees, no extension fees, straight 8%.
Andrew Schlag [00:37:32]:
And that’s a very important differentiator: you set the rules; whatever you and your private lender agree to is what happens. And for you, that’s 8% on a first, 10% on a second. And I love that. Because it keeps everything so simple. And if you’re newer and starting, I’ve had people come to me and say, well, is it okay to offer more in the beginning? I said, yes, if you want to. And it’s only your lack of confidence that’s causing you to do that. Because quite frankly, there is plenty of money. What is the amount of Private Money floating around right now?
Jay Conner [00:38:15]:
Well, before COVID, there was $18 trillion that was just sitting in people’s retirement accounts for cash sitting in certificates of deposit that could be used, you know, for Private Money. And a couple of months ago, I looked at—
Andrew Schlag [00:38:32]:
$18 trillion.
Jay Conner [00:38:34]:
Yeah, with a T. That was before COVID, but now on this side of COVID, D $31 trillion. Can you imagine? In cash. I mean, that’s even more than the, than the federal budget. I was gonna say, and the government hasn’t. But yeah, I mean, there’s money all around us.
Andrew Schlag [00:38:59]:
Wow.
Jay Conner [00:38:59]:
And, um, you know, all we gotta do, all you gotta do as a, uh, real estate entrepreneur and investor is get the word out that you got this program to pay these high rates of return safely and securely to individuals.
Andrew Schlag [00:39:14]:
So one more question before we wrap up today, and thank you again so much. I know due to our, uh, errors on, uh, on the internet, whatever the heck was going on. We spent extra time here today, and I just so appreciate you spending it with us. Uh, if you were starting over from scratch, what would you do differently in your business and why?
Jay Conner [00:39:36]:
Well, I would not have started this business without a mentor or coach; I’ll tell you that. My first 6 years, I made so many mistakes. Um, the only education that I was using was experience from the mobile home business, which does not translate to this business. And I was reading some books, but if I had it all to do over again, I would not have waited 6 years into it before I actually started working with somebody that had already blazed the trail and already, you know, knew what to watch out for. They’d already gone through the minefield. So my advice is don’t start the way I did. Start working with someone who can be your mentor, be your coach, hold your hand as you are on this pathway to a new career.
Andrew Schlag [00:40:29]:
That’s some good advice. I am grateful that I found a great mentor in the beginning, you being one of them. And thank you again so much. I just want you to know and to remind you of back in April, April of 2014, when I met you. At the same time, I met our friend and mentor, Ron LeGrand. It was a very pivotal point in my life, and I’m so grateful that you were there and for everything you’ve taught me. Well, I know you have a gift for everyone, so anything else you want to share before we give them the beautiful gift you have?
Jay Conner [00:41:05]:
Hey, I’m ready to give this gift away.
Andrew Schlag [00:41:07]:
Let’s do it.
Jay Conner [00:41:08]:
And that is, yes, so I’m so excited about my book. Which is called Where to Get the Money Now. And by the way, this is not an ebook. You can’t download it. I actually have to put it in the mail and mail it to you. And believe it or not, the post office actually is still open. Um, so I will mail this to you in a priority envelope. You’ll receive it in 3 days or less.
Jay Conner [00:41:32]:
Where to Get the Money Now, subtitle, How and Where to Get Money for Your Real Estate Deals Without Relying on Traditional or Hard Money Lenders. And it’s $20 at Amazon, but it’s actually free here on Andrew’s show. Just pay a couple of bucks for shipping, and we’ll send it to you. You can get the book at www.JayConner.com/Book. And I’m an E-R, not an O-R. So go to www.JayConner.com/Book. So, that’s www.JayConner.com/Book, and we’ll rush it right out to you.
Andrew Schlag [00:42:13]:
That’s an amazing gift. I— when you got me my copy, I read through it, and wow, what an amazing power-packed book that is. And thank you again so much for that amazing gift for all of our listeners. Thank you again for being with us, Jay. It’s always good seeing your smiling face. And I’ll see you again very soon.
Jay Conner [00:42:33]:
Thank you so much, Andrew, for having me. See you soon.
Andrew Schlag [00:42:36]:
Bye for now. Thanks so much for watching. And if you liked that video, hit the like and subscribe button so you don’t miss any more. Comment below what you got out of it. It’ll help with the algorithm so we can continue to spread incredible information to awesome entrepreneurs just like you and spread the message. Thanks for all the support.
Narrator [00:42:54]:
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 7 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.