In the ever-evolving landscape of real estate investing, one lesson remains constant: funding is king. If you’ve ever missed out on a deal because you didn’t have the money, you’re not alone. But what if you could put yourself in the driver’s seat—never rely on banks, never miss opportunities, and walk away from the closing table with tens of thousands in profit without sinking your own money into the deal? That’s exactly what Jay Conner and his team recently accomplished, using a shrewd application of Private Money and creative deal structuring.
The Deal Breakdown: Motivation Meets Opportunity
Crystal Baker shared a powerful case study: a property at 230 South Palmyra. The seller found Crystal’s company, CGN Homebuyers, thanks to their A+ Better Business Bureau rating—a crucial reminder that reputation builds trust. The initial call was handled by their AI assistant, Bailey, who scheduled a same-day call with the admin, demonstrating the importance of “speed to appointment”—never missing a motivated seller’s inquiry.
Why was this seller so motivated? Life had thrown him curveballs: plans gone sideways, a failed renovation, and an urgent need to relocate out of state. While the seller initially asked $205,000, there was an existing mortgage of $167,000 at a stellar 3.5% interest rate, with monthly payments of $1,289. After some negotiating—helped by the seller’s need to move quickly—the final purchase price was brought down to $173,000, just high enough to give the seller what he needed to move on with his life.
Stacking Strategies: Subject To + Private Money
What sets this deal apart isn’t just the negotiation. It’s the combination of creative strategies:
- Subject-To Financing: Crystal acquired the house “subject to” the existing mortgage. The title transferred, but the mortgage remained in the seller’s name, with Crystal agreeing to make the payments. No qualms about credit checks, no bank approvals. This alone put her in a position of control.
- Private Money for the Win: To cover renovations ($52,800 after a change order), closing costs, and to give the seller his $6,000, Crystal arranged $80,000 in Private Money, at 10% interest, paid quarterly. (Notably, her private lender is in second position—on top of the existing mortgage.) After closing expenses, Crystal walked away from the table with $71,549 in cash—before she even started renovations.
Real Numbers, Real Profit
Let’s talk projected profit, because these numbers tell the real story:
- Sale Price (ARV): $375,000
- Remaining Mortgage: ~$167,000
- Private Money Payoff/Interest: ~$82,000
- Realtor Commissions (5%): $18,750
- Closing Costs: ~$3,500
- Renovations: $52,800
After all costs and payouts, the projected net profit is $103,750—nearly double what most dream of on a single flip, all while using none of her own money.
Lessons for Investors
There are critical takeaways here for any investor, new or seasoned:
- Reputation Sells: Crystal’s seller chose her over other investors because of trust (Better Business Bureau rating). Build your public presence.
- Systematize for Speed: AI and CRM allowed Crystal’s team to respond immediately—a real competitive edge.
- The Power of Asking: Instead of making a firm offer, Crystal asked the sellers what they needed. That opened the door to the best deal for both parties.
- Stacked Creative Financing: Combining “subject to” and Private Money made an all-cash solution possible, while also ensuring a zero out-of-pocket purchase.
- Profit Isn’t Just on the Sale: Receiving cash at closing by borrowing for both purchase and renovation means investors don’t have to “wait” for the flip to get paid.
Final Thoughts
Deals like this aren’t rare—they become routine for those who master the fundamentals: funding first, credibility, negotiation, and fast action. Are you ready to stop being at the mercy of lenders and start controlling your own deals—and your profits? Start building your Private Money network today and see what’s truly possible.
10 Discussion Questions from this Episode
- What are the key differences between Private Money, hard money, and traditional bank financing for real estate investors as explained in this episode?
- How does the volatility in financial markets, like shifts in the 10-year Treasury note or tightened bank lending, impact investors who rely on Private Money versus those who do not?
- Why do private lenders often prefer an 8% fixed return from private lending compared to the potential 10% average annual return from the stock market?
- How did Coach Crystal’s Better Business Bureau (BBB) rating influence the seller’s decision to contact her company, and what lessons can be drawn about reputation in business?
- In the deal breakdown, what was the significance of combining a “subject-to” strategy with private lending, and how did this maximize the deal’s profitability?
- What negotiation tactics did Crystal use when communicating with the seller and his mother that resulted in a lower purchase price?
- How important are relationships—with contractors, real estate agents, and lenders—in enabling quick action and successful outcomes for investors, as highlighted in the episode?
- What systems did Crystal have in place (e.g., AI assistant, CRM) to ensure efficiency and “speed to appointment,” and how did this contribute to winning the deal?
- Discuss the role of mindset and the “teacher/educator” approach in attracting Private Money lenders, as mentioned in the episode.
- After hearing about this real-life deal, what are your key takeaways for applying combined strategies (like subject-to and Private Money) in your own investing, and what potential challenges might you anticipate?
Fun facts that were revealed in the episode:
- Better Business Bureau Leads
A motivated seller found Coach Crystal because her company, CGN Homebuyers, had an A+ rating on the Better Business Bureau website. This endorsement was so compelling that it helped Crystal stand out above other investors and clinch the deal. - Getting Paid at Closing—Literally!
On a recent real estate transaction, Coach Crystal brought home an excess cash-to-close check of $71,549—meaning she actually received money at closing, used none of her own funds upfront, and still had enough left over after covering the rehab and seller’s needs. - Creative Deal Structuring Wins
Coach Crystal combined two strategies in one deal: she bought the property “subject to” its existing low-rate mortgage (3.5%) and supplemented with private lender funds in second position, showcasing a creative approach that squeezed maximum value from the deal while minimizing risk and upfront cash.
Timestamps:
00:00 Getting serious about business funding
03:29 Unlocking private real estate funding
07:47 Using Private Money for deals
12:00 Discussing investment risk preferences
17:17 Connecting via AI scheduler
18:11 Handling calls with AI assistant Bailey
22:09 The seller’s story and urgency
25:33 Negotiating renovation costs
27:36 Buying a house subject to a note
32:55 Securing escrow overages profit
37:05 Negotiation strategies and tactics
39:31 Raising Private Money for real estate
41:37 Announcing the Private Money Conference
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
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Inside a $100K Flip: Combining Private Money and Subject-To in a Hot Market
Jay Conner [00:00:00]:
If you want to get serious about your business, if you want to stop it- if you want to stop missing out on deals because you don’t have the funding, you know what? If you want to stop being beholden to the lenders and them making the rules, and you want to get excited about your business because you know where the money’s coming from, if you want to start living in your business knowing that when you make an offer, you know where the funding’s coming from, you’re going to make more offers. If this is speaking to you, if this is speaking to you and you want a solution to your funding problem, here is the deal. Do not pass Go. Do not collect $200 if you’re playing Monopoly. Let’s go, and let’s get you to the Private Money Conference and get this once and for all fixed.
Narrator [00:01:11]:
If you are a real estate investor and are wondering how to raise and leverage Private Money to make more profit on every deal, then you are 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 [00:01:38]:
Quite frankly, I haven’t seen, um, this much of a change in this volatility ever since 2009. Most real estate investors, they, they don’t even know what’s happened and what’s going on. So let me, let me tell you what’s going on. For the first time in years, the 10-year Treasury note is the highest it’s been. It’s almost 5%. Now, if you’re not familiar with the 10-year Treasury note and what that means, Everything that happens with mortgage rates in the banking industry is predicated on and foundationally based upon the 10-year Treasury note. Now, what this means, nobody really knows yet. But what this means is that this could have a major impact on what’s going to be happening to rates.
Jay Conner [00:02:39]:
All kinds of rates, mortgage rates, CD rates, and all that. On top of that, simultaneously, the banks have tightened up. Now I’m talking about somewhat specifically with real estate investors, but they’ve tightened up across the board. On top of that, this past weekend, Reuters reported that private lending has dropped by 40% in just the past 3 months. Private lending dropped 40% within the past 3 months. And so there’s that news, but I’ve got great news for you. Are you ready? Put your seatbelt on. Here it comes.
Jay Conner [00:03:29]:
None of that matters. None of that matters. Now, what is going on in the market? What’s going on in the financial markets has got absolutely zero impact on how much Private Money you can get and what you will pay your private lenders. You see, most— see, you all are in the right place here right now during my presentation. Most real estate investors, unfortunately, until they get into this world where we’re talking here about Private Money, most real estate investors out there outside of us, they think that they are handcuffed to what the markets offer. They think they are handcuffed and have to bow to what the lenders are offering. They have to bow to what banks are offering. They have to bow to what hard money lenders are offering.
Jay Conner [00:04:36]:
And you know what? They have to bow to those terms when they are letting the markets decide their destiny. But you know what? In our world, we do just the opposite thing. We don’t apply for mortgages. Hey, I’ve got great news for you. Every one of you in this Zoom right now, you are already approved, and you’re already approved for whatever interest rate that you want to pay. How in the world can that be? Oh, so the reason none of that stuff matters None of that stuff matters in the markets is that in this world of Private Money, you, I, we, we get to choose who we’re going to do business with. We get to choose the interest rate. We get to— see, here’s the deal.
Jay Conner [00:05:42]:
You’re not applying for money. You’re not applying for money. You’re not filling out any applications. What are you doing? Instead of applying for Private Money— I mean, instead of— not Private Money— instead of applying for a loan, you’re offering an opportunity. You see, in my first 6 years, 2003 to 2009, I thought you had to do what everybody else thinks they have to do right now. All I did was go to the local banks. I don’t even know about hard money back then. And by the way, if you’re new to this world, hard money is not Private Money.
Jay Conner [00:06:21]:
Very, very different. Hard money is institutional money, and hard money lenders, just like the banks, make the rules. So my first 6 years, I had to succumb to all that. But then, when I was cut off from the banks in January of 2009, I knew I had to find A better and quicker way to get my deals funded. That’s when I learned about Private Money. My definition of coincidence is God’s way of staying anonymous. I learned about Private Money within 2 weeks of being cut off from the bank. And you know what, my friends? I’ve never missed out on a deal for not having the money.
Jay Conner [00:07:04]:
Listen, here’s an example of how you are going to be in the driver’s seat. I’ve been paying my private lenders 8% ever since February 2009. I just closed on a deal this past Thursday. By the way, I brought home a $70,000 check when I bought the property and didn’t take any of my money to the closing table. Who wants to get paid? To buy properties? Who wants to get paid to buy properties? I’ve been paying my private lenders 8% ever since February of 2009. And you know what? I still pay them 8%. Zero points. Zero points.
Jay Conner [00:07:47]:
Zero extension fees. And by the way, a double-check to make sure you’re not paying too much for a property. If you can’t bring— if there’s a renovation involved, and by the way, Private Money is not just for rehab deals. Private Money is not just for renovations. Private Money is when the seller of the property— I don’t care if it’s in the Multiple Listing Service, I don’t care if it’s a for sale by owner, I don’t care if it’s an auction, I don’t care if it’s a foreclosure— if the seller requires all the cash, whether it’s an off-market deal or an on-market deal, if the seller requires all the cash, Private Money is the answer. And so back to being in control. Here’s a big part of the secret sauce. Did you know that my wife, Carol Joy, and I, we’ve had 47 different individual private lenders funding our deals all these years? I’ve— we flipped over 500 houses.
Jay Conner [00:08:48]:
I stopped counting after 500. And what’s interesting is, and don’t miss this, Don’t miss this. Not one of these 47 private lenders has been funding our deals using their investment capital; some use their retirement funds, using self-directed IRAs. We’ve got, we’ve got some private lenders that are using both investment capital and retirement funds. But here’s the thing. This is so important what I’m getting ready to say. Not one of these 47 private lenders ever heard about Private Money or private lending until I did something, until I put on my teacher hat, which says Private Money, Teacher. Now, what that means is that your mindset is so important.
Jay Conner [00:09:47]:
Mindset, taking on the attitude of teaching. So you see those 47 private lenders for Carol Joy and me; they never heard of it until I started sharing what this world is all about. And you know what? When you share the opportunity of private lending with someone that’s never heard of this world, then you know what? You get to make the rules. When you do it this way, you see, I’ve never pitched a deal. I’ve never pitched a deal. And the reason I’ve never pitched a deal and haven’t had to pitch a deal is that I separate the conversations between exposing a potential private lender to this world, showing them what we offer, and then coming back in a week or two and giving them the good news phone call. On them funding the deal. I don’t ask them to fund the deal.
Jay Conner [00:10:44]:
They’re waiting by the phone. They’re waiting for their phone to ring so they can, so they can invest their money. Regardless of the deal, it’s still, it’s all, it’s all the same. Regardless of the deal, they’re gonna get 8%. They know that. They know, you know, the length of the note. They know all that stuff, and they are ready to go. As I say, all that stuff in the news, 5- and 10-year Treasury notes, the highest banks tightening up, private lenders dropped by 40% in the past.
Jay Conner [00:11:19]:
None of that matters. None of that matters when you are in the driver’s seat, and you’ve got a servant’s heart,t and you’re teaching, and you’re educating. So There’s the news in the market. Who cares? Who cares? You don’t have to care, right? So that’s the market update. All right. Now it’s time. As a mentor of mine told me years ago, it’s time to cut the gab and get on the pad. Zach, why would investors give 8% private when the stock market averages 10% annual return? That’s a great question, Zach.
Jay Conner [00:12:00]:
And I can tell you why. Most people do not like the volatility of the stock market. They don’t like, they don’t like, they don’t like that risk. And you say the average return is 10%. There’s the key word: average over all these years. So most people, at least our private lenders, when they get 8%, it’s just like them putting money in the local bank in a certificate of deposit. And they know exactly what the rate of return is going to be. And I’m also, Zach, glad you asked this question because the older an individual becomes, the older an individual becomes, let’s say a market correction comes along.
Jay Conner [00:12:48]:
And by the way, is there going to be a market correction? Oh yeah. There’s always a market correction. And when a market correction comes along, and there’s a significant drop in the stock market, guess what? The older people that are relying on this Private Money interest income, they may not live long enough to come out of that correction and lose all that money. So, 8, high rate of return. But here’s the key: safely and securely. Safely and securely. All right, back to the pad. So here’s what we’re going to do.
Jay Conner [00:13:24]:
I want y’all to be writing notes. Crystal is going to share a deal with you, and this is not an HGTV deal- fake deals. This is a real deal of Crystal’s. I have no idea what it is. She hadn’t shared anything with me yet. And, um, so she’s going to share this deal with— now she’s going to give you all the facts. How she found the deal, purchase price, structure of the deal, how much Private Money, and then either the profit or the projected profit. I don’t know where she is on this deal.
Jay Conner [00:14:06]:
She may have already cashed out. She might have just bought it. We’re going to find out. And she’s going to give you the real numbers, not HGTV numbers, right? She’s going to give you the real numbers, including, you know, realtor fees and all that stuff. That you need to account for when you’re looking at the profit of a deal. Crystal, I’m gonna turn it over to you. I got my pen handy. Now, after Crystal gives us all the facts, then here’s what we’re gonna do.
Jay Conner [00:14:37]:
Chaffee, we’re gonna give you some of our takeaways, lessons learned from this deal. And then I want you all to chime in in the chat. So when Crystal finishes giving the whole story, giving all the facts, I want all of y’all to type in the chat your lessons, your takeaways. What, what have you— what do you learn from these facts that Crystal is going to share? All right, Crystal, I got my pen ready. Take it away. I’m turning it over to you.
Crystal Baker [00:15:14]:
I hope everybody has their pens ready because I might turn you on your head a little bit. Um, because this is a combined strategy.
Jay Conner [00:15:23]:
Um, so, Crystal, are you sure this crowd can handle a combined strategy?
Crystal Baker [00:15:29]:
I want you to know it’s possible. How’s that? Yeah.
Jay Conner [00:15:34]:
Hey, look, y’all, raise your hand. Raise your hand if you think you can handle A combined strategy this afternoon. Can y’all handle that? All right. I see hands going up. All right, Crystal, put it on us.
Crystal Baker [00:15:47]:
Awesome. So, um, you asked me for recent. So we, um, this is 230 South Palmyra. Um, let me get my document back up. And, um, we actually just closed on it July 14th. So here’s the information.
Jay Conner [00:16:04]:
Uh, so you just bought it, uh, like less than a month ago.
Crystal Baker [00:16:09]:
Correct.
Jay Conner [00:16:09]:
All right. Well, I’d say that’s pretty, pretty hot and pretty fresh.
Crystal Baker [00:16:13]:
Pretty fresh. Um, so it actually came from the Better Business Bureau website. They looked on there, saw we had an A+ rating, um, and reached out at the very end of June. They called into the CRM.
Jay Conner [00:16:26]:
Um, all right. So hang on right there, Crystal. I’m, I’m gonna interrupt you.
Crystal Baker [00:16:29]:
Okay.
Jay Conner [00:16:30]:
Let me make sure I heard this right. Your company tells everybody what your company name is.
Crystal Baker [00:16:37]:
CGN Homebuyers.
Jay Conner [00:16:38]:
CGN Homebuyers, which is named after Crystal and her 2 kids. So CGN Homebuyers, I’m already getting lessons, and I hadn’t even let her talk for 2 seconds. Her company is on the Better Business Bureau, which talks about what your company does. And from that, the seller reaches out to you.
Crystal Baker [00:17:04]:
Correct.
Jay Conner [00:17:05]:
Y’all, that’s a rider-downer right there. That’s all I can say about that. All right. Better Business Bureau. I must say, flipped over 500 houses. I’ve been doing this since 2003. I need to get on the Better Business Bureau website.
Crystal Baker [00:17:17]:
Well, there is one catch, and that’s that you’re— and, and I can’t guarantee this, but this is what I was informed when they contacted me. They’re supposed to have to invite you to be a member, but maybe you can reach out, and they will then invite you. I don’t know. But we have an A+ Better Business Bureau rating, and we’ve been in the, I don’t know how many years, quite, quite several years. So yeah, that, uh, that was what got them to call. They called into the CRM, and the AI Bailey answered their call and scheduled a same-day appointment with their admin. So they were able to connect with them immediately.
Jay Conner [00:17:53]:
Okay. So let’s stop right, let’s stop right there. Tell everybody how the CRM works. Give a summary as to, I mean, what you just shared there is so important. Um, many takeaway lessons, not missing a phone call and all that. How does that work? And you said Bailey, so who’s Bailey, and how does that work?
Crystal Baker [00:18:11]:
Bailey is the AI assistant on the software system. In the software system, there is a calendar for members of the team. So the admin has a calendar where they can take appointments. And so we require them to have a certain number of appointments each day, and when the seller calls in, Bailey, the AI, answers the phone, asks them if they have a property that they’re interested in selling, asks them for the address, asks if there are any repairs, tries to get an idea of what they’re looking for as far as purchase price, and schedules an appointment. Her entire objective, honestly, is to try to get them on the phone, but we get some initial information. So, based on the fact that the admin has their schedule set up properly inside of the CRM, Bailey was able to set it up the same day. So found an appointment, set it up the same day, and the admin was able to then get on the phone with them.
Jay Conner [00:19:04]:
Now that’s what I call speed to appointment.
Chaffee-Thanh Nguyen [00:19:08]:
Yep.
Jay Conner [00:19:09]:
Speed to appointment. Okay. Awesome. All right.
Crystal Baker [00:19:12]:
All right. So admin spoke to them and completed the lead sheet. When they completed the lead sheet, they discovered that it was a 2-2. 2,053 square feet, which got me curious.
Jay Conner [00:19:28]:
Well, that’s a lot of square footage for 2 bedrooms.
Crystal Baker [00:19:31]:
A lot of square footage for 2 bedrooms. So yeah, so this guy, this one, this one’s exciting. So normally we would actually have one of the members, one of our students, share the deal, but I was excited about this one, so I’m sharing mine. They were, and they’re asking $205,000.
Jay Conner [00:19:47]:
So asking $205,000.
Crystal Baker [00:19:51]:
There’s an existing mortgage of $167,000. It’s actually $166,000 and some change. I averaged it for today’s numbers.
Jay Conner [00:20:00]:
So they owed $167,000.
Crystal Baker [00:20:03]:
Correct.
Jay Conner [00:20:03]:
Now, this is going to be an interesting deal because they’re asking, and what they owe is not that far apart. But go ahead.
Crystal Baker [00:20:10]:
It is an interesting deal. The mortgage rate’s 3.5%.
Chaffee-Thanh Nguyen [00:20:14]:
Woo!
Jay Conner [00:20:15]:
Now I know why you’re doing a combined strategy.
Crystal Baker [00:20:20]:
Because I’m smart.
Jay Conner [00:20:21]:
3.5%.
Crystal Baker [00:20:24]:
I learned well. And the, um, PITI for the, um, mortgage is $1,289 a month.
Jay Conner [00:20:31]:
$1,218?
Crystal Baker [00:20:32]:
$1,289.
Jay Conner [00:20:35]:
So the monthly payment, including insurance and taxes and all that good stuff. $1,289 a month. Okay.
Crystal Baker [00:20:44]:
Yep. So I got on the phone with them the following morning, and the situation was that they had bought—
Jay Conner [00:20:54]:
So wait a minute. So your assistant— I’m sorry, Crystal. So your assistant got all the information, not you, but your assistant got all the information filled out from the seller. Now your assistant is handing that property lead sheet over to you, and now you’re going to be negotiating yourself personally.
Crystal Baker [00:21:16]:
That’s correct. I finalize negotiations, so I don’t have Kim do the final. I do the final. So I also knew that, based on what they had looked up, we didn’t have our, our from the realtor yet because we hadn’t had a conversation. But I knew, based on what the assistant found, that it was worth well over $350,000, which is what we knew kind of initially. That’s not the ARV, by the way. I’m just letting you know that’s what I knew before I got on the call. So that’s on the lead sheet.
Crystal Baker [00:21:45]:
So I got on the phone, found out that I talked—
Jay Conner [00:21:47]:
So wait a minute, wait a minute, wait a minute. So you knew the ballpark was $305,000, right? But not—
Crystal Baker [00:21:53]:
Over $350,000. I knew it was over $350,000.
Jay Conner [00:21:57]:
I said no. You knew it was over $350,000 before you got on the call. And they’re asking only $205,000?
Crystal Baker [00:22:04]:
That’s correct.
Jay Conner [00:22:05]:
I just had a chill go down my back.
Crystal Baker [00:22:09]:
Okay. Well, it gets more fun. So, I got on the phone with them, found out that they had bought the property a couple of years before. His fiancée and he had intended to make this their forever home, had started a renovation, and things went bad- not right. Um, they broke up. He ended up getting a job in Georgia, where his family is, and wants to move there. And while I was on this call, I discovered that he was going to move in with his sister, so he wasn’t going to need to get a mortgage anytime soon. And that he was in a hurry by now.
Crystal Baker [00:22:51]:
So they talked to— they had actually talked to, um, a couple other investors. Um, and, and I was, I think I was the 3rd of the calls that they made. But at this point,t they had said they were most interested in working with me because of the Better Business Bureau rating. That was—
Jay Conner [00:23:07]:
That’s powerful. Powerful.
Crystal Baker [00:23:08]:
What got them?
Crystal Baker [00:23:10]:
So I asked what the lease was that they could take. He said he thought that was probably about $200,000. So they’d already started to walk back from the $205,000. So I’m already in a better position. And so I said, all right, let me get, uh, the information from my realtor regarding the value and set up a time for the contractor to come. So I got in touch with the realtor; she sent the ARV the same day, and the ARV is $375,000.
Jay Conner [00:23:39]:
Whoo doggies! Yeah, $375,000.
Crystal Baker [00:23:45]:
So I had the contractor go with the realtor, and actually I went just because I was very confused about this house, this 2/2 thing and the 2,053 square feet. And it’s in a really amazing neighborhood. Like, we’ve bought houses there, and they just turn out like nothing. So I’m thinking, what is going on with this thing? So when I got there, I could see why. Like, cosmetically speaking, very confusing layout. Fix-wise, very easy. Walked it with the contractor. Came up with a bid of $48,000.
Crystal Baker [00:24:19]:
Um, so then— whoops, where’s my page? Um, and here we go.
Chaffee-Thanh Nguyen [00:24:27]:
Okay.
Crystal Baker [00:24:28]:
And, uh, all right, so after having walked and done the repair estimate, he’s now told me he’d take $200,000. Now his mom’s in the mix, and she wants to talk to me because I guess she’s concerned about him. It’s very interesting. He’s not that young, trust me. I don’t know why she wanted to talk to me. But now she’s kind of in the middle of the negotiation. So she’s kind of negotiating for him. And I said, well, is there any way that you would take what you owe? Because I know that they think this is a nightmare because it is a nightmare.
Crystal Baker [00:24:56]:
There’s like no cabinets, no nothing. It’s, it’s, but it’s got a lot of good bones. So it’s got, I know where we’re going. I know we’re going to be fine.
Jay Conner [00:25:06]:
It’s just— So no, no kid, no kitchen cabinets.
Crystal Baker [00:25:09]:
No kitchen cabinets. The only thing in that house was a table. In the middle of that room, it was the most. It was so bizarre. So it also made me see it like eyes on. These people live there, so you know how much of a hurry they’re in if everything is gone. There’s like nothing in this place, and it’s empty. So they also are like, we have no idea how to handle this thing.
Crystal Baker [00:25:33]:
And they had structurally, properly, thank goodness, done a huge beam and opened up the kitchen and the living area and what would have been part of the dining area. So we already had a huge jump on the next steps. So it really came back with a much better rehab budget than probably most people would have anticipated. And my guys are good, and we have a relationship anyway. But so I asked them if they’d take what they owed. They said no. So I said, all right, well, you know, what can we do? Because as you can see, there’s a lot to be done here. And they finally came down to they needed like $6,000.
Crystal Baker [00:26:07]:
Apparently they had figured out what they needed to do to move. So we came up with $173,000.
Jay Conner [00:26:12]:
Ooh, my lands. So you negotiated a purchase price of $173,000.
Crystal Baker [00:26:19]:
Correct.
Jay Conner [00:26:20]:
Wow.
Crystal Baker [00:26:22]:
So if you run the Mayo on this, I could have paid because I ran the Mayo. I’m sorry. So I ran the Mayo at $50,000 with the rehab budget. So if you— and the reason I did that is that at $48,000, I just want to give myself a little extra wiggle room. So I ran it: $375,000 times 0.75 minus $50,000. You come up with $231,250, which would have taken $ 10,000 off our offer. So we could have offered $221,250. So I actually could have given them what they were asking.
Jay Conner [00:26:53]:
Right.
Crystal Baker [00:26:54]:
But I asked them what the lease was they could take. I didn’t make that offer. And then when you run loan-to-value, it’s a $ 375,000 after-repair value times 0.8, so 80%. And that gives you $300,000. So when we look at this, and we’re looking at total loan-to-value, and that’s where the trick of the whole thing comes in, I paid $167,000, right, for the mortgage. That’s the first piece. That’s what I took existing to. So it’s a part of the purchase price.
Crystal Baker [00:27:23]:
And then $80,000 from a private lender in second position. I could have borrowed $133,000, but I didn’t. I already—
Jay Conner [00:27:36]:
Right, right. So, so let’s, let’s put on pause right there. I want everybody to see what Crystal did. The combined strategy that she did was that she bought the house subject to the existing note. And when you buy a house subject to the existing note, you inherit, which means, just to make sure everybody knows, the seller agrees to sell the property, transfer title and ownership to your entity, and you agree to make the seller’s mortgage payments. You’re not assuming the loan. The mortgage company’s got nothing to do with any kind of approval process. This is an agreement between you and your seller.
Jay Conner [00:28:20]:
And on the HUD settlement statement, uh, there’s already a line. It’s called the mortgage is, you know, subject to an existing note or existing mortgage. So she’s combining buying subject to the existing note and combining that strategy to Private Money. So obviously, that first mortgage, she’s going to make payments of $1,289 a month, because that’s the monthly payment. That’s, but that’s gross. And then how much Private Money did you say you were borrowing? $80,000?
Crystal Baker [00:28:55]:
$80,000. It’s in second position, so I’m paying them 10% interest. I’m actually paying them quarterly.
Jay Conner [00:29:03]:
So your private lender?
Crystal Baker [00:29:04]:
For the private lender.
Jay Conner [00:29:06]:
Yeah. So $80,000. Your rehab is $50,000. So you’ve got an extra $30,000. No, no, no, no, no, you don’t, because you’ve got to do the price difference. So the existing mortgage is $167,000. You’re paying $173,000. So part of that $80,000 is paying for the difference between the mortgage of $167,000 and $173,000, which is $6,000.
Jay Conner [00:29:32]:
So you borrowed $80,000. $50,000 of that is going to the contractor. $6,000 of that is going to the seller. For the difference. And then, um, you’ve got, of course, you’ve got some closing costs, and look, look what Crystal can do. She can use that overage that, I mean, she’s, she brought home what’s called an excess cash-to-close check.
Crystal Baker [00:29:59]:
I can tell you the exact amount of that check.
Jay Conner [00:30:01]:
Okay.
Crystal Baker [00:30:02]:
So, um, brought, you know, of course we had the $80,000. We took the other, um, $160,000, subject to, we paid the closing costs, $8,451. So the check we brought home was $71,549.
Jay Conner [00:30:18]:
$71,549.
Crystal Baker [00:30:20]:
That was excess cash to close. Yes.
Jay Conner [00:30:22]:
So here’s the question, everybody. Who wants to get paid $71,549 when you buy a property and take none of your own money to the closing table?
Crystal Baker [00:30:34]:
Every day.
Jay Conner [00:30:35]:
That, that sort of works, right?
Crystal Baker [00:30:37]:
Yeah.
Jay Conner [00:30:37]:
Right. So she brings home this check for $71,549. $50,000 of that round figure is going to go to the general contractor. What are you going to do with the other $21,000?
Crystal Baker [00:30:49]:
Pay carrying costs and anything else that we need to do with it. Let it, let it collect interest. We have accounts that are interest-bearing accounts that money that we have in excess sits in.
Jay Conner [00:31:03]:
Colby Parker, he wants a $71,000 check when he buys and is taking none of his own money to the closing table. All right. Um, have you by chance, Crystal, run the projected profit yet by line item?
Crystal Baker [00:31:16]:
100%. Yeah.
Jay Conner [00:31:17]:
Okay. Y’all get your pen ready. I’m writing this down. So here’s the projected profit on this deal.
Crystal Baker [00:31:25]:
So I just want to let you know, they got in there; they’re doing work. It’s moving along really quickly. So we may even beat our— we’re anticipating 3 months. I think we’re going to beat that. They’re moving really fast, but there is a change order. There was a joist and band board replacement that needed to be done. So that was $4,800. So the rehab budget now actually ended up at $52,800.
Crystal Baker [00:31:46]:
So thank goodness for Murphy.
Jay Conner [00:31:50]:
Should I feel sorry for you, Crystal?
Crystal Baker [00:31:53]:
Probably not. I wouldn’t feel sorry for myself at all. All right.
Jay Conner [00:31:57]:
I’m ready to write down projected profit.
Crystal Baker [00:32:02]:
Yeah, so, um, sale price $375,000. The $167,000 mortgage isn’t going to reduce by a ton, so I just left it as $167,000 because I don’t know; it’ll be less than that, folks. We’ll make a little bit more, but it’ll be not by much. Um, paying off the private lender and their interest is $82,000.
Jay Conner [00:32:25]:
Realtor fees— $80,000 in Private Money, so you’re anticipating $2,000 in Private Money interest?
Crystal Baker [00:32:33]:
Yes, 3 months of it. Yeah.
Jay Conner [00:32:35]:
Yeah.
Crystal Baker [00:32:36]:
So give or take. And I do also want to comment; Jay made this mention earlier, but there’s definitely going to be reserves of that. So that wasn’t necessarily money spent. That was just money that was in our bank account that we could do what we needed to do with. So just to be clear.
Jay Conner [00:32:55]:
Oh, Crystal, I’m sorry to interrupt, but this is an important point. I want y’all to write this down. This is a side note. What I’m getting ready to tell you will put a bunch of money in your pocket. When you buy subject to the existing note, we have an agreement for our members that you get your seller to sign. And what the agreement essentially says is that they’re going to request the lender to reduce the payoff amount when it comes time to cash out by the amount of escrow overages. So, you know, when you’ve got a mortgage, there are escrow overages, right? Because the lender requires extra insurance, extra taxes that are held in escrow. Yesterday, we got a check in the mail for $5,200.
Jay Conner [00:33:54]:
$5,200 that we would not have gotten unless we’d had that agreement in place. That was the escrow overages. I told you all the story on July 22nd about 420 Louisiana Mayway; subject to that, we cashed out real fast. Anyway, get to the upcoming live event. We’ll teach you how that works. Back to you, Crystal.
Crystal Baker [00:34:13]:
$82,000.
Jay Conner [00:34:14]:
You’re anticipating paying off the lender. Go ahead.
Crystal Baker [00:34:18]:
Realtor commissions: 5%. We pay 2.5%, 2.5%. $18,750.
Jay Conner [00:34:23]:
So $18,750.
Crystal Baker [00:34:24]:
$18,750.
Jay Conner [00:34:26]:
That’s the realtor commission when you sell it. Okay.
Crystal Baker [00:34:29]:
Yep. And when I look at everything, estimated closing costs are around $3,500.
Jay Conner [00:34:35]:
Okay.
Crystal Baker [00:34:36]:
And so the projected cash out would be $103,750.
Jay Conner [00:34:44]:
$103,750. Hey, look, who wants to make $103,000 on a deal and you never had any of your own money involved in the deal? And that, from start to finish, worst-case scenario, 6 months from putting it on the market to selling it. Crystal, amazing deal. You just did this deal. You just closed it. How out of the ordinary is this deal from other deals that you do?
Crystal Baker [00:35:15]:
Not out of the ordinary. We’re talking to really motivated sellers all the time. So, I mean, they’re looking for help, and we’re looking to help them. And so everybody gets what they want. I mean, what did they want? They wanted $6,000 to get through moving and getting themselves set up. That’s exactly what they got. And they got out from under a mortgage that was killing them.
Jay Conner [00:35:36]:
And you provided their solution.
Crystal Baker [00:35:39]:
Yep.
Jay Conner [00:35:40]:
And everybody won. Chaffee, I know you got 2 or 3 takeaways here. What’s big here on your list of takeaways from this deal? Crystal’s deal?
Chaffee-Thanh Nguyen [00:35:51]:
Lots of lessons learned. Obviously you covered a lot while Crystal was sharing the story. And let me just start by saying that none of this would have been possible without a couple of things. The first thing is the relationship that she had with the contractor and the real estate agent that she worked with, having that relationship where she could call them up. Sounded like this deal happened the same day or the next day. And so it went really quickly. And if you want to act quick like that, you have to have those relationships in place. So, you know, relationships are key.
Chaffee-Thanh Nguyen [00:36:28]:
And Jay, I know you are the master at building relationships. Your team that you’ve put together, you’ve worked with for over a decade, everyone on your team. So, you know, finding that team is critical. And then having that Private Money ready, as you always say, Jay, get the money first. You know, if you— if she didn’t have the money, like, you know, then it’s a scramble of how do I get this financed, how to make this deal work, and all this kind of stuff. And so having Private Money ready is critical. And so those 2 things you have to have in place. Um, when you’re going out there and making serious offers, and if you want to execute quickly to get these things closed.
Chaffee-Thanh Nguyen [00:37:05]:
And then I love, um, what Crystal said before. Let me just reiterate: this is that she never asked them, like, for a price. She said, ” What are they willing to take? Like, you know, she could have said, well, you know, will you, will you take $185,000? Right? I mean, so they came back with $173,000, and, and, you know, that would have been a, what, $12,000 difference. Um, or she could have just said, you know, $200,000; that’s fine too. But again, what did they— what do they need, and what are they happy for? And, you know, even though they originally said, you know, we, we think $200,000 or $205,000— Jay, you say this all the time— a seller never really knows what they’re willing to take until, uh, it becomes real, right? And you’ve done deals where you’ve offered $50,000 less than what they said- absolute zero, I won’t take less than this- and they took it. So, let them come up with a number. Um, obviously, uh, justify your offer or justify what, what has to happen. As Crystal said, you know, look around, there’s a lot that has to be done here.
Chaffee-Thanh Nguyen [00:38:02]:
Um, you know, what, what are you willing to take, or what’s the best you could take, and let them go from there. So love those 3 things.
Jay Conner [00:38:09]:
Yeah. Thank you so much for sharing that, Crystal. A ton of lessons. And so let me ask you all a question. Are you interested in doing deals like this where, in Crystal’s case here, she brought home a $71,549 check and took no money to the closing table? Are you interested in deals like this where you’re going to make— you can make over $100,000 in profit? And those are real numbers. Those are not fake numbers. And it’s within just a few short months. That this happens.
Jay Conner [00:38:48]:
Listen, it’s time to go. If you— let me just ask you, right? Raise your hand. Everybody here on Zoom, raise your hand if you’ve ever missed out on a deal for not having the money. Anybody ever missed out on a deal for not having the money?
Crystal Baker [00:39:05]:
Yes.
Jay Conner [00:39:06]:
Absolutely. You know what? Jay Conner has missed out on a deal. For not having the money. And you know why? That was before this world of Private Money. I was relying on the banks. I was relying on the mortgage lenders. They, they made the rules. And ever since I started using Private Money all the way back in February 2009, I’ve never missed out on a deal.
Jay Conner [00:39:31]:
Listen, if you are— if you’ve never done a real estate deal, if you’ve done 1 to 5 deals, or if you’re like, uh, Stu and Harriet up in New York that came to the Private Money Conference, they already had 100 deals, houses in their portfolio. They’d already raised over $1 million in Private Money. They came to the live event, and after the live event, they raised another $3 million after coming to the Private Money event. And so if you want to get serious about your business, if you want to stop, stop it. If you want to stop missing out on deals because you don’t have the funding, you know what? If you want to stop being beholden to the lenders and them making the rules, and you want to get excited about your business because you know where the money’s coming from, if you want to start living in your business knowing that when you make an offer, you know where the funding’s coming from. You’re going to make more offers. If this is speaking to you, if this is speaking to you, yes, Zach, Private Money is 100% financing. In fact, it’s more than 100% financing.
Jay Conner [00:40:51]:
You always get to borrow more than you need for the purchase. And then if there’s a renovation involved, by the way, Private Money is not just for rehab deals. It’s when the seller requires all the cash. But listen, if this is speaking to you and you want a solution to your funding problem, here is the deal. Do not pass Go. Do not collect $200 if you’re playing Monopoly. Let’s go, and let’s get you to the Private Money Conference. And get this once and for all fixed in your real estate investing business.
Jay Conner [00:41:37]:
Thank you, Jonathan. Jonathan Swanson down in Wilmington. He just said, folks, this is real. Jonathan knows it’s real because he has seen it in action and he does it himself. The Private Money Conference— write this down, get it on your calendar. I have just opened up registrations. And yes, it will close out and fill up quickly. Put this on your calendar.
Jay Conner [00:42:01]:
I’m going to give you a special URL link. Ashley will put it in the chat. The Private Money— www.ThePrivateMoneyConference.com. Get to the conference, get your funding fixed. I guarantee it.
Narrator [00:42:16]:
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.