Credits to:
https://www.youtube.com/watch?v=kDDAufBdC6A&t=24s
“How to Fund Real Estate Deals Without Banks with Jay Conner | Ideas & Capital Show Ep 18”
https://www.youtube.com/@TylerCaseyShow
The conversation focused on demystifying the often misunderstood world of private money versus hard money in real estate investing. One concept discussed was the common confusion between private money and hard money lenders, often perpetuated by hard money lenders marketing themselves under the “private money” label. In reality, these are distinct financing routes, and understanding the difference can give investors a critical edge.
Hard Money vs. Private Money—What’s the Difference?
A key theme that emerged was the clear distinction between hard money and private money. Hard money lenders are generally brokers of capital: they pool funds from individuals, offer those investors a fixed return (often about 8%), and then lend that money to real estate investors at a higher rate, adding origination points and various fees. The investor, in turn, faces steeper costs and usually a rigid framework for borrowing.
Private money, on the other hand, is all about a direct transaction between the borrower and the lender—two individuals working together. There are no brokers, no points, and often far more favorable terms, with the negotiation happening one-on-one. The discussion explored how this approach can fundamentally change an investor’s ability to move quickly, negotiate better deals, and maximize profit, as evidenced by years of successful investments funded entirely via private money.
How to Attract Private Money: Mindset and Methodology
Several points were raised, including the vital role of mindset when raising private money. It all starts with believing in the value you offer—not chasing or begging for money, but presenting an opportunity. The approach is not about selling or pitching, but about education. Prospective private lenders—often ordinary people with “lazy money” sitting in savings accounts or underperforming retirement funds—usually have never been exposed to private lending as an investment strategy.
The discussion explored practical steps to attract private money:
- Lead with Education: Rather than asking for money outright, share how private lending works—what safety measures are in place, the typical interest rate paid (often an 8% annual percentage rate), and how their investment is secured by real estate, just like a bank holds a mortgage.
- Present a Clear Opportunity: Articulate the standard terms, such as loan-to-value ratio (commonly 75% of after-repair value), duration, and payment structure. Transparency builds trust and makes the opportunity accessible, even to those new to this world.
- Tap Into Your Existing Network: The conversation outlined three powerful sources of private capital: your own warm network (friends, family, social and professional circles), your expanded network, and existing private lenders. Building relationships and trust is the foundation—money follows trust.
The Real Power: Flexibility, Simplicity, and Opportunity
A key takeaway was the power that private money gives an investor: turning upside down the conventional wisdom that “the lender makes all the rules.” In private money transactions, the borrower often sets the terms—interest rate, payment frequency, and duration—because they are offering a unique opportunity that most people have never heard of. This dynamic flips the traditional power balance and can accelerate deal flow and confidence for investors.
Importantly, the discussion explored how private lending is not restricted to accredited investors, since asset-backed debt is directly negotiated and not governed by SEC regulations that apply to syndications or equity deals. This means anyone—from a teacher to a janitor—can participate as a private lender, putting their money to work at rates far superior to those offered in conventional savings or CDs.
Building a Scalable Model
Another insight shared was the scalability of this approach—not only using private money to fund one’s own deals, but building a network where excess capital can be matched with other trusted operators. The relationship between investor and lender is key, and educating people about private lending can lead to a compounding expansion of opportunity as word spreads via referrals.
Final Thoughts
For both seasoned investors and those just starting, the world of private money offers a direct, flexible, and often more profitable alternative to costly and impersonal hard money loans. By focusing on education, relationship-building, and a win-win proposition, real estate entrepreneurs can unlock new levels of freedom, speed, and possibility in their businesses.
If you’re interested in learning more or deepening your private money skills, events and resources mentioned in the episode offer a powerful starting point for anyone ready to take control of their real estate funding journey.
10 Discussion Questions from this Episode
- The conversation focused on the distinction between hard money and private money. Why do many real estate investors confuse these two funding sources, and what are the key differences discussed in the episode?
- One concept discussed was the use of self-directed IRAs as a tool for real estate investing. What benefits and challenges are associated with educating potential lenders about self-directed IRAs and private lending?
- A key theme that emerged was the importance of mindset in attracting private money, rather than chasing it. How does shifting your perspective from seeking to offering opportunities change the dynamic of raising capital?
- The discussion explored strategies for presenting a private lending opportunity to your social, professional, and service circles. Which of these networks might be the most receptive to private money offers, and why?
- Several points were raised, including the importance of separating conversations about funding from conversations about specific deals. What are the advantages of securing funds before finding a property versus finding a property first?
- The episode addressed why private lenders are often satisfied with an 8% return. Given current market conditions, why does this offer appeal strongly to individuals unfamiliar with private lending?
- Trust and relationships were emphasized as foundational for successful private lending. What steps can investors take to establish and maintain trust with their lenders, especially when working with people outside their immediate network?
- The idea of leveraging capital and “bringing home a check at closing” was discussed. How does this approach to funding impact the cash flow and scalability of a real estate investing operation?
- The conversation delved into the regulatory environment for private money versus syndicated funds. In what ways do these regulations impact who can lend and how investors can raise funds?
- The discussion highlighted the need for investors to continually grow their networks and seek referrals. What strategies were suggested for network expansion, and how might involvement in groups like Business Networking International help?
Fun facts that were revealed in the episode:
- Private vs. Hard Money Confusion
The conversation focused on the frequent confusion between hard money and private money among real estate investors; a key theme that emerged was that many hard money lenders market themselves as “private money lenders,” but in reality, most are simply brokers who raise money from individuals and loan it out to investors at higher rates, unlike genuine private money, which is a direct transaction between borrower and lender. - No Credit Checks or Applications Needed
One concept discussed was that in the world of private money, there are no traditional loan applications, credit score requirements, or underwriting by the lender. Instead, deals are based on relationships and asset-backed notes, meaning if you are listening to the podcast, “you’re already approved”. - $2 Million Raised Without Asking
The discussion explored the idea of “attracting rather than chasing money.” It was noted that after learning about private lending, over $2,150,000 in new private money was raised within 90 days—without ever pitching, selling, begging, or directly asking anyone for money.
Timestamps:
00:00 Introducing Jay Conner on Capital Raising
04:51 Discovering private money options
08:31 Protecting investors with real estate
12:03 Getting private money for deals
14:36 Flexible loan terms for property flipping
17:08 Discussing Investment Strategies
22:32 Growing your business network
25:20 Investing for higher returns
26:49 Investment accessibility for regular folks
30:16 Private Money Conference details
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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Building Trust and Networks for Successful Private Money Lending
Jay Conner [00:00:00]:
A lot of real estate investors confuse hard money and Private Money, and it’s not their fault because a lot of hard money lenders call themselves Private Money lenders, right? They’re not Private Money lenders. Most hard money lenders are a brokerage, a broker of money. They go out and raise money from individuals to invest in their hard money fund. And they’ll pay them 8%. And then they turn around and loan the money out to us real estate investors at a higher interest rate and charge points and origination fees. But in this world of Private Money, it is a direct transaction between you, the borrower, and the individual that’s loaning the money.
Narrator [00:00:51]:
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.
Tyler Casey [00:01:18]:
Hey everyone, Tyler Casey back here again for episode 18 of the Ideas and Capital Show. We have a special guest with us today. His name is Jay Conner, and he is an expert on raising private capital for real estate deals. He has a coaching program that teaches other investors how to raise private capital, and he also hosts live events that teach people how to do it. And one of the cool things is I’ve done a lot of private capital equity deals with other people. I’ve actually never done a private debt deal with somebody else. And that’s where Jay specializes in helping people: sourcing private capital through the debt side. So Jay, why don’t you just tell the audience a little about yourself?
Jay Conner [00:02:09]:
Sure. First of all, Tyler, thank you so much for inviting me to come along and talk about what I’m so excited about, so passionate about: Private Money. Ever since I started attracting Private Money in 2009, I haven’t missed a real estate deal because I didn’t have the money. And so my wife, Carol Joy, and I started investing in single-family houses all the way back in 2003 here in eastern North Carolina. We’re in a small market. Our total target market is only about 40,000 people. We do about 20 single-family houses a year. And for the first 6 years, we were investing in single-family houses from 2003 until January of 2009.
Jay Conner [00:02:57]:
Tyler, the only thing I knew to do to get funding for my deals was that I had a line of credit at the local bank, and that worked out okay for those 6 years. But everything changed in January of 2009. I was sitting right here at this desk. I had 2 houses under contract. The projected profit on those 2 houses was over $100,000. And I thought I still had a line of credit at the local bank. I called up my banker. His name was Steve.
Jay Conner [00:03:26]:
I told him about these 2 houses I had under contract, and I learned over the telephone that my line of credit had been closed with no notice to me. I said, Steve, what in the world are you telling me? My line of credit is closed. We’ve done a ton of deals, always made my payments on time. I got a great credit score. Why has the bank closed my line of credit? And Steve said, Jay, don’t you know there’s a global financial crisis? Crisis going on right now? I said, ” No, I’m here in eastern North Carolina, under a rock. But Steve, you just gave me a global financial crisis. I don’t have a way to fund these 2 deals. So I hung up the phone, Tyler, and I sat here for a moment, and I thought to myself, and I asked myself a very powerful question.
Jay Conner [00:04:11]:
I said, Jay, who do you know that can help fix your problem? And by the way, these people running around saying every problem is an opportunity, I want to throw up. I did not have an opportunity. I had a Problem. Now, that problem became an opportunity over time. I wouldn’t be here on your podcast unless I’d had that problem back then. But at the time, it was a problem. So I asked myself, who do I know that could help fix my problem? Interestingly enough, I immediately thought of Jeff Blankenship, a very good friend of mine and Carol Joy’s. We have known each other because of a cappella gospel singing events through church and et cetera.
Jay Conner [00:04:51]:
Well, Jeff was living in Greensboro, North Carolina at the time. When this happened, I called up Jeff and told Jeff what had just happened. And Jeff said, well, welcome to the club, Jay. And I said, well, I’m not sure I want to be a member of that club, but what club are you talking about, Jeff? He says, ” Well, that’s the club of having your line of credit closed. He said, ” The bank closed my line of credit last week. I said, ” Well, Jeff, how are you going to fund your real estate deals? He said, ” Well, have you ever heard of Private Money? I said, no. He said, ” Have you ever heard of self-directed IRA companies where an individual can take current retirement funds and move them over with no tax consequences to the self-directed IRA company, and then they can loan that money out to us real estate investors, and the interest that we pay them is either tax-free or tax-deferred depending on the type of retirement account they’ve got. I said, Jeff, you are talking another language.
Jay Conner [00:05:50]:
I don’t have a clue what in the world you’re talking about. I said, ” What is Private Money? He said, well, I’m really not sure, but there’s a gentleman down in Jacksonville, Florida, by the name of Ron LeGrand. I said, Who’s Ron LeGrand? He says, ” Well, I’m not sure about that, but Ron says we can get a lot of Private Money really fast if we come to his event. I said, ” Okay. So Jeff and I went to Ron’s event. I learned about Private Money. I’d never heard about it before. And oh boy, Tyler, did I learn about Private Money.
Jay Conner [00:06:21]:
I came back here to Morehead City, North Carolina, our hometown, and I put into, and you know what’s interesting? I never ask anybody for money. No pitching, no selling, no begging, no chasing, no persuading. I was able to attract $2,150,000 in new funding, new Private Money, in less than 90 days of starting to offer my opportunity for Private Money. And since that time, I’ve never missed out on a real estate deal for not having the funding.
Tyler Casey [00:06:53]:
So when you say attract, what are you doing if you’re not directly asking the person for money for this real estate deal? How are you attracting the money?
Jay Conner [00:07:04]:
So that is the big secret sauce of how I go about doing this and the other real estate investors that I coach. One very common question I get, Tyler, from real estate investors that have not raised Private Money or haven’t raised much. They say, Jay, what’s the first thing I need to do to start raising and attracting Private Money? And here’s the answer. You’ve got to own the real estate between your ears. In other words, you’ve got to have the right mindset. So let’s talk about the mindset. When I came back home from that event, I decided I’m not chasing anybody. I’m going to get people chasing me.
Jay Conner [00:07:40]:
And by the way, these private lenders we’ve had over these years, 47 individuals, human beings, regular people, ordinary people funding our deals. And here’s a big, important part of the process. None of these, as in zero, none of these 47 people ever heard of Private Money, private lending, self-directed IRAs until I exposed them to this world. So let’s break this down step by step. What are you going to do? Lead with education. So the first thing I decided was, okay, Jay, let’s put the opportunity together in an easy-to-understand offering that anybody can understand. So I said, okay, no deals attached to it. Regardless of the deal, what interest rate are you going to pay your private lenders? Annual percentage rate.
Jay Conner [00:08:31]:
How are you going to protect them? Well, I’m going to give them the same protection that the local bank gets. The promissory note’s going to be backed by the real estate with either a deed of trust or a mortgage backing that note. I’m going to name them on the insurance policy as the mortgagee. How can they get their money back early,y prior to the term coming due,ue if they have an emergency? What’s the frequency of payments? What’s the maximum loan-to-value that I’m going to borrow? By the way, that’s 75% of the after-repaired value. I didn’t say 75% of the purchase price, which means when I’m buying a house at a discount and there’s a renovation involved, I always bring home a big check. It’s called excess cash to close. I always bring them a big check when I purchase the property and never have to take any of my own money to the closing. The question is, who wants to get paid to buy houses? I get paid a big check every time I buy a house, and then, of course, I get multiple checks.
Jay Conner [00:09:30]:
So the first thing I did was decide what the opportunity is that I’m going to share. And so then what did I do? I had the opportunity put together. So then what am I going to do? Well, I put on my teacher hat. Private Money teacher is what my teacher hat says. Now, obviously, I don’t physically put on my teacher hat. That’s the mindset of— I’m going to lead with education. So how do I go about sharing the opportunity with people? Well, there are 3 categories of where private lenders are. Where are these people to loan you money on your real estate deals? Well, the 3 categories are, first of all, your own warm market, your own current network, people in your cell phone, on your email list, etc.
Jay Conner [00:10:13]:
They’re in your network. The second category is what I call your expanded network. So if you want to scale your real estate business, sooner or later you’re going to run out of your own contacts, right? You’re going to need to expand your network. And I show real estate investors how to do that quickly. The third category of private lenders is existing private lenders. Individuals who are already lending money out. So back to that first category, my own network. There are 3 subcategories of your own network that you can offer the opportunity to your own network.
Jay Conner [00:10:48]:
Number one is what’s called your social circle, then your professional circle, and then your service circle. So starting with your social circle, that includes Family, friends, and anybody that you see on a regular basis. Who do you go to church with? Who are your coworkers? Who do you play golf with? I mean, what do you do for fun? Who do you hang out with? All that in your social circle. And then there is your professional circle. Your professional circle of contacts is the gatekeepers of money. That’s your CPA or your bookkeeper or your accountant. That’s your realtor. That’s your real estate attorney.
Jay Conner [00:11:27]:
And so people that are professionals, who’s your doctor? Who’s your dentist? All these people are great referral sources. And then there’s your service circle. You know, where do you take your dry cleaning every week? Who do you buy your car from? Your service circle. So you have all these different connections. So how do you expose them to it? Well, there are varied ways. Let me talk about a few. First of all, give birth to Private Money. What do I mean by that? Well, when you have a baby, or you have a grandbaby, that’s all you can talk about because you’re all Excited about your new baby.
Jay Conner [00:12:03]:
So give birth to Private Money. So in your circle, as you’re like, you’re going to church or whatever, there are 2 different kinds of conversations you can have. There’s what I call the direct method, and then there’s what I call the indirect method. My very first private lender, I got $500,000 with no deal attached to it. You see, part of the secret sauce is separating conversations about the opportunity that you have and then having a deal for them to fund. Tyler, you have probably heard this? I’m gonna take a little risk and ask you the question, but have you ever heard the guru stand on stage and say, ” Oh, just get the deal under contract; the money will show up? You ever heard that?
Tyler Casey [00:12:44]:
I would say 90+% of real estate investment coaches and gurus would say the deal is the most important thing. And if you find the deal, you’ll find the money.
Jay Conner [00:12:54]:
Yeah, it’s a lie. It’s stress. I mean, I have heard countless stories of real estate investors who buy that and believe that and go get a deal under contract and then stress out trying to find the money. And I’m going, doesn’t it make more sense to have the money lined up, ready to go? And then think about how many more offers you will make. You’re making offers, and you know exactly where the money is. I’ll make the offers I can close in 7 days.
Tyler Casey [00:13:20]:
I completely agree with that. I mean, unless I know I have the capital lined up, I don’t even make offers on deals. Herschel,
Jay Conner [00:13:26]:
Thank you.
Tyler Casey [00:13:26]:
What are the typical terms that you’re offering to these people? And then you say you get the money before— are they signing some kind of an agreement committing to the money? Are they actually putting the money with you and you’re starting to pay them from day one, or you only pay them when they have a deal? How does that all work?
Jay Conner [00:13:45]:
So there’s nothing for them to sign. They just verbally tell me how much they want to invest. Is it just liquid capital? If it’s retirement funds, then I introduce them to the self-directed IRA company that I recommend, and they move those retirement funds over to the self-directed IRA company that they can then lend out. So they’re just verbally telling me how much they’ve got and how much they want to invest. So the type of terms, first of all, the interest rate. Ever since February of 2009, I’ve been paying my private lenders an 8% annual percentage rate. I don’t get the money until I have a property to back the note because I’m not going to borrow unsecured money, right? The SEC frowns on that, right? So I’m backing that note with the real estate. So I pay them an 8% annual percentage rate.
Jay Conner [00:14:36]:
Now, if I’m only using the money for 6 months or 9 months, I’m only paying them the interest for the amount of time that I’m using that money. The length of the note is 2 years. If I’m flipping a property, I’m not going to be using the money for 2 years, but I just set it up for 2 years, so I don’t have to deal with extensions or whatever in case, you know, it’s going to last longer than I anticipated. The frequency of payments, if I’m flipping a property, well, you can just accrue the interest. You don’t even have to make payments at all. And when you cash out on the property, the private lender gets paid off their principal loan amount and the accrued interest. On the other hand, we’ve got elderly private lenders that need the monthly income as supplemental income. So we just pay them interest-only payments, which is a win for them and a win for us as the borrower.
Jay Conner [00:15:27]:
Interest-only payments are smaller; it helps the cash flow, but they make more money because I’m not paying down any of the principal loan amount.
Tyler Casey [00:15:36]:
Are you a flipper then? Is that what you’re doing? Your own deals that you’re doing? You said you’re doing about 20 a year; are you flipping 20 a year?
Jay Conner [00:15:43]:
Most of them, yes.
Tyler Casey [00:15:45]:
Buying and holding some of the time. It sounds like this method of funding probably works better for short-term investments.
Jay Conner [00:15:52]:
Well, not necessarily. I’m paying 8%. The commercial rate on a long-term rental is more than 8% at the local bank. So at one time that was not the case. You could get long-term money for less than that, but Most of the houses we are flipping. Now, if I buy a single-family house subject to the existing note and not having to use Private Money, then I will typically sell those properties on lease purchase or rent-to-own. That’s a longer-term holding that property until the rent-to-own or tenant buyer gets ready for a mortgage to cash us out.
Tyler Casey [00:16:29]:
And you’re only doing those deals in this little town of 40,000 people in North Carolina.
Jay Conner [00:16:35]:
Yeah. So in 2 counties, Carteret County and Craven County. So all the properties that we do are right here within a 30-minute driving period. I mean, I’ve just made a business decision that I personally don’t want to invest in properties unless I can get to it within a reasonable period of time to drive by it if I want to.
Tyler Casey [00:16:55]:
Yeah. Well, I would say like showing other people how to do this and raise capital is probably more of a scalable business for you than flipping houses?
Jay Conner [00:17:03]:
Oh, absolutely. I’ve got real estate investing clients all over the nation.
Tyler Casey [00:17:08]:
That’s why I’m not a flipper, because you’ve got to show up every day and do the work every time to make any money doing it. I mean, I buy and have a plan to sell the assets that we’re acquiring at some point in the future. And I’m typically doing bigger commercial-type multifamily investments or development that have a little longer time horizon on them. This type of short-term debt maybe doesn’t work great for what I’m doing, but for a flipper, you know, or for somebody who’s maybe doing smaller, like, BRRRR projects that they can renovate a house and BRRRR out of within. And one thing I will say just to the audience listening: you should still have a little cash backup in case that BRRRR doesn’t work out exactly the way that you planned, or in case that flip doesn’t work out exactly the way that you planned. But it sounds like this would be an alternative funding method to either your own cash or the bank. Like, I’ve had some clients; I’ve actually only done it one time on one deal ever. I did hard money because I had a local guy here in Missouri who was promoting being a hard money lender and explaining the benefits of it and why you should use hard money versus using the bank’s money to do flips or BRRRRs or whatever.
Tyler Casey [00:18:16]:
And I had this house that I had a friend from high school whose father was terminally ill, had like a ton of Medicaid debt on his estate, right? When he passed away, that debt was going to be recoverable through the sale of assets. But at the point in time we were talking about, there was no lien on any of the property. So he needed to sell some of these things very quickly because his dad was going to pass away in like a couple of weeks or something. That was the time he had been given, which is a very sad thing. Well, like, we could put them on the market. This is what they would probably sell for on the market. This is how the process would look on the timeline, or I’ll buy them from you for this. You know, right now, and I’ll close in 5 days.
Tyler Casey [00:18:56]:
And so I did that. I used cash to do it and then went and got hard money to basically pay me back, plus the renovation costs on the deal. And it worked out pretty well. On hard money, the terms are a little onerous. You know, they usually have like a point or 2 on the front end, you know, and then they have maybe 11 to 13% interest or something. Are there ever any lenders who push back on that 8% that you reach out to,o r people who just aren’t interested in that return?
Jay Conner [00:19:25]:
That’s a great question, Tyler. The answer is no. And here’s why. Of all these 47 private lenders that I’ve had funding our deals over the years, none of them ever heard of Private Money before I exposed them to it. None of them ever heard of self-directed IRAs until I taught them about it. So when they hear 8%, that sounds fantastic. Because the only thing they’re comparing that to is what they can get in the local bank. If it’s a savings account, that’s pennies.
Jay Conner [00:19:55]:
If it’s a certificate of deposit in today’s market, you might be able to get a 3% annual percentage rate in a CD, but they’re only going to offer that to you for 5 months. They’re not going to lock that in for 12 months because the market is so volatile. And so when you come along and offer an ordinary human being 8%, they’ve never heard of that. Like, wow, 8%. That’s fantastic. I’m not putting on my teacher hat when I’m talking to an existing private lender. And by the way, I’m glad you brought up hard money. A lot of real estate investors confuse hard money and Private Money, and it’s not their fault because a lot of hard money lenders call themselves Private Money lenders, right? They’re not Private Money lenders.
Jay Conner [00:20:39]:
Most hard money lenders are a brokerage. A broker of money. They go out and raise money from individuals to invest in their hard money fund, and they’ll pay them 8%, and then they turn around and loan the money out to us real estate investors at a higher interest rate and charge points and origination fees. But in this world of Private Money, it is a direct transaction directly between you, the borrower, and the individual that’s loaning the money.
Tyler Casey [00:21:09]:
I mean, definitely, if you can get 8% from private lenders with no points, no origination charges, you know, no timeline restrictions, I mean, that’s 100% better than what you can do anywhere else.
Jay Conner [00:21:20]:
Oh, absolutely. And you see, the challenge that real estate investors who have never attracted capital before face is getting the thinking flipped upside down because we’re all conditioned to believe that the lender makes the rules. We’re conditioned to believe that the lender is the underwriter. We’re conditioned to believe that the lender sets the interest rate, the frequency of payments, the length of the note, the loan-to-value, all that stuff. Well, turn that upside down. There are no applications. Hey, I got great news. If you’re listening to this podcast, you’re already approved.
Jay Conner [00:21:58]:
There’s no application. There’s no credit score. Instead of applying for a mortgage, You’re offering an opportunity to regular, ordinary individuals who have never been exposed to this world. So as a result, you set the interest rate. Now, my recommendation is just to duplicate and mirror what I offer. It seems to work pretty well ever since 2009.
Tyler Casey [00:22:21]:
I would imagine that with what you’re saying, though, that these private lenders who you’re working with, you have to be a person that they deem worthy of trust to begin with for this to work.
Jay Conner [00:22:32]:
Absolutely. The relationship comes first. And so as I said, when we started our conversation, you’ve got your own network, right? If you want to scale your business, you’re gonna need to grow your network. And by the way, when you start working with private lenders like this, they’re going to refer other individuals to you that they can’t keep their mouths shut about, right? I’ve got a lot of private lenders I’ve never met. I’ve never met them in person. I’ve talked to them over the telephone, right? But they’ve been referred to me over the years by existing private lenders that I’m already doing business with. So if you want to grow your network, which you will want to over time, then getting involved in organizations in your local chapter, such as Business Networking International,l is a great way to grow your network very quickly. But yes, trust the relationship first is critical.
Tyler Casey [00:23:23]:
So this is an interesting concept to me because somebody like you who’s kind of intentionally keeping your own real estate business small, just doing, you know, 20 deals a year in your little market, you don’t really need all this capital. So if you are attracting and raising as much capital as you are, why aren’t you helping place that capital with other operators to make money as well?
Jay Conner [00:23:46]:
Who said I wasn’t? I run a mastermind group.
Tyler Casey [00:23:48]:
Are you getting paid by borrowers, by lenders, or to help connect these Private lenders with other operators? What are you doing with all the excess capital or opportunities for capital that you get?
Jay Conner [00:23:59]:
So you and I are fellow members in a mastermind group. I also run a mastermind real estate investing membership. So the members of my mastermind group have access to that capital if they need it.
Tyler Casey [00:24:13]:
Because I mean, to do 20 deals a year, I mean, obviously you could be doing it in various shapes and sizes, but I would imagine in a 40,000-person city, the property values aren’t exceptionally high.
Jay Conner [00:24:24]:
Well, our median price right now is $400,000. So $400,000, 20 deals. I’m very blessed.
Tyler Casey [00:24:30]:
You’re doing a couple a month, so you maybe got $100 grand out at any one time, if you know, or a million bucks out at any one time.
Jay Conner [00:24:38]:
No, because it’s taking about 6 months to cash out. So 6 months on average, sometimes 9 months. So I may have money tied up in as many as 12 projects simultaneously. And of course, one question that I get, Tyler, is, well, Jake, why don’t you just use your own money? Well, that’s a great use of your own money if you’re just going to do 1 or 2 deals. But if I’m going to have 12 or 14 projects going on simultaneously, I don’t want to keep my own personal money tied up in that. And if I did, if I’m putting my money in the deal, then how much money am I earning? If I can borrow it for 8%, I’m earning 8%. Do I want to pay myself 8% or do I want to pay somebody else 8%?
Tyler Casey [00:25:20]:
If you can go place that capital that is your capital in other places that would produce a better rate of return than 8%, then you should do that. That’s definitely not a guarantee, but I mean, there’s stuff like my real estate funds you could do that would probably produce a much better rate of return than 8%. Even the S&P 500 generally averages a better rate of return than 8%. If you’re a really savvy investor, you know, I would think producing an average rate of return above 8% is not that hard. Or if you’re accredited and have access to those kinds of opportunities where, you know, you can get into private equity and other things. I think most people don’t even realize how much there is out there where you can earn way more than what the average person’s earning in a 401. But not everybody qualifies for all those things. So, like this Private Money lending thing, you know, somebody who’s got $50 grand in a retirement account could do
Jay Conner [00:26:06]:
You know, this way of using Private Money, you’re not limited to only borrowing from accredited investors because the SEC does not regulate asset-backed debt. If you’re syndicating, if you’re raising money for a fund, absolutely. The SEC is regulating that activity. But asset-backed debt-, borrowing money backed by real estate, got the promissory note, the deed of trust, the mortgage, etc.- you’re not limited to accredited investors. Anybody can be a private lender anywhere. I have private lenders in 10 different states. You can borrow across state lines because the Commissioner of Banks does not regulate what we do. It’s all business that’s directly between you and that other individual.
Tyler Casey [00:26:49]:
Man, I wish every industry operated like that, where people were actually just free to make decisions that they thought were good for them instead of being told what they can and can’t do by A bureaucrat somewhere; it would make things a lot easier. But yeah, I mean, most people can’t even invest with me. It’s like less than 10% of the population can even invest with me in my deals. But in this deal, somebody can go make, put their money to work making 8%, who’s a janitor that’s making $50K a year, you know, or has saved. I mean, I feel like that’s a great alternative for a lot of people who can’t get into the kind of higher-level deals that require accreditation, for sure. And it’s probably better than their fee-laden IRA plan where they just stick them into some kind of Edward Jones moderate plan that, you know, or whatever it is. It definitely makes sense to the right group if you’re targeting the right type of people.
Jay Conner [00:27:36]:
Yeah. And you know, this world of Private Money, we’re not looking for rich people. We’re just looking for ordinary people that have what I call lazy money. The reason I call it lazy money is that it’s not working for that person, right? It’s either sitting as investment capital, earning nothing in a savings account, or not much in a money market account. They got retirement funds that they’re sick and tired of the volatility. This is all just regular ordinary people’s money.
Tyler Casey [00:28:03]:
Yeah. I mean, everybody’s got to find a way to get their money to work for them, or they’re going to stay poor forever. Right. You’ve got to be investing in something that’s growing or paying you a rate of return. And right now, if you’re not making a rate of return of, you know, 4%, you’re not even keeping pace with how fast the government devalues our currency, you really don’t have a choice but to go put it to work in some other way than a CD or an annuity or something that you deem safe. That’s— you’ve got to go put it in real estate, you’ve got to go put it in stocks, you’ve got to go put it in debt on real estate, you’ve got to go put it into a business. If you’re not doing one of those things, you are losing money every day.
Jay Conner [00:28:40]:
That’s right, for sure.
Tyler Casey [00:28:42]:
But I would think, too, a lot of these lenders want their money to be put to work. They need other operators other than just you when you go raise capital from these people. I think it’s great that you’re helping actually place that with other operators. Do you have some kind of a vetting process for that? Or how do you determine, like,e who you’ll help raise the capital?
Jay Conner [00:29:01]:
Yeah, well, I’m gonna help anybody raise capital. Most of my mastermind members, they’re raising their own capital. They’re not relying on me to raise the capital. So I’m showing them exactly how to go into their own network and attract and raise the capital themselves. Because at the end of the day, it comes back to what you said, Tyler, and that is that relationship that the capital raiser has with their private lenders is so important. So I’m showing my members exactly how to do it step by step so they’re not out there, you know, chasing and begging private lenders. Again, they’re educating their own connections.
Tyler Casey [00:29:41]:
Well, okay guys, it sounds like if you are a private lender who wants to put some money to work, either cash or a retirement account at 8%, you should connect with Jay. It also sounds like if you are a real estate operator who wants to raise private capital from the people that you know, you should connect with Jay. And I know Jay’s got an exciting in-person event coming up here in October, and I will just let him tell you a little bit about that event. And I’ll also let him tell you how to connect with him if you’re interested in any of the things that we’ve talked about today.
Jay Conner [00:30:16]:
Excellent. Thank you, Tyler. So yes, I have my upcoming in-person live event. It’s called Private Money Conference. Here’s the bottom line. If you have ever missed out on a real estate deal because you did not have the money and the funding, you want to get to this event. 3 days, October 7th, 8th, and 9th. I’ll be there the entire time teaching all the different methods that I use to raise Private Money without ever having to ask for money.
Jay Conner [00:30:47]:
You can check out all the details at www.theprivatemoneyconference.com. And if you have any questions whatsoever. I actually answer the telephone. Just give me a call at 252-808-2927. And the clock is ticking. This event is going to close out. Now, this is a $3,000 event, but because you are here on Tyler Casey’s podcast, you get to come for free. You and a guest get to come for free.
Jay Conner [00:31:19]:
All you gotta pay is a $97 registration fee. The only reason we charge that $97 is to lock in your seat. And if you’re bringing a guest, their seat as well. So don’t miss this on theprivatemoneyconference.com.
Tyler Casey [00:31:34]:
Well, Jay, I really appreciate you coming on today and teaching our audience about how to raise Private Money. I think it was valuable. And I will say having more tools in your tool chest as a real estate investor to go out there and obtain capital to do deals is valuable. So thanks for sharing that with us, Jay. And again, I appreciate you coming on.
Jay Conner [00:31:55]:
Tyler, thank you so much for having me.
Narrator [00:31:58]:
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.