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Today’s strategy: “How To Spot A Private Money Scam!!! – Free Coaching Friday”
Timestamps:
0:01 – Get Ready To Be Plugged Into The Money – Free Coaching Friday!
1:00 – What is Free Coaching Friday?
1:18 – Who is Jay Conner?
5:57 – Jay’s new book – “Where To Get The Money Now? – https://www.JayConner.com/Friday
8:37 – What is Private Money?
10:08 – When to buy Subject-to the existing note?
12:06 – “How To Spot A Private Money Scam!!!”
18:57 – What is the right way for private money to work?
22:29 – Real private lenders are paid from the real estate attorneys
25:57 – Private lenders are defined differently by different people
31:42 – Private money is a collateral deal
33:15 – How much fees are acceptable in the normal course of business? https://www.JayConner.com/Trial – join the Private Money Academy
Private Money Academy Conference: https://jaysliveevent.com/live/?oprid=&ref=42135
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
Free Webinar: http://bit.ly/jaymoneypodcast
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 $64,000 per deal.
What is Real Estate Investing? Live Private Money Academy Conference https://youtu.be/QyeBbDOF4wo
YouTube Channel:
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How To Spot A Private Money Scam!!!
Jay Conner (00:06):
Okay. I got a question for you. Are you wanting more money or money at all to get your real estate deals funded? I don’t care if you are a new real estate investor and you’re struggling to still get your first deal funded, or if you’re a wholesaler and you’ve received some assignment fees and you want to stay in some deals, but you haven’t had the funding, or maybe you’re a seasoned real estate investor, and you just want more funding for your deals, but you’re tired of hard money lenders or traditional funding. Well, I got great news for you right here on Free Coaching Friday. I’m getting ready to plug you into the money right now for your real estate investing deals, regardless of your experience, how long you’ve been doing it, etc. Well, before I plug you into the money, in fact, I got a free book that I’m going to ship to you. Before I tell you about that.
Jay Conner (01:00):
Let me welcome you all to Free Coaching Friday. Well, what in the world is Free Coaching Friday? Well, we talk all things about real estate investing, particularly getting deals funded and finding deals here on Free Coaching Friday. And if you’re brand new to Free Coaching Friday, my name is Jay Conner here in Morehead City, North Carolina. My wife and I, Carol Joy, and I, we’ve been investing in single-family houses all the way back to 2003. So wow, like 18 years we’ve been doing this business and from 2003 to 2009, we relied on local banks and mortgage companies to fund our deals. And in January 2009, I picked up this telephone right here, called my banker. I’d had this conversation many times with my banker. His name was Steve. And I learned in that conversation, I had two deals in the contract when I called him up.
Jay Conner (01:58):
And I learned in talking with Steve that I had lost my lines of credit like that. Well, it wasn’t because I had bad credit, it wasn’t because I had a bad relationship with the bank. In fact, I’d been doing business with Steve for 6 years and he had funded many deals for me. Well, at that time, and you probably know, we had a global financial crisis going on all around the globe and it’s like the spigot turned off overnight. Unbelievable. So I knew I had to find a better and a quicker way. Well, my definition of coincidence is God’s way of staying anonymous. And in less than 2 weeks, I was introduced to this world of private money and private lending. And since that time in January of 2009, I have not missed out on a deal because I did not have the funding.
Jay Conner (02:49):
And so I want you to experience the same thing. Now, the title of this Free Coaching Friday is, “How To Spot A Private Lender Scam.” And the reason I want to give you the clue. There’s one clue. There’s one major clue that will tell you that somebody is getting ready to scam you with private money or supposed private money that exists, it really doesn’t. And I want you to be aware of that. I mean, in traveling the nation, you know, since 2011, showing other real estate investors how we do this business with private money, I have heard nightmare stories from other real estate investors as to how they got scammed with somebody that was, you know, supposedly getting ready to fund a deal. But I’ll get to that in just a few minutes.
Jay Conner (03:48):
First, I want to get you plugged into the money. I told you I got a free book. I’m going to send you so this Free Coaching Friday is all about where to get the money, honestly, ethically from people that you can trust and where not to try to get the private money from, right? Two very important distinctions. But first I always love to know who in the world is and I mean the world, we have people tuning into Free Coaching Friday from all over the world. I love to know where people are tuning in from. So right now, whether you’re watching on the live stream or you’re watching the replay, we get a ton of people watching the replay as well. I want to know where you are from. What’s your name? Of course we see your name when you’re typing in the comments, but where you’re from.
Jay Conner (04:39):
And again, whether you’re on the live stream right now, or you’re watching the replay, I want to know where you’re from. So there is Scott Veach, one of our platinum and mastermind members all the way from Alabama. And I got to raise up cause I can’t see, I gotta put my glasses on. Now, we have got oh, Andrea or Andrea from the Dominican Republic, my lands all the way from the Dominican Republic. Welcome to Free Coaching Friday. Again, I want everybody to type in. There’s a bunch of you online right now. Where are you turning in from? Again that works whether you’re watching the live stream or you’re watching the replay after you type in where you’re from. Right? Of course, you know, when you like something, when you learned something here on Free Coaching Friday, you’re going to give me a thumbs up.
Jay Conner (05:26):
So right now let’s make sure you know where the thumbs up button is. Right now, with the video hit the blue like button and send me a sea of likes across the screen right now. Lots of likes, lots of likes. Come on, Scott, send me some likes. I know you got some likes for me. And right after that, I need some red hearts. Send me a bunch of red hearts. So whenever you love something that I share with you here on Free Coaching Friday, today, send me a bunch of red hearts. I see some blue thumbs up coming across the screen right now. Anyway, okay, so I’ve got this gift for you that I want to ship to you. This is where you get private money, honestly, and ethically and legally then after I show you this, I’m going to show you, as I just said, where to be aware that someone is getting ready to scam you in private money.
Jay Conner (06:19):
Okay. So where can you get it honestly, and ethically and very, very quickly? Well right here. Hey there Angela, all the way from Anderson, South Carolina, welcome to Free Coaching Friday, Angela. So here is this book, “Where To Get The Money Now,” right? Subtitle, “How And Where To Get Money For Your Real Estate Deals Without Relying On Traditional Or Hard Money Lenders.” Right? This book was in the top books when it was released a few months ago on Amazon, under the category of real estate investing. Well, don’t go to Amazon and spend money on it, right? You can go to Amazon and give me some awesome reviews. That would be pretty cool, right? But I will give you the book for free. Now just cover a couple of books, for a couple of bucks for shipping and handling. In fact, Scott, since you’re on here with me, go ahead and type in the comment bar for me, Scott, if you’re still on, where people, how people can get this book for free, and here’s the URL, folks. It’s www.JayConner.com/Friday.
Jay Conner (07:33):
And that will take you right there to the website where you can claim this book for free. One of the highlights in this book. Well, the book is not that long. I mean, it’s got 160 pages, but this book will show you step by step, the 5 steps on how to locate private lenders in 3 different categories. All right? One of those is your own connections, your own network. It also shows you how to locate existing private lenders, right in your own backyard and your own area, right? That’s the private lender data feed that I talked about. And so there’s when I was cut off from the banks, as I just shared with you.
Jay Conner (08:28):
I put together the system, there’s 5 steps to getting the private money. Let’s make sure you understand that when I’m talking about private money. Private money is not hard money. It’s not broker money. It’s not bank money. It’s not mortgage money from traditional lenders. Private money is doing business with individuals, just like you. They loan you as a real estate investor. They loan you money from their investment capital or, and/or from their retirement accounts. So my book goes into the details of how to work with self, people that have self-directed IRAs and they can loan you money from their self-directed IRA. So I want to get this book in everybody’s hand that has any interest in real estate investing because this book is the key to never miss out on deals. Now, look, I know that a lot of you have had training on buying houses on terms or the pretty house business.
Jay Conner (09:34):
And guess what, Carol Joy and I do that as well. I just bought one the other day, subject to the existing note. But what I have discovered is that most people, like 87% of For Sale By Owners, off-market houses, what do they require? They require all the cash, right? So if someone’s got a mortgage or they own a house free and clear, obviously the first thing that I’m going to negotiate, or my acquisitions is Kim, she’s been with us for years. If it’s got a mortgage and I want you to write this down. If someone’s got a mortgage on their house that should trigger you, that should trigger you to negotiate buying that house subject to the existing note, all right, leaving that note and leaving that mortgage in their name. And then you just take over the payments. That’s not making an assumption.
Jay Conner (10:28):
The banks got nothing to do with any kind of approval process. That’s just an agreement between you and the seller. They leave them a note in their name, the mortgage, you agreed to make their payments and they transfer ownership every year. Now, if they own the house free and clear, that should trigger you to negotiate with them, selling to you as seller-financing. That is, they take a note and you’d give them a note, and they make monthly payments. But we know in the real world, the majority of the people aren’t going to require all the cash, right? And that’s where the private money comes in. So I would need your help. Everybody here on Free Coaching Friday, whether you’re watching live right now, or you’re watching the live, or you’re watching the replay, I need your help. Do this one thing for me right now, and that is tap or press or push your share icon right below your video right now. Better than that.
Jay Conner (11:23):
Put a comment in there, on with it as well, when you’re sharing it. But I need your help in sharing this free book, “Where To Get The Money Now,” out to all of your connections. I know birds of the same feather flock together. And so I know you have some friends that are real estate investors as well. So if you would do me that favor since I am offering this book for free, hit your share icon and help me get this word out. All right, there you have that. Now, if you like the free book offer, send me a bunch of hearts right now, whether you’re watching on the live stream or the replay, you like the free book offer, send me a bunch of love right now here on Free Coaching Friday. Whether you’re live or watching the replay, send me some hearts.
Jay Conner (12:06):
Okay, let’s go ahead and answer this question right now. How do you immediately recognize what is probably a private money scam? It’s simple folks. When you have an individual accompany, whatever, when you have someone that is posing as a, or saying they are a private lender, or even though maybe they’re saying there’s a hard, they are a hard money lender, right? Here’s the catch. If they ask you to send them any money whatsoever, I don’t care if it’s a $50 application fee, a hundred dollar application fee, $2,000 processing fee. I don’t care what they call it. That is all signs of a scam right there. So, first of all, I don’t even, I mean, and this book will keep you out of that world.
Jay Conner (13:26):
I promise you, you do private money the way I teach you in this book. Again, you can get it at JayConner.com/Friday. This book will keep you out of that danger of someone posing themselves as a private lender and asking you for money upfront even before you find out if you’re approved. I mean, you see these scam artists, they do it in more than one, they do it in different ways. They may ask you for some kind of money, some kind of application fee, some kind of processing fee, whatever.
Jay Conner (14:20):
Back to spotting these scam artists, so they will ask you for money as a real estate investor in different stages, okay. In different stages of the process. They may ask you for money in the form of an application fee before they even say, “We’ll fund your deal.” But most of the time, here’s what they do. They’ll have you send information about the deal. They’ll have you send information about, you know, yourself or your company or whatever. And they’ll say, “Don’t worry. It doesn’t matter if you’ve never done a deal.”
Jay Conner (15:16):
“We fund deals for brand new real estate investors,” and all that mess. As my granddaddy would say, “It’s a bunch of hogwash.” Here’s what they’ll do most of the time. So watch for this, what they will do is say, “We have approved your deal. We’ve approved your deal, and we need to get it to the final stage of underwriting before we wire the funds for closing.” All right, that’s the big red flag. And then they may ask for as much as, you know, a thousand, 1,500, 2,000, 2,500 bucks for you to wire to them, for them to finish processing, get it to their underwriting department, an underwriting department that doesn’t even exist. Right? And then they’re going to wire you the funds. Well, let me tell you a little secret here. Guess what? If you do that, you wire them funds or send them money before they, if at any point in time, here’s the deal.
Jay Conner (16:18):
If you wire money to a supposedly private lender, I mean, to begin with the money’s going in the wrong direction. Private lenders wire money to your real estate attorney. You don’t ever, you don’t handle it. You don’t start sending any money to a private lender until after the deal is closed. Right? You don’t send any money. You don’t send any money to a hard money lender. Alright? You don’t send any money to a private lender. You don’t send any money to any lender, okay, before you purchase the house, period. Right? So, I mean, you wire that money to a supposedly hard money lender or private lender before you purchase that house. Guess what? They will disappear into thin air, like magic. I mean, you’ll reach out to them. They’re not responding. I mean, they are like gone, right? And you just got scammed, right?
Jay Conner (17:28):
So how is private money supposed to work in the right way? Legal, ethical, honest, everything above board. Here’s the way it works. Whether you have attracted these private lenders into your world or not. Okay. So somebody just shared something here. Maybe a story here. Yeah, Elaine. Hey Elaine, good to see you. Sorry I had to lean up here to get my glasses on. Elaine says, “I get emailed all the time. 100% financing.” There you go. If somebody is emailing you, offering a hundred percent financing, you know it’s a scam, right? “They’re not looking for money. Is that a scam? How can they do that?” Here’s what I want you to do, Elaine. I want you to forward one of those emails that you got, I want you to forward one of those emails that you have received offering you a hundred percent financing, and I want to review it.
Jay Conner (18:23):
In fact, I’ll review it. I’ll come back here on the next Free Coaching Friday and I will dissect that email that you received. Here’s the email address. I want you to send it to my assistant here at the office. Ashley Jacks. Her email address is Ashley@JayConner.com. Forward one of them emails, Elaine, and I’ll get it reviewed and give a report back to everybody here on Free Coaching Friday. But how is, how, what’s the right way for private money to work? Well, here’s the deal, whether you’ve attracted them yourself, okay, or whether they were referred to you or whatever, the way it works is, no, they send the money. They send the money. And by the way, Elaine, 100% financing.
Jay Conner (19:19):
When we do private money deals, we always get a hundred percent financing. We always get a hundred percent financing, but we get that. And we always borrow more than we need to buy the house. But we’re doing that business with people that we know, and we’re not sending them again. We’re not sending them any money up front, right? So here’s the way it works, the right way that everybody’s protected. You have a deal when you got a house that you want to buy, you got it under contract, your real estate attorney checks the title, right. You know exactly what the funding that you need for the deal. Okay? And right before closing, you have your, you instruct your private lender, or actually your real estate attorney will send your private lender wiring instructions for the private lender to wire the money to your real estate attorney or your title company.
Jay Conner (20:22):
Whoever’s doing your closing. Now here, the money comes in. The money comes in, all right? Now, your real estate attorneys got it. Now the closing happens. You close on the deal. Now, since you borrowed more than you’re going to need to purchase the house, you’re going to bring home a check, right? Particularly if you’ve got a rehab involved. Now, your personal private lender, not a hard money lender or broker or institutional money, but your personal private lenders, they don’t get any money from you, period. They don’t get any money from you until you start making payments. If you’re making payments, you know, we can structure deals in different ways. We can make, you know, sometimes the private lender needs monthly payments. Of course, if we’re making payments, it’s always interest-only. It’s always interest-only payments. That’s a win for the private lender. That’s a win for you.
Jay Conner (21:15):
It’s a win for them because they make more money because they’re keeping all of their principal invested with you until they cash out and you sell a house. And it’s a win for you because interest-only payments are, you know, smaller than principal and interest. It helps your cash flow. So the private lender doesn’t get any money. And this is, and this is one, you know, private lender in your own network. They don’t get any money. You start making payments and you cash them out. Now, let’s say you borrowed hard money, okay? Let’s say you borrowed from a conventional lender, all right. Now, again, they don’t get any money. They don’t get any money until you close the deal. Now, if it’s a traditional lender or a hard money lender, they are going to be charging points, right? They’re going to be charging origination fees, same thing, points, origination fees, same thing.
Jay Conner (22:07):
You may be paying 2%, right? But whatever they charge, and then of course we’ve got, they’ve always got these fees called “jump fees,” right? They call them different things like processing fee, application fee, underwriting fee. I mean, let your creativity go wild. And you got all kinds of fees that they’ll have that they’re collecting, but here’s the catch. All right? The traditional or hard money lenders, they get paid from the real estate attorney. That’s a writer-downer right there. You don’t pay them what you are paying them. It’s coming. It’s being deducted from your proceeds, from your real estate attorney’s closing. So here’s the one. Follow the money, follow the money. Here’s how the money goes, right? The traditional or hard money lender wires the money to your closing agent, to the real estate attorney for the purchase of this property.
Jay Conner (23:07):
Okay? Now you have the closing right now. Since you borrow more than you need to buy the house, then you should get a check. You should get a check after closing. Now if it’s a hard money lender, traditional lender, then you’re going to have to bring some money to the table. You may have to get some private money in second position or whatever cause the hard money lender, traditional lender, is not going to fund 100% of the deal. They’re just not. They might fund 80% of the deal, but you have to come up with a different 20% or whatever is missing. But as far as how do they get paid? They get paid from your real estate attorney. They get paid from your closing agent. When I say closing agent, real estate attorney, same thing. Because your closing agent might be a title company.
Jay Conner (23:57):
So they’re going to get paid. They’re going to get their application fee and processing fee and underwriting fee and all that. And all that’s disclosed on the HUD settlement statement. All that’s disclosed and you should see what all those fees are before you go to closing. But again, here’s the bottom line. Let’s don’t, let’s don’t complicate this. It’s simple. And here’s the simple thing for you to understand. You will know and you will spot a private lender scam if they ask you or, and/or require you to send any money to them prior to your real estate attorney closing the deal. That’s it. That’s it. So my advice is never, as in one more time, never send money upfront to, you know, the lender. I mean, they’re in the business of lending money. So they’re going to lend the money, they get paid after the deal is closed.
Jay Conner (25:00):
Well there you have it folks. Wow, we’ve been going almost 30 minutes here on Free Coaching Friday. Let me ask you to tell me something. So if you learned something at all in this Free Coaching Friday, this works, whether you’re watching the replay or you are watching live on the live stream, type in the comment bar right now, “I love it.” I love it. So let’s say your, Scott says there are several companies that call themselves private lenders, but they only fund 90% on purchase and require, let’s see here, and they require, that’s a long message from Scott and they require, what does it say here? They require pre-qualification with credit checks, must have good scores, and they want 2 months’ worth of bank statements. These are not semi-private lenders. To me, more like hard money lenders. “Is the term private lender ambiguous?”
Jay Conner (25:52):
:Is use of the term ‘private lender’ not regulated in the industry?” Scott, that’s the best question I’ve been asked today. You’re exactly right. The term ‘private lender’ is defined differently by different people, right? So, hard money lenders or traditional lenders, a lot of times will call themselves ‘private money lenders.’ And then the term ‘private lender’ is not regulated within the industry. I mean, it’s like, there’s like these terms like fly all around, right? So, hey, hard money lenders may call themselves a private money lender. And here’s why they do that. The reason they do that is, first of all, they want it to sound like it’s real easy money, right? But in essence they really are. They really are loading out private money. There are, these hard money lenders are loaning money. They go raise money, right? So, and I’ve got great friends that are hard money lenders and brokers that are ethical and honest and all above board, right?
Jay Conner (27:00):
I’m just doing the business this way. I’m saving a lot of money and putting it in control and that kind of thing. But when these hard money lenders call themselves ‘private money lenders,’ they really are. They’re loaning private money, but what did that, what did they do? Right? And again, there’s nothing illegal about this. It’s just a more expensive way for you to do business, right? But what they do is they go out and raise private money from private lenders, individuals. All right? And they have these individuals, private money lenders invest in a fund and they’ll have different kinds of funds, right? So, those funds have to be approved by the security, by the SEC, the Security Exchange Commission, right? I mean, to get one of those, it’s called a “Private Placement Memorandum.” And for them to get one of them approved, I mean, they’re going to spend 30 or 15 to $30,000 with an SEC attorney to even get that in place to where they can offer individuals to invest in the fund.
Jay Conner (28:02):
So back to your question, Scott, and by the way, anybody, if you’ve got some questions here on Free Coaching Friday, go ahead and type them in the question bar. I mean, I’m not under the deadline. I don’t have to like to shut her down right now. If anybody’s got a question, I’ll do my best to get an answer right now. Just type it in the comment bar. And look, if you’re watching the replay, you got a question, type your question in the replay and I’ll still answer questions. It just won’t be live. I’ll be typing them in the comment bar. So in our world, Scott, private lenders are defined as the individuals, mom and pops, individual people that we are doing business with directly. And by the way, Scott, I don’t want to take my hat. Now if I had a hat on, I’d take it off.
Jay Conner (28:47):
But I want to congratulate you. Scott. Listen, folks. Scott just did. Thank you for the thumbs up. In fact folks, if you’re loving it, if you’re learning anything, send me a bunch of thumbs up and a bunch of love right now. And better yet type in the comment bar, “I love it.” But I’m going to congratulate you, Scott. I want to congratulate you. Scott did a webinar just this week, Scott did a webinar just this week and on the webinar had some fantastic guests and the purpose of Scott doing that webinar was to teach people in his warm market that he has an association with to teach him what private money is and what private money is all about and to teach them the private lending program. And my lands, Scott, you already got people texting you before the webinar was over, I think, saying, “Hey, I got, you know, so many hundred thousand dollars in a year, blah, blah, blah, blah, blah.”
Jay Conner (29:36):
Anyway, you did a fantastic job on that webinar, Scott. I was excited to attend that with you, but yeah, the definition in our world here. In our world, the definition of a private lender is we’re doing business directly with the person, not a company, not an institution, not a bank. We are doing business with the person individually that is loaning our LLC, our entity, the money. And a hard money lender, most of the time, is the definition of that, a hard money lender is a broker of money. So the hard money lender is like the middle person. If you will, the lender will go, will go raise money, right? Then, as I say, I got a lot of friends that are in that business and they raised the money.
Jay Conner (30:38):
They get the money in the fund. So those private lenders will not be getting an individual note in an individual deed of trust or mortgage, like we give them, right? I mean, you all know this. When we’re borrowing money as a real estate investor directly from the private lenders right now, we’re going to give them a promissory note. And these documents are prepared by our real estate attorney, by your real estate attorney, right? And they’re going to get that real estate to collateralize the note, right? So we’re not borrowing unsecured money. Now, when a hard money lender goes out and raises money for a fund, then the security that the private lender has, it’s investing in that fund, the security they have are the documents. So they’re not getting a mortgage. You know, in our world, private lenders, they can foreclose on the properties that we do if we don’t pay them.
Jay Conner (31:37):
And you know, a lot of times I get questions from new real estate investors, they say, “Well, Jay, who’s going to lend me money and I’ve never done a deal? Who’s gonna lend me money and I’ve never done a deal?” Well, here’s the answer to that question. If you don’t pay the private lender, the property does. There’s the answer right there. You see the reason private lenders loan us money on our deals is because we are collateralizing that note. Private money is a collateral deal, right? And by the way, just so you understand, the private lender does not own the property. Okay? We’re not doing joint venture deals. The private lender does not own the property. You own the property, your company, your LLC, your land trust, whatever entity you’re using, you own the property. All right? I don’t see any other questions coming in right now.
Jay Conner (32:34):
You’re on the live stream. So I really love hanging out with y’all on another Free Coaching Friday. We got a lot of people here right here on the live stream that are tuning in. And if you enjoyed Free Coaching Friday here today, right now in the comment bar type in, “I love it.” And I’m going to shut up and just make sure I’m not missing any comments. I’m missing a ton of comments. We’ve got Crystal Coleman. Hey, Crystal! Oh, here’s some questions. Here we go. Penny Justman. Here we go, Penny. “How many fees are acceptable or normal course of business?” Okay. Fees, Penny. That’s like a fantastic question.
Jay Conner (33:29):
Penny, “How many fees are acceptable or normal course of business?” Well, here’s the deal. It depends on where you borrowed the money from when you’re borrowing money, Penny, from a private lender, I mean a true private lender, not a broker, not a middle-person. Okay? When you’re borrowing money directly from a private lender or private lenders, there are zero fees, right? There are zero fees and here’s the deal. You see, there’s 3 categories of where you get private money. There’s people in your own warm market. At my upcoming live event, the Private Money Academy Conference, I’m going to be having a whole networking session at the conference on, well, how to grow your warm market. How to network. Networking is very important. And the third category are existing private lenders. Okay? So when you’re doing business directly with individuals that are not institutions, there are no fees, no origination fees, no points, no nothing.
Jay Conner (34:40):
Right? That’s one beautiful thing about private money. Again, if you just joined the live stream, let me shift my book to you. The book is free, a couple of bucks for shipping, but you can get it at www.JayConner.com/Friday. And I’ll ship this book out to you. This teaches you exactly how I did business and locate individuals, private lenders. Now, Penny, fees. If you are borrowing money from a hard money lender, really the bottom line answer is what’s acceptable. What’s, whatever you’re willing to accept. But the other part of your question here is, “or normal course of business.” So let me tell you what would be a normal course of business, for sure. No more than 2 points. No more than 2 points or the origination fee would be 2 points.
Jay Conner (35:38):
Now, how do you calculate points? Well, a point, okay. A point is every point is 1% of the amount of money you’re borrowing. Okay. So if you’re borrowing a hundred thousand dollars, okay, 1 point would be $1,000 in origination fees. If it’s 2 points, $2,000. 3 points, $3,000. And again, that’s borrowing a hundred thousand. If you’re borrowing 200,000, you know, 1 point is 2,000. 2 points is 4 and 3 points is 6,000, right? So the normal course of business is going to be right around 2 points right now. I’ve got some good friends that are hard money lenders that will charge 3 points, right. But I really don’t know any that are doing less than 2 points. Now that’s not going now, Penny, that’s not going to be the only fee. Okay. That’s not going to be the only fees that are on there.
Jay Conner (36:40):
Then we’re going to have these other fees that they’ll call all kinds of names – underwriting fee, processing fee, application fee, and they’ll have them line item all those other fees. Okay. Should not exceed another 1% at the very high end, right? Like, I’ll see underwrite, I’ll see underwriting fees that are like 600 bucks, right? Application fee, maybe 200, 300 bucks. Again, you’re not paying any of that folks. Never, never, never. You’re not paying any of that prior to you purchasing the property at closing and you’re closing agent or real estate attorney then pays or deducts that from the proceeds and sends that money back to whoever’s loaning the money. So, Penny, an excellent question. And you’re doing business directly with private lenders, no fees. Okay. Institutional 2 points and then no more than another 1.01% for all these other fees.
Jay Conner (38:29):
And just one last time before I wrap it up, if you just tuned in, I’m giving away my book, right? “Where To Get The Money Now,” it’s all about raising private money and you can get it at, in fact, somebody that’s on here right now, somebody that’s on here, anybody that’s live right there who is saying hi, I got a bunch of people coming in right now. Hey there, Ted. My lands, Ted. I haven’t seen you in a while. Welcome to Free Coaching Friday. The URL where people can get the free book type is www.JayConner.com/Friday.
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