Being cut off from the bank was the biggest blessing in disguise Jay Conner had ever had.
Quitting was never an option for Jay. When Jay lost his line of credit in 2009 he looked for ways to fund his real estate deal. At that time he does not want to lose over a hundred thousand dollars on the two houses that he had just under a contract.
Here began Jay’s greatest mantra, “It Is Impossible For You To Fail Unless You Choose To Quit.”
In this video, Jay Conner explains the greatest difference between Private Money and Hard Money.
He will also share the five steps of the most effective ways in raising private money.
Timestamps:
0:01 – Raising Private Money with Jay Conner: The Origin
1:37– Jay Lost His Line of Credit
2:43 – One: The Most Dangerous Number In Your Business
3:35 – The Biggest Blessing In Disguised
4:47 – What In The World Is Private Money
5:30 – Jay’s Private Lending Program
6:18 – Private Money vs. Hard Money
14:21– Five Steps In Raising Private Money
16:20 – The Secret In Raising Private Money Without Asking For Money
16:42 – Jay’s Free Money Guide: https://www.JayConner.com/Guide
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
https://www.JayConner.com/MoneyPodcast
Jay Conner is a proven real estate investment leader. He maximizes creative methods to buy and sell properties with profits averaging $67,000 per deal without using his own money or credit.
What is Real Estate Investing? Live Private Money Academy Conference
YouTube Channel
https://www.youtube.com/c/RealEstateInvestingWithJayConner
Apple Podcasts:
Facebook:
https://www.facebook.com/jay.conner.marketing
Listen to our Podcast:
https://www.buzzsprout.com/2025961/episodes/11264937
Raising Private Money – The Jay Conner Story – Real Estate Investing Minus the Bank
Jay Conner
00:00:32
I was sitting right here at my desk in January of 2009, and I was so excited here in my real estate investing business because I’d been in the business already for six years. I started in 2003. In the first six years of my business, I was using the local bank to fund my deals. So it was January 2009. I called up my banker, my banker’s name was Steve, and I had had this conversation with Steve many, many, many times. I called him up to let him know about two deals that I had under contract. Now, both of these single-family houses that I had under contract to buy, were worth me over $100,000 in profit. So I called up Steve, we had a little chit-chat like we’ve had many, many times, and I told Steve about these two deals. I told him where they were located, the funding that was required for these two houses for me to purchase, and I was gonna make over a hundred thousand dollars on these two houses.
Jay Conner
00:01:36
When I finished telling Steve about the deals and when I wanted to close, Steve went quiet on me on the other end of the phone, which is never a good sign when your banker goes quiet. He cleared his throat and he says, Jay, I’m sorry to tell you, but we have closed and shut down your line of credit. I don’t know if you’ve ever heard somebody say something to you, and when they said it, it was like your brain and you’re saying to yourself, I can’t believe what I’m hearing. I said, Steve, what do you mean I have lost my line of credit and you’ve shut me down? I’ve never been laid on payments up until that time I had an 800 credit score and I’ve lost my line of credit. What’s going on? He says, Well, Jay, due to the financial crisis going on globally, and you may recall what was going on in 2007, 2008, and 2009, due to the global financial crisis, we are no longer loaning money out to real estate investors.
Jay Conner
00:02:34
That’s exactly what Steve said to me. So I, you know, finished the conversation, I hung up the phone and I sat here at my desk for a moment thinking, What in the world am I going to do? When I was thinking about other options and alternatives to getting my deals funded, and I didn’t want to lose over a hundred thousand dollars on these two houses that I had under a contract, one thought came to my mind, and it was a big lesson that I want you to remember from my mistake. And that is the biggest, or the biggest challenge you can have, the most dangerous number in any business is the number one, only having one contractor. If you’re rehabbing houses, only have one relationship with a realtor, right? Well, I only had one relationship for funding, and that was one banker and one bank.
Jay Conner
00:03:33
And when that was gone, no way to fund my deals. Well, today, and I’ll tell you, being cut off from the bank was the biggest blessing in disguise I’d ever had. Being cut off from the bank in January 2009 has been the biggest blessing and, to my business of anything that’s ever happened. And how is that? Well, I’ll tell you what happened. You know, another mantra that came to my mind when that happened with my bank cutting me off, I remember, and I thought to myself, You know what, Jay? It’s impossible for you to fail unless you choose to quit. And quitting was not an option for me. So I said, Who do I know that is a real estate investor that’s doing very, very well? So I thought of my friend Jeff, who lived in Greensboro, North Carolina at the time. Well, I picked up the phone, I called Jeff, and after we had our pleasantries, I told Jeff what had just happened to me.
Jay Conner
00:04:30
We are being cut off from the bank. Jeff said to me, he says, Well, Jay, welcome to the club. I said, What club Jeff? He said, Welcome to the club of losing yo line of credit at the bank. I just lost my line of credit last week. I said, Jeff, your bank cut you off too. He said, Yes. I said, Well, what are you doing now to fund your deals? And Jeff told me something I’d never heard before. He says, Jay, I am now using private money. And I said, What in the world is private money? I’d never heard of private money. I’d never heard of private lending. Well, Jeff told me all about it and what he was doing. And so I hung up the phone and I started studying private money. I learned that in this world of private money, a lot of it has to do with teaching other people, other individuals what private money is and how they can earn high rates of returns safely and securely by investing their investment capital and or their retirement funds with you, the real estate investor.
Jay Conner
00:05:31
So I stuttered it and I put together what I call my private lending program. My private lending program is what I teach other individuals, other, you know, human beings, what private money is and what private lending is, and how they can make a lot of money. And in fact, in some cases, depending on the type of deal that we structure and the type of private money they have, how they can earn money unlimited per year, tax-free. So I started teaching people how to do that, and in less than 90 days, I was able to attract and raise $2,150,000 in less than 90 days. And so again, it was the biggest blessing. So in this episode, I wanna share with you the five steps, five easy steps that I put together for attracting, and raising private money. And I put it together back then in 2009, and I still use it today.
Jay Conner
00:06:28
But before I go over those steps, I want to be clear with you about exactly what is private money. What are we talking about? And then I want to contrast private money with hard money. How is private money differ from hard money? Because I’m not talking about hard money, I’m talking about private money. So let me define private money, At least in my world, the definition of private money is it is an individual who loans their investment capital, just their liquid funds to you, the real estate investor, and or they may loan to you on your deals, retirement funds by moving those funds to a self-directed IRA company. And I’ll talk all about that. And then they loan this money to you. We give them security, they actually get a mortgage or ADI of trust that secures their note. And so this private lender is doing business directly with you and your company, your LLC, or land trust, whatever entity that you’re buying houses in or buying properties.
Jay Conner
00:07:34
By the way, private money is not only for single-family house investments, it’s also for commercial deals. I mean, you may be interested in investing in apartments or you know, duplexes, you know, small deals, big deals, whatever. It’s all the same money. It’s just a matter of how we structure the deal. So now that we have established that a private lender or private money is you doing business directly with an individual and them funding your deals, then let me go ahead now and contrast private money with hard money. So hard money is typically a broker of money. Hard money is typically loaned out by a brokerage that has gone out and raised private money from private lenders that we’re talking about. And these private money lenders invest the in the hard money lenders’ fund, right? So
Jay Conner
00:08:36
They get a de of trust who secures their note when they’re loaning money to me. But a hard money lender goes out and raises money from private lenders, and then they loan that money out to real estate investors. They are a middle person. They’re making money on money, right? So here are the big differences between private money and hard money. First of all, is the interest rate. Now, let me tell you right now, the average private lender individual in the United States that’s funding real estate deals is getting 8% in interest. And that’s what I pay ’em 8%, okay? A hard money lender right now is anywhere from 12% to 16%, depending on the hard money lender you do. And now there are some exceptions to that. You know, there are some hard money lenders that only charge 10%, but then they have larger origination fees. So the first big difference is the interest rate.
Jay Conner
00:09:38
In private money, the interest rate is much, much lower than hard money interest rates. Secondly, what’s called origination fees. Well, an origination fee is a percentage. It’s also called points. It’s a percentage of the amount that you are borrowing. So let’s say for easy calculation, you’re borrowing a hundred thousand dollars from a private lender. Well, if it’s hard money, you’re gonna be paying on average four points, 4%. You gotta bring $4,000 of your own money to the closing table just to borrow that money from the hard money lender before you start paying 12, 13, or 14% interest, right? Well, in the world of private money, it’s only 8%. So you’ve already got a much lower interest rate. And in the world of private money, there are no points, no origination fees. In all these years, I’ve never paid a private lender on origination fees or points when I am borrowing money.
Jay Conner
01:10:38
So first of all, the interest rate is much, much lower. There are no points in the world of private money. Now, the third big difference between private money and hard money is what’s called extension fees. So you know the normal term or length of a note, when you’re borrowing hard money, the length of that note is going to be six months, maybe nine months. You might be able to get an extension to 12 months. Well, if you haven’t cashed out in six or nine months with a hard money lender, then you have to pay an extension fee with your hard money lender, which on average is going to be about 2% or so. So hard money has extension fees. So now let’s see where you are so far on a hard money loan, if the interest rate is 14% and the points are 4%, you’re already up to 18% in the world of hard money.
Jay Conner
01:11:34
And now 2% to extend the node. If you haven’t cashed out, you are already up to 20% your first year of borrowing money on, you know, borrowing hard money. Well, listen, there are no points with private money, there are no extension fees. You’re still at 8%, right? Now. The next great big difference between hard money and private money is how much money you have to bring to the closing table out of your own pocket when you are purchasing a property. Well, in the world of hard money, they’re only going to advance between 65 and 80% of the purchase price. Well, who’s got to bring the rest of the money to the closing table when you buy? That’s right, you do. You gotta bring the other 20% of the purchase price. Well, guess what? In this world of private money, you don’t ever have to bring any of your own money to the closing table.
Jay Conner
01:12:32
In fact, my favorite reason for using private money is you always get a big check when you are purchasing the property. I mean, who wants to get paid to buy properties and bring none of your own money to the closing table? That’s right, you do. I always bring home a big check when I’m using private money. So the private lender is going to advance always more than I need to buy the property. Now, the reason that’s going to work is that I’m buying properties at, you know, discounted prices, right? That’s why the private lender is willing to loan more than I need to purchase the property. So big difference in interest rate, no points, the amount that you’re going to get advanced, there’s no extension fees. And another big difference between hard money and private money is your credit has got nothing to do with how much private money you can get.
Jay Conner
01:13:31
Your credit score doesn’t matter. It’s because these are collateral loans. And then in addition to that, your verification of income doesn’t matter, right? And I’m telling you, it just puts you in control of your business by you being able to make the rules and not the hard money lender. That’s another big difference. You see, hard money lenders like banks, make the rules as to how much money they will loan to you. They make the rules as to what’s the maximum loan to value. Well, in this order, private money, the private lender isn’t making the rules. You are making the rules. In fact, you see, in this broad private money, there is no application process. You are already approved. Well, I promised you when we started out, I was gonna share with you the five steps that I put together to raise $2,150,000 in less than 90 days when I was cut off from the banks.
Jay Conner
01:14:31
And here they are. The five steps I put together are, number one, I made my list of potential private lenders from my own connections that have relationships. I looked at my cell phone, who was on my cell phone, who was on my email list, who was on my social media, my Facebook friends, my LinkedIn, and my Instagram. So I looked in all the social media who I went to church with, and I put my list together as to who I was going to reach out to and teach them about private money. That was the first step. The second step was I had an opening conversation with them and told them about private money. Now, in episode number two of raising Private Money, I’m gonna be sharing with you exactly what I say to private lenders when I’m talking with them. Step number three is I put together a short little 16-minute audio called Stress Free investing.
Jay Conner
01:15:27
And that was a CD I put together that I handed out that taught people what private money is. And that CD and that recording would lead them back to me for step number four. And step number four is where I actually teach the potential private lender what my private lending program is and how they can earn such high rates of return safely and securely. And the fifth step is the verbal pledge. When I get through teaching them the program, which only takes about 20 minutes, they tell me how much they have to work with. They also tell me if they have retirement funds, and I’m ready to introduce them to my self-directed IRA company representative to where they’ll move those funds over to do business with them. So finally, in this episode, I want to answer the question, how is it that I have raised millions and millions in private money and I’ve never asked anybody for money?
Jay Conner
01:16:22
And here is the secret I put on teacher hat, I put on my teacher hat, and I teach people in my warm market that I have a relationship with, what private money is, how my program works, and how they can make high rates of return safely and securely. So if you are interested in getting all the private money that you could ever want, and you want to get it like really, really fast, and you want to learn what my private lending program is, well, I’ve got a free gift for you that you can download right now. I’m so excited. I just finished writing my new private Money Guide, and it’s called Seven Reasons Why Private Money Will Skyrocket Your Real Estate Business and Help you build Incredible Wealth. You can download my Private Money Guide for free at www.JayConner.com/MoneyGuide. That’s www.JayConner.com/MoneyGuide, and that’ll put you on the fast track to getting private money. I’m so excited that you decided to join me here on the very first episode of Raising Private Money. As I said, in the next episode, I’ll be sharing with you exactly what I say to private lenders and where to find them. I’m Jay Conner, The Private Money Authority wishing you all the best.
Comments