In this episode of the Raising Private Money podcast, Jay Conner, along with co-hosts Crystal Baker and Chaffee Thanh-Nguyen, and guest Jay Mora, delves deep into the essential elements of leveraging private money for real estate deals!
If you’re a real estate investor looking to understand how to raise and use private money to your advantage, this episode offers invaluable insights. The focus is on the common questions private lenders are likely to ask and the strategic importance of setting minimum investment amounts. Below, we break down the key points discussed in this enlightening session.
The Vital Role of Private Money in Real Estate Deals
Jay Conner on the Abundance of Private Money
Jay Conner opens the discussion with a pivotal insight: “There’s more private money than you can use.” He elaborates with an anecdote demonstrating the importance of sticking to a minimum investment amount. Conversations with potential investors often highlight the availability and abundance of private capital waiting to be tapped by savvy real estate investors. Conner emphasizes that understanding this landscape can significantly impact your success in securing necessary funds.
Setting the Minimum Investment Amount
Crystal Baker provides her perspective on setting a minimum investment amount, emphasizing flexibility and the benefits of pooling funds from smaller investors. Crystal mentions her minimum investment amount of $30,000 but points out that combining smaller sums from family members or friends can also work. On the other hand, Chaffee Thanh-Nguyen highlights that the optimum minimum investment amount can vary greatly depending on the location and type of investment. Setting a strategic minimum, usually around renovation costs, can ensure you do not undervalue your services or stretch your resources too thin.
Preparing for Private Lender Questions
Understanding Common Questions from Private Lenders
Jay Conner introduces a pivotal part of the discussion by listing nine questions that potential private lenders usually ask before funding a real estate deal. Based on a recent webinar with potential lenders, Jay emphasizes the importance of being prepared to answer these questions convincingly. “If they’re asking questions, they’re interested in lending you money,” Jay notes, underscoring the critical nature of these inquiries. Crystal Baker and Chaffee Thanh-Nguyen reinforce the need for thorough preparation to instill confidence in potential lenders.
Key Questions to Anticipate
Jay Conner shares the insights from his recent webinar with investors, highlighting that these questions are not hypothetical but come directly from recent interactions. Important questions include:
- What is the timeline for this investment?
- What guarantees or security can you offer?
- How do you determine the value of the property?
- What is your experience in real estate investing?
- How do you handle potential market fluctuations?
Jay advises having clear, honest answers ready, using real-life examples when possible, to build credibility and trust. Chaffee Thanh-Nguyen adds that specificity goes a long way in building lender confidence.
Liquidity and Timeline of Funds
Self-Directed IRAs and Investment Timelines
The episode also touches on another significant aspect: investment timelines, particularly concerning self-directed IRAs. Crystal Baker emphasizes the importance of discussing the timeline and liquidity of funds with investors, especially those considering using retirement funds. Jay Conner acknowledges having both liquid capital and retirement funds, facilitating flexibility in his investment strategies. Crystal points out that while liquid capital can be quickly invested once a deal is available, self-directed IRAs require more structured conversations to determine the next steps and transfer timelines.
Aligning Investment Goals with Timelines
Chaffee Thanh-Nguyen stresses the value of clarifying questions when investors inquire about timelines. Understanding the investors’ goals allows for better alignment and ensures that the investments meet their expectations. This approach not only enhances transparency but also fosters a stronger investor-investee relationship.
Geographic Investment Strategies
Investing Beyond Local Markets
Crystal Baker and Chaffee Thanh-Nguyen discuss their experiences investing in various locations. Crystal outlines her investments in Virginia Beach, Chesapeake, and North Carolina, while Chaffee shares his extensive experience across more than ten states. Jay Conner highlights the importance of assessing property criteria and ensuring the lender’s money is protected, regardless of the investment’s geographical location. This segment underscores the importance of being open to opportunities beyond one’s immediate market, provided due diligence is conducted.
10 Lessons Discussed in this Episode:
- Private Money Foundations
Delve into the critical importance of leveraging private money to finance real estate deals, exploring foundational concepts and benefits.
- Navigating Webinar Content
Jay Conner introduces the topic and shares nine essential questions private lenders will ask before funding a deal, based on his recent webinar experience.
- Insights from Live Webinars
Gain valuable insights from Jay’s live webinar, where potential lenders raised pivotal questions—a must-know for any real estate investor.
- Answering Lender Questions
Learn how to prepare and articulate answers to common queries from private lenders, ensuring you signal genuine interest and credibility.
- Host and Guest Exchanges
Engaging discussions between hosts and guests, exploring additional questions and considerations new private lenders might have.
- Profile of a Successful Investor
Meet Jay Mora, a high-volume wholesaler and fix-and-flip expert, and learn about his successful investment journey and key takeaways.
- From Realtor to Wholesaler
Gain insights into Jay Mora’s transition from a traditional realtor to a high-volume wholesaler and fix-and-flip investor, highlighting pivotal moments and lessons learned.
- Managing Multiple Lenders
Understand the dynamics and strategies of working with multiple private lenders, and how to address their specific questions and concerns.
- Investment Timeline Clarity
Crystal Baker explains how to address private lender inquiries about investment timelines and fund liquidity, ensuring clear and effective communication.
- Actionable Steps for Investors
Learn strategies for mobilizing investment capital and preparing liquid funds for real estate deals, emphasizing practical steps for immediate application.
Fun facts that were revealed in the episode:
- Diverse Investment Locations:
Crystal Baker invests in a range of locations, including Virginia Beach, Chesapeake, Portsmouth, Isle of Wight County, Suffolk, and even across state lines in North Carolina. She highlights how diverse investment locations can mitigate risks and maximize opportunities.
- Pooling Funds with Family:
Crystal shares an intriguing strategy of pooling smaller investment amounts with family members to meet the minimum investment thresholds. This collaborative approach allows those with limited funds to still participate in lucrative real estate deals.
- Investing Outside Local Area:
Chaffee Thanh-Nguyen reveals that he has bought and sold properties in over 10 different states. He justifies this strategy by emphasizing the importance of selecting properties based on criteria that protect the lender’s money, showcasing how geography doesn’t limit successful real estate investing.
Timestamps:
00:01 – Raising Private Money Without Asking For It
03:18 – Prepare for potential lender questions from the webinar.
09:48 – Invest your capital and set up a call.
10:38 – Answer with a clarifying question for clarity.
13:51 – Investor need to know their timelines well.
20:07 – Establish minimum amount based on renovation costs.
22:03 – Consider smaller amounts for foreclosure property buying.
27:10 – “Truth always guides investment decisions in all markets.”
28:04 – Private lenders seek secure investments in individuals.
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