***Guest Appearance
Credits to:
https://www.youtube.com/@multifamilyap360
“How I Raised $2 Million in 90 Days for Property Deals with Jay Conner”
https://www.youtube.com/watch?v=5rzX5J_zDaA
Private money has become a cornerstone for many successful real estate investors. Unlike traditional bank loans, private money offers terms generally set by the borrower, enabling rapid deal closures and often leading to significant profits. Jay Conner, a seasoned expert in private money lending, shares his insights in this enlightening episode of the Raising Private Money podcast.
Understanding Private Money
Jay Conner’s journey into the realm of private money began out of necessity. After his bank abruptly shut down his line of credit during the financial crisis of 2009, Jay had to find alternative funding sources. Fortunately, his close friend Jeff introduced him to the concept of private money — funds sourced from individuals looking to invest their capital or retirement savings in real estate deals. Unlike institutional banks and hard money lenders, private lenders don’t require you to jump through hoops.
Jay emphasizes that using private money is more about educating prospective lenders than making a hard sell. “I put on my teacher hat and started teaching people in my own network what private money is,” he says, which allowed him to raise over $2.1 million in the first 90 days after his bank cut him off.
The Mechanics of Private Money
Terms and Timelines
In Jay’s model, the private money loans he secures are typically for a two-year period. However, the actual use of the money rarely extends that long. Most deals — from acquisition, and renovation, to sale — are wrapped up within six to nine months.
Returns for Private Lenders
Jay started paying his private lenders an 8% annual percentage rate (APR) back in 2009 and remarkably, he still offers the same rate today. One might wonder how he sustains such favorable terms for himself, especially given today’s higher interest rates. The answer lies in two points: first, 8% is still considerably higher than the 4.5% or 5% one might earn through conventional methods like certificates of deposit; second, Jay makes the rules. He sets the terms that allow him to offer 8% because he is not competing with the strict, often opportunistic terms of larger financial institutions.
Finding Success with Private Money
Finding Private Lenders
Jay categorizes potential private lenders into three main groups:
- Warm Market:
People you already know — friends, family, colleagues.
- Expanded Warm Market:
This entails deliberately expanding your network, often through organizations like Business Networking International (BNI), which Jay highly recommends.
- Existing Private Lenders:
These are individuals already lending money to real estate investors, often found through self-directed IRA custodians who offer regular networking events.
Strategies for High-Profit Margins
Jay’s average profit per deal is a whopping $82,000, achieved through two key strategies:
- Targeting Off-Market Properties:
Jay primarily acquires off-market properties via Google pay-per-lead services. These properties, usually owned by motivated sellers, are not listed on MLS, allowing for better deals.
- Quick Closures:
Thanks to private money, Jay can close deals rapidly, often within seven days, which is attractive to sellers in urgent situations, such as impending foreclosures.
The Exit Strategy
Jay’s exit strategy varies depending on how he financed the property. If he financed it with cash through private money, he aims for a quick cash-out by listing the property through his long-time realtor. If he acquired it through creative financing methods like “subject-to” the existing note, he opts for selling the property on terms, like lease-to-own agreements, providing a flexible and often lucrative exit strategy.
Personal Growth and Challenges
Jay’s advice resonates beyond real estate. He advocates daily personal development and reads eight pages of personal development books each day. One transformative book for him was “The University of Success” by Og Mandino. Additionally, Jay shares that his biggest challenge in private money has always been managing more funds than deals, underscoring the importance of getting private money lined up before seeking deals.
Conclusion
Jay Conner’s experiences illustrate that private money is not just an alternative to traditional financing but a superior, more flexible option for real estate investors. Essentially, by educating potential lenders and leveraging quick deal closures, investors can achieve high profitability while maintaining control over the terms. For those looking to delve deeper into this highly effective financing strategy, Jay’s insights and resources such as his book, “Where to Get the Money Now,” are invaluable starting points.
10 Lessons Learned in this Episode:
- **Understanding Private Money**
Gain foundational knowledge on private money—what it is, how it works, and why it’s a game changer for real estate investors.
- **Transition from Banks to Private Money**
Learn the advantages of moving from traditional bank loans to private money, including faster deal closures and more flexible terms that put you in control.
- **Leveraging Self-Directed IRAs**
Discover how to use self-directed IRAs to attract private lenders, offering them high returns and a way to grow their retirement funds through real estate investments.
- **Building and Expanding Your Network**
Strategies to capitalize on your existing relationships and extend your network through groups like Business Networking International (BNI) to find potential lenders.
- **Finding Motivated Sellers**
Techniques for identifying motivated sellers, including the use of Google pay-per-lead to find off-market properties that promise high profit margins.
- **Benefits of Quick Closures with Cash**
How having access to private money allows you to close deals quickly, making your offers stand out in competitive markets and securing better deals.
- **Implementing Creative Financing**
Using methods like buying properties subject to existing notes and selling them on terms (e.g., rent-to-own) to maximize your investment profit.
- **Hosting Private Lender Luncheons**
The effectiveness of hosting luncheons to educate and attract potential private lenders, sharing your investment program while building trust and securing funds.
- **Avoiding the Smell of Desperation**
Emphasizes the importance of raising private money ahead of time, thereby allowing you to negotiate better terms and make more confident offers on properties.
- **Commitment to Personal Development**
The importance of daily habits like reading personal development books to continuously improve your mindset and knowledge base is essential for long-term success in real estate.
Fun facts that were revealed in the episode:
- Jay Conner managed to raise over $2 million in private money within the first 90 days after his traditional bank funding was cut off, showcasing his rapid adaptability and resourcefulness.
- Despite operating in a relatively small market of only 40,000 people, Jay achieves an impressive average profit of $82,000 per deal, demonstrating that significant income is possible even in smaller markets.
- Thanks to his access to private money, Jay was able to close a high-value oceanfront condo deal in just 7 days, even though other buyers had higher offers but couldn’t meet the swift closing timeline he could.
Timestamps:
00:01 – Raising Private Money Without Asking For It
04:28 – Bank shuts down credit, became the biggest blessing in disguise.
06:21 – Private money from individuals gives high returns.
10:51 – 8% interest rate on your investment?
15:42 – Exit strategy relies on funding and method.
18:29 – Expand your network, and BNI groups for connections.
21:54 – Offering high returns on real estate investments.
23:05 – Negotiated higher rate, increased investment to $500,000.
26:54 – Jay Conner’s Book “Where to Get the Money Now.”
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 money or credit.
What is Real Estate Investing? Live Private Money Academy Conference
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