***Guest Appearance
Credit to:
https://www.youtube.com/@BryceMatheson
“Raising Private Money Without Begging or Selling – with Jay Conner”
https://www.youtube.com/watch?v=q5CLJHif2Rs
When it comes to real estate investment, securing funding is often the most daunting aspect of closing a deal. Jay Conner, a seasoned expert in private lending, offers invaluable insights for both budding and veteran investors. As discussed in a recent podcast hosted by Bryce Matheson, Jay breaks down the art of leveraging private money to fuel real estate ventures. Here’s a comprehensive look at the strategies and insights shared by Jay Conner during the podcast episode.
Understanding Private Money Lending
Private money lending involves securing funds from individuals rather than traditional financial institutions. Jay emphasizes the significant role private money has played in transforming his real estate business, especially when traditional funding routes, like bank loans, become unavailable. For Jay, the journey into private money began out of necessity. In 2009, when his reliable line of credit was abruptly closed, he turned to private money following the advice of a fellow investor friend. This pivotal move not only sustained his business but enabled it to thrive.
The Mindset of a Private Money Teacher
One key takeaway from Jay’s approach is the mindset shift required to succeed in private money lending. He advises that instead of viewing oneself as desperate or in need of begging, one should adopt the role of a teacher. Jay emphasizes educating potential private lenders—ordinary people who might not even realize the potential of their idle funds—about the benefits and mechanics of private lending. This educational approach not only builds rapport but also establishes trust, which is crucial in this domain.
Navigating the Private Money Landscape
Jay shares a strategic method for managing and attracting private lenders without appearing desperate: separating the conversation about the lending program from the deals themselves. This involves first educating potential lenders about the attractive interest rates and security features of real estate investment, based on sound loan-to-value ratios. Only once they express interest does he present them with actual deals. This tactic keeps the process professional and positions the investor as someone offering an opportunity, rather than seeking a favor.
Building and Expanding Your Network
For those concerned about a limited network, Jay suggests building connections through organizations like Business Networking International (BNI), which facilitates leads and introductions within professional circles. Additionally, Jay underlines the importance of using one’s existing community connections, like church groups or local clubs, to identify potential lenders who are seeking better returns on their investments.
Structuring Deals and Ensuring Compliance
In his podcast discussion, Jay mentions the importance of structuring deals appropriately to remain compliant with SEC regulations, especially when involving multiple lenders per deal. By focusing on single-family home investments, he avoids complications with syndication and pooling, offering each lender a direct loan secured by a deed of trust. This approach not only offers peace of mind to the lenders but also simplifies the entire lending process.
Rates, Terms, and Transparency
Despite market fluctuations, Jay Conner has maintained consistent interest rates—8% for first position and 10% for junior positions—since 2009. His transparent method of outlining lender benefits and security measures contributes to building a reliable investor network. Offering features like a 90-day call option for emergencies ensures that lenders feel secure and are more inclined to engage in repeat business.
The Path Forward for Aspiring Investors
For new investors, Jay’s advice is simple yet profound: know your market, understand your program, and adopt the mindset of a teacher. Engage with organizations that can extend your reach and continuously educate both yourself and potential lenders. In doing so, you cultivate a network of funding partners who are invested in your business’s success.
In summary, Jay Conner’s insights provide a roadmap for leveraging private money to fuel real estate success. His methodical approach to fostering relationships and emphasizing education over persuasion underscores the potential of private money to transform an investor’s business landscape, making it a strategy well worth considering for anyone serious about real estate investment.
10 Discussion Questions from this Episode:
- How did Jay Conner’s approach to private money and private lending change after his line of credit was closed by the local bank in 2009?
- Jay mentions the importance of “owning the real estate between your ears” before seeking traditional real estate. How does mindset play a crucial role in raising private money, according to Jay?
- Discuss Jay Conner’s strategy of separating conversations between teaching a private lending program and presenting a deal. Why is this separation important?
- What are the benefits of focusing on being a “private money teacher” instead of a traditional fundraiser in this business model?
- How does Jay Conner manage expectations and communications with lenders who are waiting for their funds to be put to work?
- In what ways do personal networking and community involvement play a role in Jay Conner’s strategy for raising private capital?
- Jay Conner emphasizes the importance of not chasing, begging, or selling when seeking investors. How does this approach impact potential investors?
- What reasons does Jay Conner give for continuing to pay the same interest rates to private lenders despite market fluctuations?
- Discuss the advantages and potential challenges of using one-offs versus establishing a fund for real estate investing, as described by Jay Conner.
- How can involvement in organizations like Business Networking International (BNI) help expand one’s network for real estate investment, according to Jay Conner?
Fun facts that were revealed in the episode:
- Jay Conner has never asked anyone for money directly when raising private capital; he teaches potential lenders about the program and waits for them to express interest.
- Jay Conner has managed to keep the same interest rates for his private lenders since 2009 despite market fluctuations because he sets the program’s terms himself.
- Morehead City, North Carolina, where Jay Conner operates, has a population market of only 40,000 people, yet he successfully raises substantial private capital for real estate investing.
Timestamps:
00:01 Raising Private Money Without Asking For It
06:14 Discovering Private Money Lending
08:07 Private Money Teaching Goal
10:43 Getting Real Estate Deals Funded
15:31 Private Money Strategy for Deals
17:05 Key: Communication with Private Lenders
21:14 Teaching Private Money Lending Basics
26:10 Upgrade Business Operations with Lender
29:03 Collateral Substitution in Real Estate Financing
30:59 Fund Model Benefits vs. Challenges
34:58 Expand Network with BNI
36:59 Networking and Program Knowledge Essentials
40:06 Referral-Based Real Estate Investing Pitch
Private Money Academy Conference:
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https://www.jayconner.com/MoneyReport
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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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