In a recent episode of the Raising Private Money podcast, Jay Conner delves into the inspiring journey of Jonathan Broyles, a real estate investor from Lexington, Kentucky. Jonathan and his wife Cara have been making waves in the industry since attending Jay’s live private money conference in February 2022. With a remarkable track record of closing 17 deals and raising nearly $2,000,000 in private funding, Jonathan shares valuable tips and insights on leveraging private money for real estate ventures.
Understanding Private Money in Real Estate
Private money is a powerful tool for real estate investors looking to bypass traditional banking methods. Unlike loans from banks or hard money lenders, private lending involves securing funds from individuals who act in the capacity of a bank, offering investors flexibility, speed, and fewer restrictions on their transactions.
Jonathan, in his discussion with Jay, highlights the simplicity and efficiency of using private money. The traditional bank processes are often slow and laden with bureaucracies, which can be a hindrance for investors needing to move quickly on a property. Private lenders provide a smooth, straightforward financing process, allowing investors like Jonathan to close deals efficiently and with confidence.
The Role of Private Lenders
Private lenders are typically everyday individuals dissatisfied with the returns from traditional investments such as CDs, money markets, or volatile stock markets. By investing in real estate through private lending, they secure a consistent and often higher rate of return, backed by the real estate itself.
Jonathan emphasizes the importance of building relationships with these lenders. For him and Cara, the goal is to offer financial opportunities that benefit the lenders, creating a win-win situation. They source funds from savings accounts, money markets, and retirement accounts, transforming these into lucrative investments for their private lenders.
Real-Life Impact: A Case Study
Jonathan shares a compelling story of one of their private lenders, a widow who was previously earning a meager $750 annually from her money market investments. By shifting her funds to a private lending structure with Jonathan and Cara, her annual earnings skyrocketed to over $12,000. Such impactful changes illustrate the profound difference private money can make not only for investors but also for the lenders themselves.
Benefits for Investors
Jonathan explains how private money offers several advantages over traditional financing for real estate investors. Firstly, it provides unparalleled speed, an essential aspect when competing for properties, especially those requiring quick solutions. Secondly, there are no limitations on the number of ongoing deals, offering investors the flexibility to expand and diversify their portfolios.
Furthermore, using private money allows Jonathan and Cara to adhere strictly to financial safety measures for their investors. They ensure deals are never over-leveraged, maintaining a robust equity cushion and securing investments with mortgages similar to banks.
A $1,250,000 Deal: A Walkthrough
One of Jonathan’s most compelling examples is a current deal with an after-repaired value of $1,250,000. He explains their meticulous process: starting with finding the property through a reputable wholesaler, assessing the extent of necessary repairs, and calculating precise offer limits based on potential returns and costs.
Even when the wholesaler’s asking price was significantly higher, Jonathan and Cara’s disciplined approach, sticking to their formulated offer based on realistic repair estimates and conservative valuations, paid off. The wholesaler eventually agreed to their terms, demonstrating the power of adhering to solid financial principles.
Final Thoughts
Jonathan Broyles’ journey showcases how leveraging private money can revolutionize real estate investing. His focus on ethical practices, financial safety for investors, and creating mutually beneficial relationships with private lenders embodies a model strategy for aspiring and seasoned investors alike. For those interested in this transformative approach, reaching out to professionals like Jonathan and Cara Broyles can open new doors to successful real estate ventures, offering both investors and private lenders a path to secure, profitable futures.
10 Discussion Questions from this Episode:
- How did Jonathan Broyles and his wife Cara become interested in real estate investing, and what role did attending Jay Conner’s event play in their journey?
- What are some of the key advantages of using private money for real estate deals, as highlighted by Jonathan in this episode?
- Discuss the types of individuals who qualify as private lenders in the context of Jonathan and Cara’s real estate investments. How do they differ from traditional institutional lenders?
- According to Jonathan, what factors make private money a more appealing option compared to traditional bank loans or hard money lenders?
- Jonathan mentioned a widow whose annual income significantly increased through private lending. How does this story highlight the potential benefits private lending offers to everyday investors?
- Explore the process Jonathan and Cara underwent to negotiate the purchase of the $1,250,000 property. What strategy did they use to justify their offer?
- What are the steps Jonathan and Cara take to ensure the safety and security of their private lenders’ investments?
- How does the use of private money allow Jonathan and Cara to be more nimble and flexible in their real estate investment strategy?
- What steps do Jonathan and Cara take to evaluate and ensure the profitability of a real estate deal, as illustrated by their approach to the $1,250,000 deal?
- Reflect on the ethical considerations of real estate investing and private lending that Jonathan and Cara emphasize in their business practice. How do they balance business interests with providing value to their private lenders and the community?
Fun facts that were revealed in the episode:
- Jonathan and Cara Broyles have closed nearly $2,000,000 from private lenders since starting real estate investing in February 2022, despite beginning their journey by attending a live private money conference in that same month.
- Jonathan and Cara were able to negotiate a purchase price with a wholesaler significantly lower than the listed price, from $672,000 to $560,000, demonstrating their commitment to sticking to their financial safety limits.
- They have already done approximately 17 real estate deals and are working on a $1,250,000 project, showing rapid progress and success in their real estate investment journey in a relatively short period.
Timestamps:
00:01 Insights on Raising Private Money
03:33 Real Estate Venture with Jay
08:29 Lender Investment Security Measures
11:57 Improved Returns for Private Lenders
13:37 Advantages of Private Lending
17:00 Connect with Jonathan Broyles:
https://www.GoldenRodInvestments.info
19:39 Property Assessment: High Potential Area
20:21 Evaluating Extensive Repair Needs
26:39 Effective Property Price Negotiation
28:48 Lender Commitment Limits Negotiations
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