***Guest Appearance
Credits to:
https://www.youtube.com/@garretwong
“Startup Funding Explained: Everything You Need to Know”
https://www.youtube.com/watch?v=TzU9FmuVRDM
In the ever-evolving world of real estate investing, access to capital can make or break a deal. But what happens when traditional funding sources dry up or become too restrictive? This was exactly the dilemma faced by Jay Conner, a seasoned real estate investor in Eastern North Carolina, whose journey and strategies were explored in depth on a recent episode of the “Investing to Win” podcast with Garret Wong.
From Banks to Private Money: Jay’s Turning Point
For the first six years of his real estate career, Jay relied solely on institutional financing—local banks and traditional money sources to fund his single-family home deals. But as the 2008-2009 financial crisis arrived, Jay, like many investors, found his credit lines abruptly closed by the bank, jeopardizing multiple deals overnight. Instead of throwing in the towel, Jay asked himself a powerful question: Who do I know that can help me with this problem?
That introspection led him to Jeff Blankenship, a fellow investor who introduced Jay to the world of private money and self-directed IRAs. This new approach, Jay quickly learned, didn’t depend on bank approvals or credit scores but rather on relationships and transparency.
What Is Private Money?
Private money, as Jay describes, is direct investment from individuals, not institutions or hard money lenders. It’s a one-on-one relationship where investors loan funds secured against real estate, often using capital from personal savings or retirement accounts. Unlike hard money brokers who pool funds into lending operations (and charge higher rates and fees), true private lenders work directly with the investor.
Jay emphasizes that private lenders come from all walks of life. Most of his 47 active private lenders wouldn’t consider themselves sophisticated or accredited; many are teachers, civil servants, and retirees simply seeking better and safer returns on their investments.
Key Benefits of Private Money Lending
Why does Jay champion private money with such passion? He lists several compelling advantages:
- Flexibility and Speed: Without lengthy bank underwriting, deals can often close in as little as five to seven days—sometimes a lifesaver for properties facing foreclosure or competitive bidding.
- Fewer Restrictions: Private lenders don’t cap the number of deals or the size of your line of credit. Jay’s deals frequently involve borrowing up to 75% of the after-repaired value (ARV), and it’s common for him to leave the closing table with “excess cash to close”—funds above and beyond the purchase price, useful for renovations or reserves.
- No Appraisals or Red Tape: Instead of formal appraisals, Jay uses comparative market analyses (CMAs) to justify values to his lenders—trusted personal relationships eliminate most bureaucratic hurdles.
- True Win-Win: Lenders earn higher, predictable returns (Jay typically offers 8% straight, sometimes accruing during a flip or paid out monthly), while investors unlock funding quickly and efficiently.
Building Trust and Educating Lenders
The cornerstone of Jay’s approach isn’t just a promising rate—it’s education and transparency. He never pitches deals out of desperation or attaches a project to an initial conversation. Instead, he teaches potential lenders about the opportunity, shows them exactly how they’ll be protected, and only connects them to a specific deal when it matches what they want.
Notably, Jay suggests that new investors leverage the credibility of an experienced partner or mentor when starting. If you haven’t completed many deals yourself, align with someone who has. You can then confidently tell prospective lenders that you’re working with a seasoned partner who has successfully raised capital and executed deals.
Scaling With Integrity
Jay’s business model emphasizes not overcommitting—he manages the “queue” of available funds to ensure he never borrows more private money than he can put to productive use. Maintaining this transparency keeps his lenders happy and eager to reinvest after successful projects.
Final Thoughts
Jay Conner’s journey underscores the transformative potential of private money for real estate investors, no matter the size of your market or the state of the economy. By focusing on honest relationships, education, and a win-win approach, you can fund deals quickly and build a recession-proof investment business. As Jay puts it, true success is about doing what you love with integrity and creating opportunities for everyone involved.
Ready to ditch the banks? Consider private money, not as a last resort, but as a strategy to “invest to win.”
10 Discussion Questions from this Episode:
- Jay Conner emphasizes the importance of leveraging personal and business relationships when starting in private real estate money. How might someone with no real estate background begin to build credibility with potential lenders?
- The episode discusses the shift from traditional bank financing to raising private money following the 2008-2009 financial crisis. What advantages and challenges does private money offer compared to traditional institutional lending?
- Jay makes a clear distinction between ‘teaching’ about private lending opportunities and ‘asking for money.’ Why do you think this approach resonates so well with potential private lenders?
- Trust and relationship-building are recurring themes. What strategies did Jay mention for establishing trust with private lenders, especially those you haven’t met in person?
- The podcast touches on using self-directed IRAs as a source of private lending capital. What are some potential benefits and risks for both parties in utilizing retirement funds for real estate investments?
- Jay describes always borrowing more than the purchase price, provided the purchase is at a strong enough discount, and bringing home a check at closing. What are the potential pros and cons of this approach for both the investor and the lender?
- The hosts discuss accredited versus non-accredited investors, particularly regarding regulatory considerations. How does Jay structure his deals to avoid SEC complications, and what lessons are there for investors in other countries?
- Garret asks about the logistics of keeping private lenders’ money working continuously. What systems does Jay have in place to manage multiple lenders and ensure they remain satisfied with their investments?
- The episode highlights the importance of structuring deals and protecting both parties through the use of promissory notes and trusted intermediaries like closing attorneys. What risks arise when these safeguards are ignored?
- Towards the end, Jay defines success as “doing what you want, with whom you want, for as long as you want, and having a blast.” How does this broader definition of success influence an investor’s approach to business and partnerships?
Fun facts that were revealed in the episode:
- Small Market, Big Profits: Jay Conner operates in a target market of just 40,000 people in Eastern North Carolina, but still averages $82,000 profit per single-family house flip—proof that you don’t need to be in a big city to make big money in real estate.
- No Down Payment Needed: In Jay’s approach to private money lending, he never takes his own money to the closing table. He often borrows more than it costs to purchase the property, meaning he frequently brings home a check at closing rather than writing one!
- Private Lenders Aren’t Just the Ultra-Wealthy: The majority of Jay’s 47 private lenders aren’t accredited investors or wealthy elites. Many are everyday folks like retired school teachers and civil service workers who simply want better returns on their money outside the stock market.
Timestamps:
00:01 Thriving in Small Markets
06:00 Teaching Private Lending for Success
08:53 Transitioning from Mobile Homes to Real Estate
12:54 Private Lending for Real Estate
14:55 Fast Home Sale via Private Lending
20:07 Real Estate Investment Risks
21:41 Stable Returns with Private Lending
26:08 Ensuring Lender Returns with Property Investments
28:39 Private Lender Queue System Explained
33:39 Conversation Starters for Financial Growth
36:17 Real Estate Referral Opportunity
40:09 Webinar for Raising Private Money
43:22 Partner With Experienced Real Estate Mentor
45:15 Self-Directed IRA Guide
49:45 Private Lender Risk Management”
52:07 Private Money Challenge: 7-Day Course
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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https://www.youtube.com/c/RealEstateInvestingWithJayConner
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