When it comes to real estate investing, one of the most common hurdles is securing funding. Many aspiring investors are intimidated by the strict requirements and drawn-out processes of traditional lenders. On a recent episode of “Raising Private Money,” Jay Conner sat down with Michael Smith to share game-changing insights on how private money can propel your investing career—and how you can secure it without ever asking for a loan.
The Turning Point: From Banks to Private Funding
Jay Conner recounts his early days navigating the world of real estate investment. Initially relying on banks and mortgage companies, he faced a major setback in January 2009—the global financial crisis shut down his line of credit overnight.
Instead of giving up, Jay asked himself a powerful question: “Who do you know that can help fix your problem?” This shift in mindset led him to discover private money, an approach that forever changed his career trajectory.
Through education and networking, Jay was able to raise over $2 million in new funding—without asking anyone for money outright. As he puts it, “In fact, I don’t ask anybody for money. Today, I’ve got 47 private lenders that are funding our deals without ever asking for money. I never pitch a deal.” The secret? He became a teacher, educating potential lenders about the opportunity instead of selling or persuading.
Teaching the Opportunity: The “Private Money Teacher” Approach
Rather than chase investors or beg for funds, Jay Conner recommends a teaching approach. In this world, the investor defines the terms—interest rates, loan-to-value ratios, note length, and frequency of payments—in advance. For Jay, that means paying an attractive 8% interest to his private lenders and limiting borrowing to 75% of the after-repaired value of a property.
He stresses the importance of separating two conversations: first, teach the opportunity and program; second, once a potential lender is educated and interested, bring them a deal that fits the criteria. Jay’s exact script for putting a lender’s money to work is simple: “Mike, I’ve got great news for you. I can now put your money to work. I’ve got a house under contract... with an after-repaired value of $200,000. The funding required for the deal is $150,000…”
The key here is that his lenders have already been educated. There’s no selling, no chasing—just fulfillment of a promise.
Protecting Lenders and Structuring Deals
A major concern for both sides is risk. What happens if a deal falls through? Jay Conner explains that his private lenders are protected similarly to banks, with asset-backed debt secured by a mortgage or a deed of trust. They’re named on the insurance policy and title, ensuring recourse if the borrower fails to perform.
This approach distinguishes “one-off” deals from larger projects requiring SEC compliance. In single-family home investments, which are Jay’s specialty, the deals are asset-secured and private lenders receive steady, predictable returns—rather than a share of potentially fluctuating profits. The conservative borrowing limit of 75% of the after-repaired value means lenders have a substantial equity cushion.
Where to Find Private Lenders
Jay categorizes sources of private lenders into three groups:
Your warm market: friends, family, and personal connections.
Expanded warm market: networking groups like BNI (Business Networking International) and community organizations.
Existing private lenders: people already investing in real estate, often identified through self-directed IRA companies or public records.
He advocates growing your network and volunteering for roles that allow you to educate others.
Jay’s Formula for Deciding Your Maximum Purchase Price
Don’t let emotions cloud your buying decisions. Jay shares a simple math-based approach: multiply the after-repaired value by 70%, subtract estimated repairs, and if that value is below $300k, subtract an extra $10,000 to safeguard against the unexpected. This math-based formula protects both the investor and lender.
Final Thoughts
Jay Conner’s experience proves that private money can be a reliable, flexible, and abundant source of funding for real estate deals. By owning the “real estate between your ears,” educating your network, and structuring deals to protect all parties, you can invest confidently—without relying on banks or sacrificing time to red tape.
Ready to learn more? Jay Conner encourages investors to grab his free book at www.JayConner.com/Book or tune into his podcast, “Raising Private Money,” for further education and inspiration.
10 Discussion Questions from this Episode:
The episode emphasizes letting “the math, not your emotions,” guide real estate investing decisions. Can you share examples from your own life—or imagined scenarios—where emotions could lead you astray in investing?
What are the key differences between raising private money and relying on traditional institutional lenders? How did this shift impact the business after the 2009 financial crisis?
There is an emphasis on asking “who” rather than “how” when solving funding challenges. How does this approach change the way you think about building your network and seeking resources?
The episode introduces the concept of self-directed IRAs for real estate investing. What risks and benefits do you see in using retirement funds in this manner?
Why is it important to wear a “teacher hat” instead of a “salesperson hat” when approaching potential private lenders? How might this philosophy create better relationships?
The podcast discusses the need to keep the “initial conversation” with a private lender separate from discussing specific deals. Why is this separation so critical, and how could mixing them jeopardize the transaction?
Protections for private lenders, such as deeds of trust and insurance policies, are outlined. How do these mechanisms safeguard lenders, and what additional assurances might you want if you were in their shoes?
For someone without an immediate network of friends or family with capital, what three categories of private lenders are suggested? Which do you think might be most accessible or effective for a beginner?
How does joining organizations like BNI (Business Networking International) help scale and expand one’s network of potential private lenders?
The episode provides a detailed formula for calculating the maximum allowable offer on a property. How might this formula protect investors and lenders, and could you foresee any limitations or challenges if the market shifts?
Fun facts that were revealed in the episode:
Jay Conner raised over $2,150,000 in private money after being cut off by his bank in 2009—more than doubling the funding he previously had access to with traditional loans.
Jay Conner has flipped over 500 houses in a small market with a population of only 40,000, consistently averaging two to three deals per month with average profits of $86,000 per deal.
Jay Conner never asks anyone directly for money when funding real estate deals; instead, he puts on his "teacher hat" and educates potential lenders about the opportunity, leading to 47 private lenders funding his deals without pitching or begging.
Timestamps:
00:01 Unlimited Real Estate Funding
03:33 Big Fish, Small Pond Strategy
08:05 Discovering Private Money Lending
10:33 Teaching Private Money Opportunities
16:01 Private Lending via Self-Directed IRA
18:01 Fund My Deal Next Week
21:18 Private Money for Real Estate
24:31 Passive Lending Success Overview
28:06 Three Categories of Private Lenders
30:47 Networking for Private Lenders
34:07 Private Money Loan Expectations
38:26 Property Renovation Costs Explained
41:20 Calculating Maximum Property Offer
43:46 Entry-Level Housing Market Insights
Free Report:
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.
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