***Guest Appearance
Credits to:
https://www.youtube.com/@scalablerei
“#62 Mastering the Art of Raising Private Money with Jay Conner”
https://www.youtube.com/watch?v=wT7aLflhpVg&t=2s
The journey of a real estate investor is filled with challenges and opportunities, but one challenge consistently stands out: securing funding. In a recent episode of Scalable Real Estate Investing, expert investor Jay Conner shared his story and insights on how private money can transform the trajectory of a real estate business. Partnering with host Mason Klement, they peeled back the layers of what it really takes to raise and leverage private capital.
The Shift from Traditional Lending to Private Money
Funding real estate deals with bank loans is a common starting point, but it can be a risky bottleneck. Many investors, including Jay Conner, have learned the hard way that banks can pull lines of credit suddenly, putting deals and profits in jeopardy. This kind of wake-up call can turn a problem into a golden opportunity—if investors are willing to explore alternatives.
After experiencing this himself, Jay Conner pivoted to private money, assembling a network of individuals willing to lend directly on his deals. Unlike hard money lenders—who often broker funds and charge points—private money involves direct relationships with individuals. The process is not about pitching deals but educating potential lenders about the advantages and mechanics of private lending.
Building Relationships and Teaching the Private Lending Program
Success with private money isn’t about desperately searching for cash once a deal is in hand. Instead, Jay Conner recommends that investors make “the money comes first” their mantra. By having funds lined up and “pledged” before making offers, investors gain confidence and negotiating power. This approach fosters a mindset of opportunity rather than urgency.
The foundation of raising private money is relationship-based. Investors should start by reaching out to their warm market—friends, colleagues, and acquaintances. These are people who know, like, and trust them, making the transition from conversation to funding more natural. The strategy includes teaching these contacts the private lending program, covering the basics: the interest rate offered, the length of the loan, how the lender is protected, and other pertinent details.
Jay Conner advocates never directly asking for money. Instead, the focus should be on informing and educating. By outlining how the process works and the security involved, potential lenders often end up eager to participate, excited by the opportunity for higher, safer returns that traditional investments fail to offer.
Structuring the Deals for Safety and Simplicity
A major selling point for private lenders is security. Lenders receive a promissory note collateralized by the property—usually in the form of a deed of trust or mortgage. They’re also named on the insurance policy and title, protecting their interests comprehensively. Importantly, funds are always wired to a closing agent, never directly to the investor, ensuring transparency and safety.
In structuring these deals, Jay Conner uses a conservative approach, never borrowing more than 75% of the property’s after-repair value. This provides a significant equity cushion, protecting lenders if market volatility impacts resale prices. These practices, combined with the option of interest-only or deferred payments, result in win-win scenarios for both the investor and their lenders.
Finding More Private Lenders and Scaling Up
Beyond personal contacts, investors can expand their networks through organizations like Rotary Club or Business Networking International (BNI). These venues introduce investors to new connections who may be interested in private lending opportunities. Additionally, it’s possible to identify existing private lenders by leveraging data services that track individuals who are already making such loans.
Self-directed IRA holders represent another massive pool of potential lenders. Many of these individuals are searching for better returns on retirement funds, and real estate-backed notes can offer just that.
Mindset and Integrity Lead the Way
At the heart of Jay Conner’s approach is mindset and integrity. Building trust by knowing your program inside out, staying transparent, and doing what you promise cements long-term relationships. Lenders aren’t just investing in deals—they’re investing in you.
Embracing private money isn’t just about funding projects; it’s about liberating your business from traditional limitations, building new partnerships, and creating scalable, sustainable wealth in real estate.
10 Discussion Questions from this Episode:
- Jay Conner shares his experience of losing his bank line of credit in 2009, which pushed him to discover private money lending. How do moments of crisis lead to creative solutions in real estate investing?
- Jay Conner emphasizes the importance of “the money comes first”—lining up funding before finding deals. Do you agree with this approach, or do you think it’s better to find deals first and then secure financing? Why?
- Private money lending is described as distinct from hard money lending. What are the key differences between these two forms of real estate financing according to the episode, and what implications do those differences have for investors?
- Jay Conner discusses teaching potential lenders about private lending programs rather than “pitching deals” or aggressively soliciting investments. How does this educational approach build trust and credibility, and could it be applied to other industries?
- The episode details three primary sources for finding private lenders: warm market, expanded warm market, and existing private lenders. Which source do you think is most effective, and why?
- Jay Conner outlines how private lenders are protected through first lien positions, insurance naming, and other mechanisms. What protections or guarantees would you personally consider necessary before lending capital to a real estate investor?
- The loan-to-value (LTV) ratio is capped at 75% of the after-repair value in Jay Conner’s model. Why might this specific threshold be both beneficial for lenders and limiting for investors?
- Jay Conner and Mason Klement discuss the mindset needed to ask for capital and expand one’s network. What personal or professional barriers exist that might prevent investors from seeking private money, and how can they be overcome?
- There’s a mention of self-directed IRAs as a way for individuals to lend money to investors. What are the unique advantages and potential risks of sourcing private investment capital from retirement accounts?
- Jay Conner stresses trustworthiness and a clear, professional lending program as prerequisites for others to lend money. What actions or documentation can an investor provide to enhance trust with potential private lenders?
Fun facts that were revealed in the episode:
- Jay Conner has been investing in real estate since 2003 and has rehabbed over 450 houses, with his average profit currently at $74,000 per house—even though he invests in a small area with only 40,000 people.
- When Jay Conner lost his line of credit from the bank in 2009, he quickly pivoted to private money, raising $2,150,000 in less than 90 days by teaching 44 new private lenders about his private lending program.
- Jay Conner never pitches deals or asks for money directly—instead, he educates potential private lenders about his program and lets them come to him, creating a win-win situation for both sides.
Timestamps:
00:01 Safe Returns with Real Estate
03:54 From Mobile Homes to House Flipping
06:47 Turning Problems Into Opportunities
09:52 Creative and Cash-Powered Real Estate
14:51 Confidence with Private Funding
19:15 Getting Started with Private Lending
22:34 Profitable Real Estate Funding Tips
24:02 Finding and Approaching Private Lenders
26:31 Finding Private Lenders
32:06 Real Estate Investing by Referral
35:22 Private Lender Protection Explained
39:06 No Fees with Private Lenders
40:41 Networking to Raise Investment Funds
46:01 Benefits of Interest-Only Loans
47:54 Scalable Real Estate Investing
Free Report:
https://www.jayconner.com/MoneyReport
Join the Private Money Academy:
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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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