Guest Appearance
Credits to:
https://www.youtube.com/@EliteOnlinePublishing1
“How to Fund Real Estate Deals Without Banks with Jay Conner”
https://www.youtube.com/watch?v=hSAmIyDiKpc
Navigating the world of real estate investing can be daunting, especially for those just starting out or for investors who face challenges securing traditional financing.
On the Raising Private Money Podcast, Jay Conner, a seasoned expert in private lending, and Melanie Johnson demystify the process of raising and leveraging private money. The conversation explores strategies, safeguards, and mindset shifts that have propelled Jay’s real estate career and can help others do the same.
Private Money vs. Hard Money: Understanding the Difference
One of the key points Jay highlights is the fundamental distinction between private money and hard money lending. Hard money typically comes from institutional lenders or brokerage firms that pool funds from investors and lend them out at higher interest rates, often accompanied by fees and points. While hard money serves as a commercial option, it tends to involve more rigid underwriting and less flexibility for individual borrowers.
In contrast, private money is a one-on-one transaction where funds are sourced directly from individuals. These private lenders might be friends, family, colleagues, or contacts from expanded networks. They offer greater flexibility and often better terms. Jay emphasizes that building a base of private lenders requires education and trust, allowing investors to secure capital without the layers of bureaucracy and expense associated with institutional loans.
Building a Niche in Real Estate: The “Big Fish in a Small Pond” Approach
Jay’s journey into private money began when traditional lines of credit vanished during the 2008 financial crisis. This pivotal moment forced him to rethink his approach and seek more resilient funding options. Operating in a small market in Eastern North Carolina, Jay discovered that being a “big fish in a small pond” enabled him to dominate his niche, consistently performing two deals per month with impressive average profits.
This strategy underscores a core lesson for investors: rather than competing in crowded markets, focus on a specific niche or geographic area where your efforts can stand out. Establishing expertise in a smaller market allows for deeper relationships, more reliable deal flow, and higher profitability per transaction.
Protecting Private Lenders: Safeguards and Transparency
For anyone considering borrowing or lending through private money, trust is paramount. Jay details rigorous protections he offers to private lenders, mirroring those required by local banks. These include naming lenders on insurance policies and title insurance documents, ensuring their investment is backed by tangible assets and protected against unforeseen events.
Loan-to-value (LTV) ratios are another critical safeguard. Jay limits borrowing to no more than 75% of the after-repaired value, providing lenders with a substantial equity cushion. This conservative approach reassures lenders and builds confidence in the security and reliability of the investment.
Structuring Deals: Interest Rates, Terms, and Flexibility
Private lending deals are often structured with interest-only payments, which provide consistent income to lenders while supporting the investor’s cash flow. Jay has offered a steady 8% interest rate to his private lenders since 2009, higher than bank certificates of deposit or savings accounts. By educating lenders about this opportunity—and avoiding the 12% rates typical of hard money—he creates attractive, secure arrangements.
Loan terms generally range from two to five years, but Jay rarely uses the funds for the full term, preferring rapid renovations and sales. This liquidity further benefits private lenders, who see their capital actively working without prolonged risk exposure.
Finding Private Money: Networks and Associations
For those looking to tap into private money, Jay recommends leveraging existing networks—phone contacts, email lists, and local business connections. Joining real estate investor associations and attending meetups can also expand access to both potential lenders and trustworthy operators. These venues offer the dual benefits of education and relationship-building, positioning investors as popular and valuable contributors to their communities.
Empowering Investors Through Education
Jay believes strongly in educating both borrowers and lenders about private money. He even offers his bestselling book, “Where to Get the Money Now,” and provides scripts and access to his live Private Money Conference to help others master the art of raising capital. His commitment to transparency and ongoing support shines through, empowering investors to build lasting success.
In summary, private money offers a powerful alternative to traditional real estate financing. By focusing on education, transparency, and relationship-driven strategies, investors can unlock new opportunities, protect their partners, and scale their businesses—just as Jay Conner has done.
10 Discussion Questions from this Episode:
- Jay Conner explains the protections he offers his private lenders, such as being named on insurance and title policies. Why do you think these protections are important for both lenders and borrowers in real estate deals?
- How did the global financial crisis in 2009 impact Jay Conner’s real estate investing strategy, and what lessons can newer investors learn from his experience?
- According to Jay Conner, there’s a significant difference between hard money and private money lending. What are the main distinctions, and how might those affect your decision as a borrower or lender?
- Melanie Johnson asks about typical interest rates for private lending. What factors should influence how much you offer or expect as a private lender?
- Jay Conner describes “lazy money” sitting in bank accounts earning minimal interest. What are the risks and rewards of moving such funds into private lending for real estate?
- The episode discusses lease-to-purchase options for buyers who can’t immediately qualify for a mortgage. What are the advantages and disadvantages of this arrangement for both the property owner and the prospective buyer?
- When vetting a potential real estate partner or borrower, what are the key elements to check before committing your money, based on Jay Conner’s advice?
- Why does Jay Conner prefer an interest-only payment structure with his private lenders, and what are the benefits for both parties?
- The episode emphasizes the importance of being a “big fish in a small pond” and niching down in real estate. How can this strategy help investors succeed in their local markets?
- Jay Conner shares ways to find and expand your network as a private lender, including attending real estate investor associations and local meetups. How can building a strong network impact your opportunities and potential success in real estate investing?
Fun facts that were revealed in the episode:
- Jay Conner and his wife, Carol Joy, have been married for 40 years and have built their real estate investing business together in Eastern North Carolina.
- In less than 90 days, Jay Conner was able to raise over $2 million in private money without tying it to any specific real estate deal, simply by sharing the investment opportunity with his personal network.
- Jay Conner offers his private lenders protection similar to what banks provide, including naming them on insurance and title policies, and ensuring a conservative loan-to-value ratio for added safety.
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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