***Guest Appearance
Credits to:
https://www.youtube.com/watch?v=HfJWsqaa-Ug
“How to Raise Private Money for Real Estate Investing | Jay Conner E33.”
https://www.youtube.com/@iamkeithandrews
If you’re a real estate investor—or aspiring to become one—you know that access to funding can make or break your deals. On the “Raising Private Money” episode with Jay Conner and Keith Andrews, listeners get an in-depth look at the strategies and mindset shifts that set successful investors apart, especially when it comes to raising private capital.
Understanding Private Money vs. Hard Money
Jay Conner, widely recognized as “The Private Money Authority,” shares his journey in real estate since 2003 and the pivotal moment that led him away from traditional financing. Like many investors, Jay started by working with local banks and mortgage companies. But in 2009, when his trusted line of credit was abruptly revoked, he realized he needed a different approach.
That’s where private money entered his world. Jay distinguishes private money from hard money—something many investors confuse. Hard money typically comes from brokers who manage a fund and add origination fees and higher interest rates on top. Private money, on the other hand, is direct: it’s a transaction between an investor and an individual lender, with no intermediary. This makes private money not only faster but also cheaper, as it eliminates costly fees.
Who Can Be a Private Money Lender?
According to Jay, nearly anyone can become a private money lender. His roster includes retired teachers, police officers, civil service workers, and even minors who have received inheritances. The core trait is having “lazy money”—capital or retirement funds sitting in low-yield accounts that could work harder elsewhere. By offering these individuals a secure way to earn a higher return, investors can build a robust network of private lenders.
Structuring Deals and Protecting Lenders
One of the significant concerns for both investors and lenders is security. Jay is clear: he never borrows unsecured funds, structuring each deal to protect the lender as much as a traditional bank would be protected. Each lender receives a promissory note and either a deed of trust or a mortgage, depending on the state. This gives them legal recourse should anything go wrong.
A typical arrangement might offer an 8% annual return, fully collateralized by the property as security. The lender is also named as mortgagee on the insurance policy and additional insured on the title insurance policy. In the rare event of an urgent need for liquidation, lenders can invoke a 90-day call option, allowing them to give notice and have their capital returned ahead of schedule. Jay’s thorough approach helps build trust and peace of mind with his private lenders.
Finding Private Lenders: Your Warm Market and Beyond
Jay emphasizes that most private lenders will come from your existing network—people you know from your local community, professional circles, and even your church or golf club. These are individuals who already trust you and may be unhappy with their current returns on savings or retirement accounts. For growth, it’s essential to expand your network, using groups like Business Networking International, SCORE, and local business organizations.
Another source of lenders is those already invested through self-directed IRA companies. Companies like these frequently host networking events where investors—who are already familiar with real estate lending—can connect with those seeking capital.
The Standard Deal: Keeping It Simple and Secure
Jay describes a standard deal as borrowing up to 75% of the after-repaired value of a property, providing an ample equity cushion for the lender. Deals are always processed through a real estate attorney or title company, ensuring legality and transparency. The process is straightforward: lenders wire funds directly to the trust account, not to the investor personally, and all legal documents are drawn up by professionals. This careful structure helps prevent confusion and risk for everyone involved.
Resources and Taking Action
For those eager to dive further into the world of private money, Jay provides a wealth of resources: from his book “Where To Get The Money Now?” to scripts for starting conversations with lenders, and even live events designed to broaden investor skills and networks. Keith Andrews encourages listeners to think beyond hard money, highlighting how truly transformational private money can be in terms of speed, cost savings, and deal flow.
The core message from Jay Conner and Keith Andrews is clear: stop waiting for the perfect moment or the perfect contact. Take action, learn the system, and start creating opportunities using private money. With the right approach and the right structures in place, funding doesn’t have to be a hurdle—it can be your greatest asset as a real estate investor.
10 Discussion Questions from this Episode:
- What are the key differences between private money and hard money, according to Jay Conner, and why might a real estate investor prefer one over the other?
- How does Jay Conner suggest protecting private money lenders in real estate deals, and what legal documentation is involved?
- In what ways does Jay Conner recommend locating and attracting potential private money lenders?
- What strategies does Jay Conner use to build trust and avoid appearing desperate when discussing funding opportunities with potential lenders?
- How are private money deals typically structured in terms of loan-to-value ratios, loan terms, and repayment options?
- What are the advantages for private lenders in using self-directed IRA accounts to fund real estate investments, as outlined by Jay Conner?
- How does offering a 90-day call option in the promissory note benefit both the investor and the lender?
- What role does a real estate attorney play in private money transactions, and what are the associated costs according to Jay Conner?
- How has Jay Conner’s approach to funding deals changed since discovering private money, and what impact has it had on his business?
- What actionable steps does Jay Conner recommend for investors who want to start leveraging private money in their real estate investments?
Fun facts that were revealed in the episode:
- Super-Fast Closings:
Jay Conner revealed that using private money allows them to close real estate deals in as little as seven days, much faster than the traditional 45 days it typically takes with banks or mortgage companies. - Ordinary People as Lenders:
Contrary to popular belief, Jay Conner shared that private lenders don’t have to be wealthy elites—retired teachers, police officers, civil servants, and even minor children (via inheritance) can all be private lenders. - Get Paid to Buy Houses:
With private money, Jay Conner brings home a check at closing, using excess funds (after buying and rehabbing a property below its after-repair value) for renovations and other costs—meaning they actually get paid to buy houses.
Timestamps:
00:00 Discovering private money for real estate
04:47 Attracting and managing private lenders
08:21 Diverse private lenders explained
11:04 Using retirement funds in self-directed IRAs
15:08 Expanding your lender network
19:10 Structuring real estate financing
21:41 Managing investment promissory notes
24:04 Finding private money for real estate
27:12 Talking private money with Jay Conner
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
YouTube Channel
https://www.youtube.com/c/RealEstateInvestingWithJayConner
Apple Podcasts:
Facebook:
https://www.facebook.com/jay.conner.marketing
Listen to Our Podcast:
Comments