***Guest Appearance
Credits to:
https://www.youtube.com/@TheWealthClockPodcast
“How to Raise Private Money Without Banks | Jay Conner | EP41.”
https://www.youtube.com/watch?v=5vg2sJVkicg&t=6s
When it comes to real estate investing, access to capital is the lifeblood of every successful deal. Yet, for many investors, acquiring funding without relying on traditional banks can seem like an insurmountable challenge. In a recent episode of the Raising Private Money Podcast, The Private Money Authority, Jay Conner shared his proven strategies for raising and leveraging private money with Steven Weinstock. Their discussion offers a treasure trove of practical advice for both new and experienced real estate professionals looking to expand their financing options.
The Myth of Desperation: How to Approach Private Money
One of the most common misconceptions about raising capital is that it involves “begging, chasing, or persuading” people to invest in your deals. As Jay Conner explained, the key is to separate conversations about the opportunity from discussions about any specific deal. According to Jay, “desperation has a smell to it”—if you approach someone with a deal and immediately start explaining why you need funding, you risk sounding desperate and losing credibility.
Instead, Jay’s approach centers around education. By taking on the role of a “private money teacher,” he empowers potential lenders to understand the opportunity without any pressure. He uses strategies like private lender luncheons, where he invites contacts (including lawyers, CPAs, and real estate agents for added credibility) and simply educates them about private lending—no hard sell required.
Who Are Private Lenders and Where Do You Find Them?
Private lenders are individuals—not institutions—who are willing to finance real estate deals in exchange for a return on their money. Jay identifies three categories of potential private lenders:
- Warm Market: Your immediate network—friends, family, colleagues, and professional contacts already in your phone.
- Expanded Warm Market: By joining organizations like Business Networking International (BNI), you can expand your connections quickly and tap into new groups interested in real estate investing.
- Existing Private Lenders: People who are already loaning money to other real estate investors, whom you might meet at self-directed IRA networking events.
Interestingly, many of Jay’s lenders had never even heard of private money investing or self-directed IRAs before he educated them about the concept, highlighting the importance of informing your network.
Structure and Security: Treating Private Lenders Like Banks
A critical draw for private lenders is the security they receive. As Jay Conner detailed, private lenders are not joint venture partners; instead, they function similarly to a bank. Loans are secured by a first-lien position on the property, backed by promissory notes and either a mortgage or deed of trust, depending on the state. Lenders are also named on the insurance and title policies, offering them the same protections a traditional bank would receive.
Why Investors Love Private Money
The benefits of working with private lenders are manifold, as Jay outlined:
- Speed to Close: Without bureaucratic hurdles, deals can close in just a week.
- Unlimited Opportunity: There’s no cap on the number or amount of private loans.
- No Draws for Rehab: Investors can secure all rehab funds upfront, improving cash flow.
- Increased Confidence: Knowing the money is ready allows you to make more aggressive offers.
This flexibility is vital in a shifting market, as Steven Weinstock recounted from his own experience during the 2008-2009 financial crisis, when traditional lending dried up and even fifty-percent-down deals were scrutinized.
The Simple Five-Step System for Attracting Private Money
Jay revealed a straightforward five-step process for those looking to get started:
- Make Your List – Identify potential lenders in your contacts.
- Start the Conversation – Use simple scripts to introduce the concept.
- Send Educational Material – Jay utilizes a “stress-free investing” audio guide.
- Host an Educational Meeting – Teach the benefits and process of private lending.
- Secure a Verbal Pledge – Once comfortable, move forward with a real deal.
Conclusion
As the episode makes clear, the path to private money isn’t paved with desperation or high-pressure tactics but with education, credibility, and building real relationships. By positioning yourself as a resource and educator, and by structuring deals to protect and benefit your lenders, you can unlock an inexhaustible source of capital for your real estate investing goals.
For more actionable tips and access to Jay Conner’s resources, including his book and scripts, visit his website, provided in the episode.
With the right knowledge and approach, private money is not just accessible—it’s a game-changer for your real estate business.
10 Discussion Questions from this Episode
- Jay Conner emphasizes the importance of separating conversations about opportunities from discussions about specific deals to avoid appearing desperate. How might this strategy change the way you approach potential private lenders?
- What distinguishes private money from institutional money in real estate transactions, and what advantages do private lenders offer that institutions often cannot?
- Jay Conner outlines three main categories where private lenders can be found. Which category do you think would be the most beneficial for beginners, and why?
- The episode discusses hosting private lender luncheons as an educational strategy. What potential benefits and challenges might arise from this method of networking?
- Why does Jay Conner advise getting private money lined up before making offers, and how could this shift the confidence and success rate of real estate investors?
- The legal structure of private money deals is compared to borrowing from a bank, including promissory notes and liens. What legal protections are provided to private lenders, and how might this impact their willingness to invest?
- In what ways does paying private lenders interest-only payments, rather than principal and interest, benefit both parties in a real estate deal?
- How do the tax implications differ for private money lenders using investment capital versus retirement funds, and what considerations might this create for both investors and lenders?
- Jay Conner describes himself as a “big fish in a small pond” by focusing on two counties in North Carolina. What are the merits and drawbacks of focusing on a small, targeted market versus expanding into multiple markets?
- The five-step system to attract private money without chasing it includes creating a list, having opening conversations, sharing educational material, teaching the opportunity, and gaining verbal pledges. Which step do you believe is most critical, and why?
Fun facts that were revealed in the episode:
- Jay Conner Never Missed a Deal Due to a lack of Funding
Since he began using private money in February 2009, Jay Conner has never missed out on a real estate deal because he didn’t have the funding lined up ahead of time, thanks to his strategies for raising private capital. - First Private Lender Luncheon Yielded Almost $1 Million.
At his very first private lender luncheon, Jay Conner invited about 20 connections from his network, along with his real estate attorney, CPA, and realtor, and received $969,000 in pledged funding from that single event. - Average Profit of $86,000 Per Single-Family Home
Jay Conner revealed that his average profit per single-family house—achieved through renovating and reselling—has been $86,000, showing the potential returns from his approach to real estate investing with private money.
Timestamps:
00:00 Finding and Educating Private Lenders
07:58 Private lender vs joint venture partner
09:51 Benefits of Working with Private Lenders
13:42 Real estate challenges post-2008 crisis
17:39 Interest-only loan payment options
22:01 Growing Up in the Mobile Home Industry
25:28 First real estate deal story
30:02 gifts and conference offer
31:52 Discussing access to capital
Free Report:
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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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