Credits to:
https://www.youtube.com/watch?v=h7rl-5pCaBY
“Episode 145 – How to Fund Real Estate Deals with Private Money & Self-Directed IRAs -with Jay Conner”
https://www.youtube.com/@thecpazone
Private Money is reshaping the way real estate investors fund their deals, and few understand this realm better than Jay Conner, often dubbed the “Private Money Authority.”
On a recent episode of the Raising Private Money podcast together with Ryan Pulice, Jay shared his journey, strategies, and secrets to successfully leveraging Private Money for real estate deals. Whether you’re a novice or a seasoned investor, the episode was packed with actionable insights you can use to skyrocket your investing business. Here’s a breakdown of the most essential lessons.
The Banking Crisis that Sparked a Private Money Revolution
Jay’s foray into Private Money began out of necessity during the 2009 financial crisis. After years of relying on bank lines of credit and mortgage companies to fund deals, Jay found himself suddenly cut off by his banker—without notice, right after putting earnest money down on two properties. Faced with the possibility of losing significant profits and having no funding options, Jay asked a crucial question: “Who do you know that can help fix your problem?”
That led him to a contact who introduced him to the concept of private lending—individuals who lend their investment capital or retirement funds directly to real estate investors. This paradigm shift changed Jay’s business forever.
Become a Teacher, Not a Pitchman
One of Jay’s standout strategies is leading with education rather than sales. Most people have never heard of Private Money or self-directed IRAs. By adopting a “teacher mindset,” investors can genuinely help their network understand a new world of opportunity. “As a result, you as the borrower get to make the rules,” Jay noted.
Unlike traditional banking, where lenders set all terms, private lenders are open to the terms set by the investor—when the investor explains the benefits, safety, and structure thoroughly.
The Power of Self-Directed IRAs
A major revelation for many listeners is the use of self-directed IRAs for Private Money investing. As Ryan observed, most people wrongly believe their retirement funds are locked in mutual funds. Jay points out that less than 1% of people have even heard of self-directed IRAs, partly because financial advisors have no incentive to recommend them.
By educating your network about this underutilized vehicle, you’re providing access to higher returns and tax advantages—while also unlocking a new source of funding for your deals.
Why Private Money Beats the Banks
Jay listed several reasons private money trumps traditional financing. Here are just a few highlights:
- You’re Always Approved: Forget lengthy applications and underwriting hurdles—when you use private money, “you’re already approved”.
- Unlimited Potential: There’s no cap on how much you can borrow or the number of deals you can do.
- Cross-State Flexibility: Private lenders can be from any state, greatly expanding your capital sources.
- Speed and Control: As your own underwriter, you decide the terms, cash flow structure, and loan-to-value ratios.
How to Find Private Lenders
Jay distilled his approach into three categories:
- Current Network: Family, friends, your social, professional, and service circles (think CPA, attorney, business owners).
- Expanded Network: Groups like BNI, Rotary, and the Chamber of Commerce offer networking opportunities beyond your immediate circle.
- Existing Private Lenders: Those already experienced in private lending, often found via self-directed IRA companies and networking events.
Structuring Deals for Success
Jay recommends always teaching the opportunity first, separate from discussing any specific deal. Once people are educated and prepared, funding flows naturally. A typical script involves telling potential lenders, “I got great news for you; I can now put your money to work,” sharing the property details, and simply arranging for the funds to transfer. Pitching the deal is unnecessary—trust is built through education and relationship.
Get Started: Resources from Jay
Jay generously offered listeners free resources, including a private money script collection and his bestselling book, “Where to Get the Money Now.” He even invites investors to his live event for a nominal fee for hands-on learning.
Final Thoughts:
If you’re serious about scaling your real estate business, embracing private money is a game changer. As Jay shared, it’s about being a leader and teacher—help your network win, and you’ll never struggle to fund another deal. Dive deeper with Jay’s resources and start building your own private lending network today.
10 Discussion Questions from this Episode
- Jay Conner described a pivotal moment in 2009 when his bank unexpectedly closed his line of credit. How did this event change the trajectory of his real estate investing career, and what lessons can investors draw from his experience?
- The episode highlights the concept of being “your own underwriter” in private money lending. What are the advantages and potential risks of this approach compared to traditional institutional lending?
- What is the difference between private money and hard money, and why does Jay Conner emphasize the distinction throughout the episode?
- Education and positioning as an “expert” play key roles in raising private money. How can real estate investors effectively educate their networks to attract potential private lenders?
- Jay Conner has never pitched a deal or directly asked for money, but instead offers an “opportunity.” What are the psychological and practical implications of this approach for both investors and lenders?
- The use of self-directed IRAs is discussed as a tool for both raising capital and offering tax advantages. What are the benefits and challenges associated with utilizing self-directed IRAs in real estate investing?
- Liability and asset protection were briefly addressed with a focus on LLCs and land trusts. What are the key factors investors should consider when choosing the appropriate ownership structure for their real estate investments?
- Jay Conner outlined three main sources for finding private lenders: current network, expanded warm market, and existing private lenders. Which of these sources do you think is most effective, and why?
- The episode stresses the importance of separating the conversation about private money from the presentation of individual deals. How does this separation benefit both the investor and the potential lender?
- The SEC’s role in regulating capital raising is explored, with Jay Conner distinguishing between single-family asset-backed debt and syndications. How does understanding these regulations protect investors, and what mistakes should be avoided when raising private capital?
Fun facts that were revealed in the episode:
- No Applications Needed: When raising private money for real estate, Jay Conner highlights that you don’t have to fill out lengthy applications or meet arbitrary institutional requirements—if you’re a real estate investor, you’re “already approved” to borrow private money.
- Self-Directed IRAs Are a Hidden Opportunity: Less than 1% of the population knows about self-directed IRAs for private lending, and Jay Conner points out that most financial advisors never mention them because they don’t earn commissions from them.
- You Can Get Paid to Buy Houses: By structuring private money deals the right way, Jay Conner explains that real estate investors can sometimes bring home a check on the day they buy a property, using excess funds raised to cover renovations and carrying costs.
Timestamps:
00:00 Discovering private money lending
03:32 Losing a line of credit
07:11 Learning about private money
12:33 Funding real estate investment deals
16:41 Setting up an LLC properly
20:22 Assessing Property Cash Flow
21:11 Explaining private lender financing
26:37 Finding Private Lenders: Current Network
27:56 Building a referral network
31:53 Offering Free Autographed Book
33:54 Wrapping up with Jay
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.
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