Where to Find Private Money for Your Deals with Jay Conner

Good morning and welcome, Wicked Smart listeners. It's Chris Pree again, your host, and I've got another awesome guest for you. You know, I'm always looking for guests, as I always share with you guys, that have been in the biz for a while. But also it helps when, at least for our community, it helps when we kind of attach it to some of the things we're doing. Jay Connor, our next guest, and I have been hanging out since, gosh, I think it's 2008. We're going to talk about that in a second. But secondly, Jay mixes creative real estate and going out and raising money when he's doing creative deals. Because, look, you're going to run across deals when you're with us. I don't care how well I train you, where you're going to pass on them if you didn't have some private money set up. So I want to help you see what that avenue might look like. Jay started his career back in 2003. At the beginning of his career, he did rely on traditional financing, very similar to me, and that involved large down payments. It involved, you know, Signing personally, involved origination fees, you name it. All the stuff that I've been whining about since the 2008 crash. After the crash on his end, he got cut off by his banker. Oh, surprise, surprise. That's what I went through, right? We have very, very similar stories. So that led Jay to explore this whole world of private money. He developed a system around it, how he could gather millions of dollars for real estate deals. He raised like, I think it was like $2-point-something million originally in private money within just a few months. And then with his system, sort of like I trademarked a system for the 3 Paydays, he has a really cool system. He enjoys 7-figure profits every year and he works like less than 10 hours a week. That's a cool formula that you guys should latch on to. You're going to see Jay and I doing a lot more together. He's spoken recently at a Wicked Smart Sit Down. We have spoken to his tribe and you are going to again be hanging out with Jay if you just latch on to us. But make no doubt about it, guys, proximity matters. And being in the right community, the Wicked Smart community, matters when you can go ahead and meet amazing people like Jay, not just meet them online, meet them, interact with them, shake their hand, get deals done together, pick their brain. That stuff's invaluable. With that, I'm going to go ahead and dive in here. Okay, Jay, with that as a little backdrop, as I explained, our stories are so in line from the lovely '08 crash. Welcome back to the show.

Thank you for having me on the show here, Chris. I'm always so excited to talk about Private money, how it's had the biggest impact on our business ever since I started raising capital back in 2009, tripled our business right after we started raising private money. So I'm excited to be here with you, Chris.

Same here. Opens a lot of doors. What I didn't say in the intro, the two episodes I want them to be able to go back to and kind of get a gist for what was going on back then in your world. So going back to episode 178. 178. That was like eons ago. And then episode 427. So that was a little more recent. With that, Jay, let's— I want to go back. Like, I know you just spoke to our amazing clan on a Wicked Smart sit-down. They all loved you. No surprise. So now that the other Wicked Smart listeners get to hear from you, let's talk about who this would apply to first. I kind of have like some basic vanilla questions, like who would this private money topic apply to in general?

Sure. Well, you can use— first of all, let me define private money or private lenders as to what I'm talking about. I'm talking about a private money or private lender is an individual, no institutional money, no kind of banks. I'm not talking— when I say private money, I'm not talking about hard money. And I say establish as many relationships with people as you can. Some of my best friends on the planet are hard money lenders, but I'm talking about doing business with individuals going straight to the source without having a middle person or a broker involved. And this is where we get to make the rules. I mean, we do our own underwriting, we set the interest rates. But anyway, so first of all, a private lender, we're talking about doing business with human beings that are either using their investment capital and/or using their retirement funds To fund our real estate deals. So this private money applies to a real estate investor that is needing some cash or all the cash to purchase real estate. Now, in my world, it applies to single-family houses. That's what I use private money for. You can also use private money for syndication if you're raising money for apartments or multifamily. You can use private money for self-storage. You can use private money for land. But regardless of what you're using it for, of course, in your world, Chris, in my world, it's primarily for single-family houses. And so it's when some cash or all the cash is needed to purchase the property. So, you know, I'm like you, Chris. If I can buy a house on terms, I'm going to buy a house on terms.

Right.

Subject to the existing note, etc. But if the seller is unwilling to sell to me on terms, I can use private money, all cash. Sometimes when we're buying on terms, we need some money, cash to go along with the terms deal. Maybe the seller is requiring some type of down payment or whatever. So you can use private money in what we call second position if you know you're buying it subject to the existing note. So that's a long answer to answer your question. Who's going to— who would this apply to? It will apply to you, the real estate investor, whenever you need some cash or all cash to purchase your deal.

Yeah, because instead of leaving money on the table, right? Like we— you and I can teach it, but they're going to leave money on the table if they're only doing that with no money.

Yeah, exactly.

Jay, you mentioned single-family, so I just jotted down— you see me taking notes. I'm on that same camp for the most part. Like, I bought my building creatively, but for the most part we teach single-family. Can you just give your opinion on why we're in that kind of niche? Why you are?

Right. And, you know, I mean, there's benefits to, you know, all kinds of real estate. Single-family has just sort of been my comfort zone for me because I came from the mobile home or manufactured housing business where I was working with individuals to help them buy a home. So that was simply, you know, my background. Now, why would I— other than that, why would I choose single-family houses? Well, there's one thing about it. When using private money to pay all cash in this market, that's where the biggest checks are when you're actually doing renovations, right? My average profit is $82,000 per single-family house.

Wow.

And for that reason, that's why I focus. I mean, I get— I collect big checks and it doesn't take long to collect big checks. So I love the profits that are coming out of single-family. Multifamily is a great real estate asset, but it's a longer play.

Yeah.

You know, if you're going to invest in apartments or whatever, then you're probably looking at like a 3-year to a 5-year turnaround. And there's some big paydays, you know, there on the back end. So one advantage of single family is that if you're going to go in and cash out, then you don't— you're not looking way down the runway to be able to, to be able to get your money back. So that's another advantage.

Yeah. And I used to say, in addition to everything you said, I used to say people aren't going to stop getting married and getting their first, you know, it's just a, it's a, it's a nice niche that always stays kind of the sweet spot. So let's hit a few things. Jay, looking at some of my notes, best way to find these private lenders, I think, is a cool place to go next, if you would agree.

Sure. So where do you find these private lenders? Well, there are 3 categories of where you find private lenders. There are what you call your— I call it your warm market, your own connections, you know, relationships, family, friends, you know, etc. And then there's what you call the expanded warm market. I teach real estate investors how to grow their connections very, very quickly. And one, one big secret right there is Business Networking International, BNI. And so when I started raising capital, I joined Business Networking International right here in Moorhead City. It was founded by Ivan Meisner. The purpose of that organization and your local group is for each member to give each other leads. So when I joined the group, what was I looking for? I was looking for individuals that were not happy with their rates of return in the local bank and certificates of deposit or the volatility of the stock market. So my fellow members referred a lot of people to me that wanted to get higher rates of return safely and securely. So that's one way that I grew my connections very, very quickly. The third place to find these private lenders are existing private lenders. Those are people that are already loaning money out to other real estate investors. Now, the reason I like your warm market and growing your warm market much better than I do existing private lenders is because when you are— when you are establishing a relationship in your own market, your own warm market, for someone to be a private lender, Guess what? We get to make the rules, right? We're setting the interest rate. And so what did I do? I put on my teacher hat, which says private money teacher, private money teacher, and lead with a servant's heart. You know, I've got 47 private lenders right now. Not one of them ever heard about private money, private lending, didn't know what it was. None of them had ever heard about how they could use retirement funds and transfer their retirement funds or a portion of them over to a self-directed IRA company and then earn money either tax-deferred or tax-free. And so I taught them. So what I love about the warm market or expanding your own warm market connections is we are making the rules. We set the interest rate. There's no applications. It puts you in the driver's seat, right? There's no negotiation on the interest rate because here's the program that you teach. Now, with existing private lenders, they already know the game. Like they've, they've already been loaning money out. So they're already accustomed to getting 12%, you know, maybe, and points. I've never paid any of my private lenders any points or origination fees because I set the program and you can do the same thing. As a real estate investor, I say sort of just duplicate my program. It seems to work pretty good. Now, an interesting statistic is a little over 70% of account holders at self-directed IRA companies want to be a private lender and want to loan money out to real estate investors. But that's going to be a negotiation conversation in the, in the, in the world and the space of having your teacher hat on. and teaching people that don't even know what private money is and opening them up to this opportunity, you get to stay in control and make the rules.

Love it. Now, I wrote down rates just because we were talking about rates and rates have gone cuckoo, right, lately. And I always teach— I know you do, Jay. Okay, we can do 0% what we're buying. We can do sub-2 deals that have nice underlying rates. What are these private lenders accustomed to in your network anyway, for rates? Are you saying they're— well, go ahead, you say.

Sure. Well, ever since I started raising capital in February of 2009, I've been paying my private lenders the same exact rates, and that's 8% in first position, 10% for smaller amounts of money in second position. And I haven't changed it. It's still today the same that it was in 2009. And one question I get, particularly in the last couple, last couple of years, People say, Jay, how in the world are you still paying your private lenders with the market going crazy and interest rates going up? How are you paying them the same thing of 8% that you were back in 2009? And I said, well, there's 2 answers to that question. As I said, the first answer is, first of all, I make the rules. That's what I'm paying. That's what I'm offering. Right. The second answer is You know, you can go down to First Citizens Bank here on Bridges Street in Morehead City, and right now you can get a certificate of deposit for about 4.5%. About a year ago, it was 5.5%. But guess what? 8% is still a whole lot better than 4.5% or 5%. So they still make more money with me. And my private lenders aren't complaining. They're as happy as they can be.

Okay. Who wants to be the next apprentice? Pretty interesting, guys. We started this apprentice program back as a July 4th, 2024 promo. That's where it started. And it was so incredibly effective. We were just going to run it for the summer. It was so effective immediately we kept it. It's in place now. And what is it? It allows you to get into the community, the Wicked Smart community, for less dollars than the QLS home study course sells for right now on our site. In fact, when you go to smartrealestatecoach.com, Forward slash apprentice-pod, apprentice-pod. When you go there, you're going to see that as an apprentice, you're going to get over $13,000 worth of coaching, the possibility for you to touch base with us if you want to, 4 or 5 times a week. And it doesn't exist anywhere out there, frankly. That's why we did it. We did it for 2 reasons. One, no one is giving you the support out there. We keep hearing feedback, which is how this was born. That other educators are not giving support. They're just selling stuff. So it doesn't exist anywhere and nowhere in the real estate education or coaching space. And we want to help you do one thing— deals. So we've wrapped the support mechanism around this. We've allowed you to get into a Slack community with the other associates who previously were protected in Slack, and now you get to jump in there and experience that for 12 weeks. You also get to come to the In the Trenches boot camp, which is private. It's a chance to hang out with the family team in one of the coaches for 2 and a quarter days in our conference room, roll up our sleeves, get calls done, get deals done. If you come with leads, you leave with deals. Absolutely incredible. I could go on and on. Go to the website right now, check out more information about the Apprentice, and I'm going to give you the In the Trenches boot camp site because you don't have to become an Apprentice. It just happens to be free with Apprentice and Associate. So 2 links I'm going to give you, super important. smartrealestatecoach.com/ittb-pod. That's going to give you some information about the boot camp. If you want to buy a ticket to the boot camp, it's more expensive, but you can just come check us out. About 1 or 2 people every time we run it do just that or become an apprentice and it's for free. smartrealestatecoach.com/apprentice-pod. Well, yeah, let's put it in perspective, Jay. Your experience is, is tremendous, right? So they're comfortable. They wouldn't— we would They wouldn't stay in your network. And on that note, do they have anyone else ask you? Outsiders did. But do any of your 47 investors say, hey, Jay, the rates went up, I need or want more? Have those discussions come up or not really anymore?

1 out of 47. They simply asked the question and they said, Jay— and this question was about 2 years ago— and they said, Jay, with rates going up, are you going to be paying any more interest? And I said, no, I'm keeping the program the same. And I said, the reason I'm keeping it the same is I still compare my 8% rate to what my private lenders could get alternatively at the local, you know, bank and certificates of deposit.

Yeah.

And of course, this rate is much higher. And they kept right on rolling. They just asked the question.

Yeah. Again, your longevity speaks volumes, so I don't blame them. I wanted to see if that came up. So we both love creative, right? I call it on terms. What, what is your preferred way to exit when you're not rehabbing? Let's say, what else are your preferred ways to exit?

Well, it depends on how I bought, how I buy the property. So if I'm paying all cash with private money in this market, I don't want to leave that private money buried in that real estate. So if I'm paying all cash, I want to cash out, put it in the Multiple Listing Service. However, if I'm buying it creatively on terms such as subject to the existing note, unless there's a huge amount of equity in it, then I want to sell it on terms or lease purchase.

Yeah.

And you know, if you buy it right and you buy it on terms, it's been my experience, Chris, you tell me, the longer you own a single-family house, the more money you make, particularly, you know, particularly if you're buying it creatively. I mean, for many reasons that, you know, you teach, I'm not going to step into your world, but I mean, for many reasons, you make more money the longer, the longer you own it if you bought it on terms. Yeah.

No, I echo that. How much are we talking? Because I got this after your sit-down with us, by the way, the Wicked Smart sit-down. They go, yeah, but there's a whole bunch of us in the community. Like, how many of these people out there? Which I kind of chuckled because we're not a big community. We're, you know, 140 people. So how much private money is sort of out there on the sidelines?

Well, I'll give you the big answer, then I'll give you the specific answer. So the big answer is there's more money than we can use.

Yeah. Yes.

There's more money than there are deals, right? In fact, when your community really starts raising the capital like I do, they're going to have a problem. It's a good problem. You're not going to be able to use all the money that is chasing you. And, you know, in this world of private money, there's no chasing, begging, selling, persuading. You are not asking anybody for anything. You know, one Common, one common question I get from new real estate investors or people that are new to raising capital. They'll say, how do I get over the fear of rejection? And I say, listen, how can you have any fear of rejection if you're not asking anybody for anything? I'll make more sense out of that in a second. Back to your question. Prior to COVID, there was $18 trillion in cash sitting on the sidelines. That's prior to COVID. Today, 4 years past COVID, $31 trillion in cash. And that makes my point— more money than we can use. So back to what I was starting to talk about a little bit. I don't ask anybody for money. So I want to be specific on how that plays out.

This is a great nugget. Yeah.

Yeah. So 2, 2 times, 2 specific times that I'm not asking for money. I don't ask for money anytime, but here's 2 specific times. One is when you're teaching the program. So here's a really, really important nugget. You see, desperation's got a smell to it. And if you as a real estate investor are talking to a new potential private lender and you are talking about your private lending program and you're teaching them, you got your teacher hat on, but at the same time you are talking about a deal that you need funded, you're sounding desperate and you're not even trying to sound desperate. I mean, the worst time to be raising private money is when you need it for a deal, right? So I preach get the money lined up first, right? There's always going to be deals. So we teach the program. Well, how and where do you teach the program? Well, I mean, one place that you can really leverage your time, I mean, obviously one-on-one at Starbucks or whatever, You can be having a conversation with someone in your warm market, but I like to leverage my time. I raised $969,000 at one private lender luncheon event where I invited 20 people in my own network, had my CPA there, my real estate attorney, my realtor that I do business with. Takes 20 minutes to teach the program, which by the way, the program is in my book, Where to Get the Money Now, that I'm going to give your followers for free here in a few minutes. The program's in the book. Just follow the program and teach it. And then at the end of that luncheon, there was an interest form, you know, on the table. So those that were interested or whatever, you know, they got together with me. So that's the first— that's the first example there. Now, when else do you not ask for money? I've never pitched a deal. I have never pitched a deal Since I started raising cows. They say, Jay, how do you do that? Well, again, we're separating the conversations of I got someone that's learned the program and they like it and they've told me how much they want to start with. And then I got a deal for them to fund. So, Chris, let's say that you're one of my new private lenders and you've told me I've taught you the program, you like the program. It's a lot better than putting the money in the local certificate of deposit. And I say, okay, Chris, I'm going to put your money to work for you just as soon as possible. Now, let's say you've told me You got $150,000. And let's also assume that $150,000 are retirement funds that you've had, like at Vanguard or Schwab or somewhere in mutual funds or stocks or what have you. Could have been a previous 401. And then let's say I've introduced you to a self-directed IRA company and you've moved your funds over, and that took you a couple of weeks. Now your funds are sitting there. Waiting to be used. You're not making any money until I put those funds to work for you. That's why you moved the funds over. So I'll say, Chris, I'm going to put your money to work for you just as soon as possible. So let's say a week or two goes by and now I've got a deal for you to fund. I'm going to share the script right now. The script, exactly what I would say to Chris when I call him up. And I call this the good news phone call. So I call up Chris, Chris answers the phone, we have a little bit of chitchat, and here's the exact script. I say, Chris, I got great news for you. I can now put your money to work. I've got a house in Newport under contract with an after-repaired value of $200,000. Now, the funding required for the deal is $150,000, which of course matches up to what you've got set aside. The closing is going to be next Thursday, so you'll need to have your funds wired to my real estate attorney's trust account, who's going to do the closing, by next Wednesday. And I'm going to have my attorney send over the wiring instructions. That's the end of the conversation. The most stupid thing I could have asked Chris is, do you want to fund the deal? Of course you want to fund the deal. You've been waiting for the good news phone call, and I'm not going to bring a deal for you to fund. Unless it matches the criteria of the program. For example, remember the numbers I told Chris? The after-repaired value is $200,000. I told him the funding required for the deal is $150,000. Well, that's 75% of the after-repaired value. There's another big reason I love private money. I didn't say 75% of purchase price. See, the purchase price is $100,000. I'm bringing home a $50,000 check because I'm borrowing $50,000 more than my purchase price, which I'm going to use the majority of that money for a renovation, you know, on the house. But that's another great big reason for private money. You always get paid to buy houses upfront. Who wants to get paid to buy houses? And back to your world, Chris, and you're not taking any of your money out of your own pocket and taking to the closing table. Back to the note. Actually, the way I do private money actually is a no down payment proposition because I'm not taking any money out of my pocket and I'm bringing money home.

Yeah, love it. Jay, so I don't forget, you mentioned the book, but we also have a link for them. Why don't you give them the link and then what they can expect to see there? And then thank you. You didn't— I didn't know about the book. So yeah, let's say that and then we'll go ahead with that first. Then I'll ask you for your last thoughts.

Sure, sure. So my book is titled Where to Get the Money Now. Where to Get the Money Now. The subtitle is How and Where to Get Money for Your Real Estate Deals Without Relying on Traditional or Hard Money Lenders. Folks, this is not an ebook. This is actually a real book. And yes, the Postal Service is still in business. So I— you can pay $20 for this at Amazon, but don't pay $20. I'm going to ship it to you. 3-day priority mail, you know, postal service. The book is free, just, uh, cover shipping and handling. And here's how you get it. I'll autograph it for you, ship it right out. You go over to www.jayconner.com/chrispre, C-H-R-I-S-P-R-E, as he is so famously known for, Chris Pre. So Jay Conner with an ER, J-A-Y connerr.com/chrispre, and that'll take you right to the book.

Love it, Jay. Thank you so much. The nuggets are like some of the stuff they can run with right now, but after they go to that link and get the book, they can actually be in business your style. Jay, anything I didn't— you and I have been on a lot of shows together. Anything I didn't ask you or nugget you want to share before we sign off with the Wicked Smart listeners?

So, yes. Don't. So if you're listening to this, to this episode, do not make the biggest mistake that I made when I started in real estate investing back in 2003. 2003 is when I went full time into this. And the mistake I made is I started out in this business by myself for 6 years with no coach, no mentor, by myself. And I'm telling you, I lost— I lost hundreds and hundreds and hundreds of thousands of dollars in mistakes that I would not have made if I had signed up with a coach like Chris Pre. I do. I mean, if you don't have a coach yet, Chris Pre is your man right there to work with. And don't do— don't go out on the island by yourself like I did. But my other final thought, Chris, is gratitude. I am grateful that you invited me to come join you back here on the podcast because you and me sync right up, even if you're from the North and I'm from the South.

Perfect. It's the perfect marriage. Jay, what's cool is— and thank you for the— for saying the coach in me— but I think, as always, you and I make a great team for them because we'll teach this, the creative, together. You'll teach how to get money. It's a phenomenal team meshing together here, the 2 tribes. So as I said in the intro, we're going to see a lot more of each other. They get to hang out with you a lot more. And, and again, I thank you so much for spending some time today with me. Again, I love it. Always, always, always love it.

Thank you.

Okay, Wicked Smart listeners, that does wrap up our time together today with my good friend Jay Connor. Listen, if you enjoyed the show at any level, I always tell you this, please take a few seconds for us, rate and review it and share it with others like this one nugget, this one person in this case can open doors for so many of you and the people you know, why not share the episode? Why not be the impetus to help someone do that and open their world up? Guys, if you do not have our free books, I want to give you as a gift the Real Estate on Your Terms and the Deal Structure Overtime book, which really dives behind the scenes on deals. Go to wickedsmartbooks.com/podcast. You'll get them for free. It's not free. Put in your credit card and we charge you for shipping. It's totally free. If you have not seen my master's class yet, go to smartrealestatecoach.com/mastersclass. It's a short workshop I did. It's about 45 minutes plus some Q&A where I break down the system, how we got here, especially after the 2008 crash, how we operate now. And it's sort of the new way of real estate, not the old way, and how you can too. I know you'll get some value out of it. It'll let you at least see the light. And if that's something you want to pursue further, You can have a private call with me if you'd like. It won't be on the workshop. I don't say it only in the podcast. Go to smartrealestatecoach.com/chrisfreecall. See you guys soon. Hey guys, are you simply sick of juggling a dozen different software tools for your real estate business? I know I was, and I know I'm not a tech person, so it was frustrating. A subscription for this, you get a subscription for that, and they don't even work together out of the box. That's very frustrating, especially in the real estate world where your best time spent is going to be out in the field or on the phone with sellers. And now you're stuck hiring a tech guru just to make all that sync up. So let's ditch the chaos and let REI BlackBook handle everything. Automate your lead follow-up, track every deal, analyze things quickly for you, make offers all in one platform. In fact, with the Wicked Smart platform, we now have access, if you're in the Wicked Smart community, to all the other associates' properties. Can you imagine that? So you're brand new in the business perhaps, and your seller looks on your website and sees 20, 30, 40 properties, instant credibility. So you're going to get everything on REI Black Book from our custom workflows for lead generation all the way to closing. It has it covered. Try it today for just a buck. $1, guys. Visit smartrealestatecoach.com/reibb-dd. smartrealestatecoach.com/reibb-dd. D as in dog, D as in dog. Thanks for listening to the Smart Real Estate Coach Podcast.

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