How to Get Money for Real Estate Deals Without Relying on Traditional Money Lenders

Today’s guest is Jay Conner.   Jay Conner has been buying and selling houses since 2003 in a town of only 40,000 people with profits now averaging $78,000 per deal. He has Rehabbed over 475 houses and been involved in over $118 Million Dollars in Transactions.   Show summary: In this episode, Jay Connor discusses the advantages of using private money and private lending over traditional banking methods for real estate investments. He shares his personal success story of raising $2.15 million in private funds within 90 days. Jay also highlights the importance of mastermind groups, building a strong team, and the transition from mobile homes to single-family houses. Additionally, Jay promotes his book "Where to Get the Money Now?" which offers a step-by-step guide to funding real estate deals, and he provides a special offer for listeners to receive an autographed copy.   -------------------------------------------------------------- Mastermind Groups (00:00:00)   Background and Journey (00:00:45)   Transition to Private Money (00:02:22)   Deployment of Private Money (00:03:49)   Protection for Private Lenders (00:04:38)   Applicability to Commercial Real Estate (00:05:59)   Building a Strong Team (00:06:52)   Automation and Delegation (00:10:03)   Efficiency and Growth (00:11:48)   Raising Capital Strategies (00:14:31)   Raising Private Money (00:16:35)   Mindset and Rejection (00:21:40)   Book Recommendation (00:22:24)   Offer for Listeners (00:22:46)   The giveaway (00:22:55)   Raising money principles (00:23:39)   Thank you and closing (00:23:56) -------------------------------------------------------------- Connect with Jay: Web: www.JayConner.com   Facebook: https://www.facebook.com/jay.conner.marketing   Linkedin: https://www.linkedin.com/in/privatemoneyauthority/   Free Book: https://www.jayconner.com/book   Connect with Sam: I love helping others place money outside of traditional investments that both diversify a strategy and provide solid predictable returns.     Facebook: https://www.facebook.com/HowtoscaleCRE/ LinkedIn: https://www.linkedin.com/in/samwilsonhowtoscalecre/ Email me → sam@brickeninvestmentgroup.com   SUBSCRIBE and LEAVE A RATING. Listen to How To Scale Commercial Real Estate Investing with Sam Wilson Apple Podcasts: https://podcasts.apple.com/us/podcast/how-to-scale-commercial-real-estate/id1539979234 Spotify: https://open.spotify.com/show/4m0NWYzSvznEIjRBFtCgEL?si=e10d8e039b99475f -------------------------------------------------------------- Want to read the full show notes of the episode? Check it out below: Jay Conner (00:00:00) - My business started to skyrocket, like overnight when I started joining really good mastermind groups, mastermind groups of where I, fellow like minded individuals are in real estate investing and have been doing it a while. I'm not listening to advice from somebody that hasn't even done their first deal yet, right? I'm listening to advice from fellow mastermind members that are doing 50 plus deals a year. Welcome to the how.   Intro (00:00:33) - To Scale Commercial Real Estate show. Whether you are an active or passive investor, we'll teach you how to scale your real estate investing business into something big.   Sam Wilson (00:00:45) - Jake Connor has been buying and selling houses since 2003, in a town of only 40,000 people, with profits now averaging $78,000 per deal. He has rehabbed over 475 houses and been involved in over $118 million in transactions. Jay, you've been on the show before. It's really great to have you back for round two. Thanks for coming on today, Sam.   Jay Conner (00:01:08) - Thanks so much for having me back. Talking about my favorite subject in topic. And that's private money and private lending, because quite frankly, that in and of itself has had more of an impact on our real estate investing business ever since 2003.   Sam Wilson (00:01:24) - Absolutely. Jay, I asked this question to every guest that comes on the show, and so I have to ask it for the listeners maybe that didn't hear your first episode in 90s or less. Where did you start? Where are you now? How did you get there?   Jay Conner (00:01:40) - So where did I start? I grew up in the housing business with my dad, Wallace Conner, and at one time he was the largest retailer of mobile homes, manufactured housing in the nation. So I grew up, you know, being around a family that was that helps people own a home. So in the early 2000, the consumer financing for that product went away across the nation. And I knew if I ever wanted to, if I ever got out of mobile homes, I wanted to get into single family houses. Now I've done commercial as well. I've done condominium developments and, shopping centers. But my focus has been single family houses. So how did I get to where I am today? Well, I'll tell you.   Jay Conner (00:02:22) - In short, from 2003 to 2009, I relied on institutional money and local banks to fund our real estate deals. And in 2009 January 2009, I had a rude awakening. I was on the phone with my banker, and I learned that my line of credit had been closed with no notice. January of 2009 I'd done a ton of deals with my banker, and of course, during that time, they were not loaning out money to real estate investors anymore. So I knew I had to find a better and quicker way to fund my real estate deals. So right after that, I was introduced to this concept of private money private lending, self-directed IRAs. I'd never heard of any of that stuff. And so in less than 90 days, I raised $2,150,000 in private money and lending from individuals through connections that I have and had. And since that time, I've not missed out on a deal for not having the money.   Sam Wilson (00:03:27) - That is fantastic. It, $2.15 million in less than 90 days. Yes, you had the context or contacts to do that, but what did you have them invest into? I mean, it's one thing to go out and say, hey, I have, you know, this is the thing we're doing, but where did that money get deployed so rapidly.   Jay Conner (00:03:49) - In single family houses? So I had houses under contract to buy and close on before I knew that, you know, that my, my line of credit had been shut down and so but I only needed, $500,000 or so to take those houses down. So the other $1.5 million we started putting to use on other deals that we were negotiating on, you know, over that 90 day period.   Sam Wilson (00:04:20) - Got it. One of the things I think, that you've always stressed to your lenders is they are direct investors. Their name is on the they, you know, not just a promissory note, but they hold the deed of trust or I guess, you know, depending on what state you're in, I'm not sure how North Carolina does it or the mortgage. is that still the case today?   Jay Conner (00:04:38) - That is the case. Everything that we do with single family houses is what we call one offs. So what do we mean by a one off? Well, a one off is that you've got a private lender, which by the way again we're not talking institutional money.   Jay Conner (00:04:51) - These are individuals. These are human beings just like you and me, using their investment capital and or their retirement funds to invest in our deals. And so you have a private lender or maybe a couple of private lenders that are funding a single family house. And as you said, they get the problem. They get the same protection as a bank, right? They get a promissory note, they get the mortgage or the deed of trust here in North Carolina that collateralize that note. So we're not borrowing unsecured funds. They get named as the mortgage on the insurance policy. That's another layer of protection. We name them also as additional insured on the title policy. So we give them the same protection as the bank. So the private lenders are not having any kind of equity position. It's not joint venturing. The private lender acts in the same capacity as the bank. And it is our entity, our company that owns the properties. Right, right.   Sam Wilson (00:05:47) - And that makes perfect sense. And for those of you who are listening to this, go and wait, Sam, why are we talking about private lending on single family homes? On the how to scale commercial real estate podcast? It's because the principles are the same.   Sam Wilson (00:05:59) - Not only do I think the principles are the same in the in the way that you can utilize this strategy in commercial real estate, because I think, as you mentioned, you may have done that with shopping centers and with other things. but it also could give you something else in your tool belt. Another way to think about how to take down a deal, because there's there's not a one size fits all approach to how we finance and take down assets, even on the commercial. And I think even especially on the commercial real estate side, where you get into some very, very creative financial structures. So this, this may be just one more thing in your, in your toolbox that you can go, oh, here's, here's a way I can plug somebody. And I know that has a lot of capital that maybe could help us get this deal done. So very cool. It sounds to me when you mention all of this, like, you have to have a great team behind you that is able to get all these eyes dotted and t's crossed.   Sam Wilson (00:06:52) - Otherwise this becomes an administrative nightmare.   Jay Conner (00:06:55) - Absolutely. The team is so important. So who are the team members? Well, first of all, it's my opinion. You're not really in business as a real estate entrepreneur or investor until you have a relationship with an excellent real estate attorney. As a matter of fact, our real estate attorney is right next door down the sidewalk, about ten feet, so that's pretty convenient. I've been with the I've been using the same firm, the same group of people, ever since 2003 when we started. So we got a long history of relationship to Sarah. So the real estate attorney is important. I am not a realtor. I don't want to be a realtor. I want, but my relationship with my realtors are very, very important. My primary realtor that I've been doing business with, it helps me find deals, pulls all my CMA's. For me. Comparative market analysis gives me opinion on value. his name is Chris. We've been together doing this thing ever since 2004, the second year that I started.   Jay Conner (00:07:55) - And so the realtor relationship is so important. And then, of course, my team members, I've got a full time acquisition list that's been with us for 18 years. But what in the world is an acquisition? Acquisition negotiates the deals, I make the decisions. you know, based on what I want to offer on properties and etc. and then I've got my project manager. So I got a actually, I have two project managers that oversee, the houses that we're doing on rehabs. So they go out and they estimate the repairs and budgets when we're actually rehabbing a house. And, by the way. As a side note, private money is not just for rehab. Business private money is when the seller of any kind of property requires all the cash. Now, of course, we're familiar with all kinds of creative ways to buy houses and commercial properties and etc.. You know, when you're in the commercial space, of course, self storage and all that kind of stuff. Very popular to have seller financing.   Jay Conner (00:08:55) - Take back a note with single family houses. We will, you know, buy houses sometimes, subject to the existing note where the owner agrees to sell us their property and we agree to make the payments on their current mortgage and leave that in place. But at the end of the day, and, Sam, I think you will agree. At the end of the day, particularly in the world of single family houses, most of the time, as in 87% of the time, to be exact, the seller requires all the cash. So having the cash ready to be ready to go is going to allow you to make more offers and not miss out on any more deals. But back to the team. Acquisition is very, very important. And, I have a I have a full time personal assistant that helps, you know, runs my calendar, schedules my appointments and etc. but let me go back to day one. It didn't start out this way. Day one. I mean, Jay Connor was running around with his hair on fire, you know, 60 plus hours a week trying to do everything myself.   Jay Conner (00:10:03) - And I learned a very, very important lesson. You cannot scale. You cannot grow if you try to do all this stuff on your own. So I. I set out on a quest after I'd been in this business for about 3 or 4 years to start automating, delegating everything that I can and to only be involved in the activities in the business that I really enjoy. Right. So today, what do I do? Well, I make decisions. It's my job to make sure the marketing machine was motivated. Several leads are coming into the funnel every day, every week. Because I say if you don't have consistent leads coming in all the time, you're not in business. You got a hobby, right? So I make sure the marketing leads are, turned on. And another important part about communicating with my team is the proprietary software that I use, communicating with the entire team as to where we are with any given deal. That's why with the team in place and our software of communicating with each other, regardless of where that deal is in the pipeline, that's how I'm able to run this business in less than ten hours a week.   Jay Conner (00:11:16) - Right.   Sam Wilson (00:11:17) - And that. Yeah, you you've hit on hit on the, the, the team systems. I mean, that stuff takes time to build. And it goes back to the, Seven Habits of Highly Effective People. I think I'm thinking of, I think. The, the third, what is the third chapter where they talk about, Efficiency is not efficiency, but it's something along those lines where they have the, the, you know, the the matrix where it's urgent, not urgent, important, not important.   Sam Wilson (00:11:47) - Oh, right. Right, right.   Sam Wilson (00:11:48) - You know what I'm talking about. Where it's like most people spend like 80% of their time in the urgent, important category, which is crisis mode.   Jay Conner (00:11:56) - That's right.   Sam Wilson (00:11:57) - Where we need to be spending, you know, the inverse 80% of the time in the not urgent, important category in those.   Jay Conner (00:12:04) - Well, you know, if you're if you're in the if you're in the reactionary mode, right. versus focusing on growing your company and making it better and putting systems in place, then your company's never going to grow.   Jay Conner (00:12:18) - If you're in the reactionary, you know, box.   Sam Wilson (00:12:22) - Does building team and system, does that come naturally for you, or is that something you've honed over time?   Sam Wilson (00:12:30) - I'm sure I honed that over time.   Jay Conner (00:12:33) - I didn't get a college degree on how to build a team and grow system and put systems in place. That'd be a great degree. I tell you, I tell you how all that did come about very early on. And this right here is, is very, very important advice that I would give to any real estate entrepreneur, whether you're brand new or you've been in it for a while. My business started to skyrocket, like overnight when I started joining really good mastermind groups. Mastermind groups of where, fellow like minded individuals are in real estate investing and have been doing it a while. I'm not listening to advice from somebody that hasn't even done their first deal yet, right? I'm listening to advice from fellow mastermind members that are doing 50 plus deals a year, so I can't recommend that strong enough to get involved in a group to where you can really learn from and contribute to your fellow mastermind members.   Sam Wilson (00:13:39) - Right? No, that's really, really powerful. I like that. So we've talked a bit about team. You know, I like the idea. We talked about this a little bit off air. I like the idea of debt. And this is just again, you know, full disclosure here on my own show, which is that I don't love I don't love raising capital. It's not something that comes to me. And I'm like, man, like you said, you know, find team members that love doing this. Not that's not what I love doing. just because of the amount of work that goes along with it. One, you're now married to that investor for 5 to 8 years, potentially answering questions, fielding emails, responding back. I'm not an amazing communicator, Jay. It's not something, again, like, you know, outside of the podcast, it, you know, my wife handles all outbound family communications. Like, I don't know if you want to hear if you want to know something from our family.   Sam Wilson (00:14:31) - I talked to my wife, because I'm just going to do, like. That's where I specialize is doing. And I found that one of the shifts that we've made strategically is that we take on a lot more debt. It's short term debt now, similar to a private lender. And in fact, it is private lending on on a lot of deals where it's debt as opposed to raising equity. And I found that to be really powerful one, because it ticks all the boxes for me personally, where I now no longer am and beholden is too strong of a word, but I'm no longer responsible. I will say to those people that gave me the money, because there's great responsibility when you have equity investors, and as long as I'm making those payments back to those lenders on time, they don't give a rip what I do in my day in and day out. And so it alleviates that communication, you know, kind of kind of hang up that I have. So I don't know, what are your thoughts on that when you when you hear that? I mean, for me, it's it's just a strategy we, we're employing more and more and I'm really enjoying it.   Jay Conner (00:15:26) - Yeah. Well, let me comment on. What's what are the activities that we do to raise private money. So. So I've got two comments or two thoughts. Number one, as far as an activity goes or a way to raise private money as far as having an event, the only events I've done are what I call private land or luncheons or private lender events to where I will invite a group of people, you know, to a luncheon, and I'll teach the private lending program that I've put together that gives our investors high rates of return safely and securely. And so I'll just teach the I'll teach the opportunity. You know, since I started doing this, I've never asked anybody for money. And they say, J how did how do you have, you know, right. At $10 million, now that you've raised a private money without asking anybody for money, it's real simple. I put on this hat that's called my teacher hat. So this is my private money teacher hat. And I just teach people how.   Jay Conner (00:16:35) - So, you see, the traditional way of borrowing money is you go to the bank or the institutional lender, and you get on your hands and knees and you say, please fund my deal, right? It's you're begging, right? And this world, I'm not asking for a mortgage. Excuse me, I'm getting interrupted here on my screen. I'm not asking for a mortgage. I'm offering a mortgage. Right. So. So as far as activities, I mean, I've raised $969,000 at just one private lender luncheon, and I wasn't pitching any deals. There's no there were no deals at at that luncheon. It was the program. So they tell me what they want to do and how much they got to work with. And then I call them up with the good news phone call. Well, what in the world is the good news phone call? Well, Sam, let's say you're one of my private lenders, and you've told me you got $150,000 to invest. And let's say I got a house with an after repair value of 200,000 over in Newport.   Jay Conner (00:17:34) - So I pick up the phone. Believe it or not, we still have handsets here in North Carolina with cords attached to them. But anyway, I pick up the phone and I call up Sam and you and I have a little chit chat. And then here is the script. Here's the script. Let's hear it on the good news phone call. I say, Sam, I got great news. I can now put your money to work. You see. Side note, you've been waiting for the phone call. You've been waiting for me to put your money to work. Because you tell me you've got this. And by the way, Sam, if you had retirement funds and I've introduced you to the company that I recommend where you can move retirement funds tax free, no tax effect over. And then you can loan that money out and earn tax deferred or tax free income. You're really waiting for the phone call because you've moved the money over at my recommendation, and you're not making any money until I put it to work.   Jay Conner (00:18:28) - So back to the script. I call you up. I say, Sam, I got great news. I can now put your money to work. I've got a house in Newport with an after repair value of $200,000. Now, the funding required for this house, this property is $150,000. Closing is going to be next Wednesday, so you'll need to have your funds wired to my real estate attorney's trust account by next Tuesday. And I'm going to have my real estate attorney email you the wiring instructions. That's the end of the conversation. Notice I do not ask Sam, do you want to fund the deal? That's the most stupid question in the world. I get asked Sam. Of course he wants to fund the deal. He's been. He told me he's got $150,000 to put to work. He's waiting for me to put it to work, and I don't have to pitch the deal because I'm not going to bring a deal for Sam to fund. It doesn't fit the criteria of the program that I already taught him as to how it works.   Jay Conner (00:19:25) - For example, part of the program is I'm not going to borrow more than 75%. I'm not going to allow my private lenders to loan me more than 75% of the after repaired value of the property. I didn't say of the purchase price. I said of the after repair value. So did you did you hear those numbers? The after repair value, which I told Sam, was 200,000. The funding requires 150,000. That's 75% of the after repair value. And so. You know, one question. I got on another show yesterday, Sam, was when you're looking for when you're looking. I could what I'm getting ready to say is probably the most important thing I will say on this show. One question I got yesterday was J. When somebody's looking to start raising private money and they've never raised it before, what's the first thing they should do. I said that question is easy. The first thing they should do is get their mindset right. It's hard to own real estate until you own the real estate in between your ears.   Jay Conner (00:20:31) - So what do I mean by that? How do you get your mindset right? It's this whole idea of you're not asking, you're not begging, you're not chasing, you're not selling, you're not persuading, you are educating. Educating. You're an educator, you know, of my 47 private lenders that we've got right now, not one of them had ever heard of private money or private lending until I educated them on what it is. All my private lenders, none of them are sophisticated. They're normal people, just like you and me. By the way, where's a great place to start making your list as two potential private lenders in your world? Retired people? There's a good chance retired people and got retirement funds, and now you can educate them on what self-directed IRAs are. You know, not one of my 47 private lenders had ever heard of what a self-directed IRA is. And so over half of our private lenders are using their retirement funds to invest in our deals and be our private lenders. So that's the first thing.   Jay Conner (00:21:40) - You're an educator, right? You know, sometimes people say, gee, they may not say it directly, but if they've never raised private money, they got a fear of rejection. Here's my question how can you be rejected if you're not asking anybody for anything?   Sam Wilson (00:21:59) - That is. That's a very, very good point. It goes. I mean, the other way to look at that is the the answer is always no. it's no before you ever made the call. So if it doesn't work out afterward, where did where are you? The same place you started? It's like it's.   Jay Conner (00:22:15) - By the way, there's a really good book I recommend, and the title of it is go for no. Have you ever heard of that book saying not.   Sam Wilson (00:22:24) - You haven't heard of go for No, man.   Jay Conner (00:22:26) - I was going to look over there on my shelf and just see if I had it handy. It's a really, really thin book. you can get it on Amazon, but but quick read. But the premise of the book is don't go for yes, go for nothing, go for no.   Jay Conner (00:22:41) - Right. And it's just a whole reframing of how you get a bunch more yeses when you're going for. No, I.   Sam Wilson (00:22:46) - Love it, I love it. J you had one other thing that you wanted to, give away here to our listeners today, which I think will be of value. How do they get that?   Jay Conner (00:22:55) - Absolutely. Yeah. So the first time I was on your show, I gave away my e-book, but now we're taking it to the next level. So here is my recent book, Where to Get the Money Now? And subtitle How and Where to Get Money for Your Real Estate Deals without relying on traditional or hard money lenders. You can't even get this as an e-book to download. I'll actually mail this to you. Priority mail, three day priority mail. I'll autograph it and, just cover shipping. And so here's the URL to get this book shipped out to you right away. W w w dot j Connor j con air.com/book. That's J connor.com/book. I'll rush it right out to you.   Jay Conner (00:23:39) - It walks you through easy read step by step. How to get all the money and funding for your real estate deals you would want. And by the way, as Sam said at the beginning of the show, the principles are the same. Whether you're raising money for commercial or you're raising money for single family.   Sam Wilson (00:23:56) - Thank you, J, for coming on the show today. I certainly appreciate it. It was great to have you back on. And thank you also for that, giveaway there to our listeners. I myself will, end this call and probably send the book to my house because you never know what you're going to learn. So get the book. If you're listening to this show, I'm sure it's packed full of great stuff. And, Jay, thank you again for your time.   Jay Conner (00:24:16) - Thank you Sam. God bless you.   Sam Wilson (00:24:18) - Hey, thanks for listening to the How to Scale Commercial Real Estate podcast. If you can, do me a favor and subscribe and leave us a review on Apple Podcasts, Spotify, Google Podcasts, whatever platform it is you use to listen.   Sam Wilson (00:24:31) - If you can do that for us, that would be a fantastic help to the show. It helps us both attract new listeners as well as rank higher on those directories. So appreciate you listening. Thanks so much and hope to catch you on the next episode.