The Wisconsin Investor
Each week, we bring you interviews with some of Wisconsin's top real estate investors who share their tips, tricks, and strategies that you can implement right away. This show is dedicated to helping Wisconsin real estate investors elevate their game. Along with interviews, I'll also dive into hot topics in solo episodes and feature experts from various real estate sectors across Wisconsin.
The Wisconsin Investor
The Secrets To Unlimited Funds For Your Deals With Jay Conner
Imagine never having to beg a bank for funding again. What if you could consistently secure real estate deals with private lenders without ever asking for money? That's exactly what Jay Conner has mastered, and he shares his revolutionary approach in this eye-opening episode.
Jay reveals how he's built a portfolio of 47 private lenders providing $8.5 million in capital for his real estate business, all while maintaining the same 8% interest rate since 2009. Operating in a small market of just 50,000 people, he achieves average profits of $86,000 per deal by being "a big fish in a small pond" – a strategy perfectly suited for Wisconsin's many smaller markets.
The conversation illuminates the critical distinction between private money and hard money lending, with Jay emphasizing that true private money involves direct relationships with individual lenders using personal investment capital or retirement funds. This approach eliminates fees and middlemen while giving investors unprecedented control: "We get to make the rules. You as the borrower are already approved. There's no applications, no credit score checks, and you are your own underwriter."
Perhaps most valuable is Jay's psychological framework for approaching potential lenders. By separating conversations about the lending program from specific deal funding requests, investors avoid projecting desperation. His "teacher hat" approach educates lenders about opportunities rather than asking for anything, culminating in his "good news phone call" script that elegantly puts money to work without ever making a pitch.
The episode also explores how self-directed IRAs create win-win scenarios, allowing lenders to grow retirement funds at stable 8% returns that are tax-advantaged while giving investors access to capital. As one of Jay's lenders wrote in a thank-you note before passing away: "You changed our retirement years."
Ready to transform your real estate funding approach? Grab Jay's book "Where to Get the Money Now" for free (just cover shipping) at jayconner.com/book and start building your own private money network.
Welcome back everybody to another episode of the Wisconsin Investor Podcast, and today I have somewhat of a celebrity here who I'm going to introduce in a minute. But like usual, I've been doing a little commercial lately for Wisconsin Discount Properties, who sponsors the show. Today, what I'm going to focus on is not a specific deal, but just on all of the things that we can do at Wisconsin Discount Properties to help you if you're looking to get started in investing in Wisconsin, or you already are in Wisconsin and you're just looking to get that next deal or maybe get your first deal. Our team at Wisconsin Discount Properties is here to help you guys. So what you can do if you're not quite ready to start looking at deals yet, but you just want to start getting your footwork or your feet underneath, you, go to wisconsindiscountpropertiescom and, instead of putting your information in on the front page, just go to the contact us page If you just want to have a conversation and see if investing in Wisconsin or getting on our buyers list is the right fit for you. But if you do think that's the right fit and you're ready to start getting deals sent to you every single day, go to the website and put your information on the front page and you'll start getting an email from us every single week, monday mornings at 6 am with some hot deals for the week that are off market. The only place you can get them is through our buyers list.
Speaker 1:With that, let's get into today's episode, because we got a lot to cover in a short period of time. I have my good buddy here, mr Jay Conner. Jay, what's going on, brother?
Speaker 2:Hello, corey, I'm so excited to be here with you on your show to talk about my most favorite topic, that being private money.
Speaker 1:I'm so passionate about private money.
Speaker 2:Why in the world is that? Because private money has had more of an impact on our real estate investing business than any other strategy that we've used ever since 2003.
Speaker 1:For the audience here who doesn't know who Jay Connernor is. Jay and I met back in 2008. He was speaking at uh or 18, I'm sorry. He was speaking at an event that I was attending as one of the keynote speakers there and I got to network with jay and get to connect with him. Then we ended up being in some mastermind groups together and gotten to know jay for quite a while and you can tell this fella has a lot of energy and has quite the wisconsin accent. J where are you? What part of Wisconsin are you in right now that we're doing this, Robin?
Speaker 2:The Wisconsin accent. I've never been accused of having a Wisconsin accent. Yes, so my wife, carol Joy, and I we live here in eastern North Carolina, at the southern tip of the Outer Banks, in a very, very small town called morehead city, north carolina. Population 8 000 and, yeah, our total target market is only 50 000 people. Wow, um, so we don't do that many deals. We'll do two to three deals a month. Uh, we don't wholesale. We stay in all the deals.
Speaker 2:We flip most of them okay um, and, but our average profits now are 86 000,000 per deal, and I don't say that to brag at all, I say that to make a point, and that is there's an argument to be made to invest in smaller areas, outlying areas, to where you don't have all that competition with all the other real estate investors, and um, so you know it works out. I mean, run the numbers two or three deals a month at 86 grand, those. That math sort of seems to work.
Speaker 1:That math's nicely.
Speaker 2:We're in a small area here, and you know, I just much rather be a big fish in a small pond.
Speaker 1:Yeah, well, that's great because that relates really well to Wisconsin. We have a lot of small ponds in Wisconsin. You know we're talking a bar and a church and a stop sign, maybe if you're lucky. So I love what you're talking about, because I think that's an untapped area here for our listeners is they think they got to be in what we call the big cities, which, comparatively speaking, are still relatively small, but there's a lot of money to be made in those outlier areas where you don't have everybody fighting over everything. Right, absolutely, that's awesome.
Speaker 1:The reason I really thought of you, jay, is I have conversations every day with investors who are looking to get started in real estate or have already been started in real estate maybe, and one of the things I preach all the time is the two most productive things I think people can do in real estate investing is find deals and find money. And if they just keep doing those two things, obviously you got to build a little team if you're flipping and those kinds of things, right, that's also takes time. But if you do those two things, it doesn't matter how bad of it or how good of a team you have. If you buy it right, you can afford a lot of mistakes, right For your bad team. But you are inevitably known throughout the industry, throughout the country, as the leading expert in how to find private money. Can you just talk to the audience a little bit about, like, what the heck is private money? I think most of us understand it, but in your definition, what is private money?
Speaker 2:and why the heck is this such a great tool? Why are you so passionate about private money? Sure Well, one of the easiest ways to start explaining what private money is to talk about what private money is not.
Speaker 1:So when.
Speaker 2:I talk private money. I'm not talking hard money. Now I'm not poo poo and hard money lenders. Some of my best friends on the planet are hard money lenders. In fact, they use my techniques to raise money not for their deals, but for their hard money lending fund.
Speaker 1:Exactly yeah.
Speaker 2:They then turn around and lend out to real estate investors.
Speaker 2:So and the reason it's so important to talk about the distinction between private money and hard money is because you got I mean, there's a hard money industry thing going on right now to where hard money lenders a lot of them are calling themselves private money lenders and they, they are lending out private money, but it's not their money that you know.
Speaker 2:Most of the time, a hard money lender is a middle person or a brokerage that has raised private money from individuals to invest in their private lending fund, and then the hard money lender will, in turn, loan that out. So that's hard money lending. When I talk private money, I'm talking about doing business with individuals, human beings just like you and me, that loan money out to us real estate investors, either from their just liquid investment capital and or their retirement funds. Now, that's huge. Right there, I've got 47 private lenders right now funding our real estate deals and, by the way, if you're listening to this show, you don't need 47 private lenders, you just need like one or two I was going to say the only one or two could recycle their money over and over again.
Speaker 2:And that's a good thing about private money you get to use it over and over and over again, never with any origination fees, et cetera. So, yes, we're doing business with individuals. And the reason I say retirement funds are so important is, you know, not one of my private lenders my 47 private lenders ever heard of private money or the opportunity to be a private money lender. Until what did I do?
Speaker 1:I put on my teacher oh, I love it for you guys listening. You can't see this. You got to go to youtube. He's got private money, teacher hat he just put on.
Speaker 2:I love it, yeah so I put on my teacher hat and I teach people what private money is, what it it's all about. So you know one big distinction between borrowing institutional money and using private lender money when you've taught them about the opportunity is that we get to make the rules. You know, when I used to go to the local bank and borrow money from our real estate deals, I had to get on my hands and knees and put my hands underneath my chin and say please fund my deal, please fund my deal.
Speaker 2:And you know I'd have to. You know, raise my skirt up so they could look at all my personal assets and pull my credit score and financial statements. None of that exists. None of that exists in this world of private money, particularly when you got your teacher hat on and you're exposing this opportunity to people that never, you know, never, heard about this. So we get to make the rules. You see, here's the deal. Here's a writer downer you as the borrower, the real estate investing borrower you as the borrower, you're already approved. There's no applications, there's no credit score, there's no financial statement, and you are your own underwriter. You underwrite your own deals. You set the interest rate, you set the maximum loan to value Uh, you set the length of the note, you set the frequency of payments. All that, yeah. By the way, if you don't know where to start on putting that together, I got you covered. I say just duplicate what I offer, just duplicate what I teach. It seems to work pretty good.
Speaker 1:Yeah, it's served you well since 2003. I mean, that's over two decades that it works. So I think you've proven through every market now, jay, that the system you have is pretty awesome, and I know at the end of this you're going to have a little giveaway for the audience which we can talk about at the end, correct?
Speaker 2:Oh sure, yeah, I'm so excited about my new book, which is called when to Get the Money. Now, it's not an e-book, it's an actual book, book that I'll autograph and I'll mail it to you. And yeah here at the end of the show, I'm going to give out a specific URL where you can get the book for free. Uh, just cover shipping and I'll rush it out to you Three day rush delivery through the United States Postal Service.
Speaker 1:Sweet. That is awesome. I have the book, love it. There's so many good nuggets in it, by the way, jay, that I know we had a mastermind a few years ago that we were running and we Zoomed you in to speak to that audience and they loved you and you got the book out to a bunch of them and I know that made an impact for a lot of those folks as well. But private money to me, this is I wanna go back to this One of the things I think it's saying. Jake, maybe we can expound on some of those techniques they're going to find out in the book or just talk a little bit about your experience. There's a lot of fear for people around talking to friends, family, their network. They feel like they're chasing people. What are some easy things people can do to either reframe that or what have you found to make that less maybe scary for people who want to do this real estate thing and need private money to accomplish it?
Speaker 2:Yeah, that's a great question. I hear it all the time. People that have never raised capital, never raised money, they'll say something along the lines of or if they don't say it, they're feeling it. They'll say I've got a fear of rejection. So I answer that with this question. And the question is how can you be rejected if you're not asking anybody for anything?
Speaker 1:So good.
Speaker 2:So I got eight and a half million dollars in private money from my investors that I just use from project to project to project. And you know what's interesting, corey, is, I've never asked anybody for money. I've never asked anybody for money and they say, jay, wait a minute. Oh, and, by the way, in addition to that, I've never pitched a deal. I've never pitched a deal. And they say, jay, wait a minute, hold the phone, hold the phone. How do you get all that private money and you never ask anybody for money? And how in the world do you get your deals funded and you never pitch a deal?
Speaker 1:Right, I'm going to pull the curtain back on that secret so let's hear it.
Speaker 2:So here's a really, really important point to first understand this. You know I talked about my teacher hat First. You want to have an attitude that you're leading with a servant's heart and you're teaching people about this opportunity in this world of private money. So one big secret here to getting your deals funded without ever asking, never pitching is we separate this is critical, Okay, Separate the conversations with a new potential private lender about the program and then having a deal to fund. Here's a writer downer Desperation has got a smell to it.
Speaker 1:Oh yeah, Stinky cologne baby.
Speaker 2:Stinky, cologne, and you know. If you're talking with a new potential private lender about your opportunity and in that same conversation you're talking about a deal that you're looking to get funded, you already sound desperate.
Speaker 1:Yeah.
Speaker 2:Without even trying to sound desperate, because what you're communicating when you do that is I need your money to fund this deal. It's what you're communicating when you do that is I need your money to fund this deal. It's what you're communicating, and guess what? You don't need their money because there's more money out here available than there are deals quite frankly.
Speaker 2:Right. So first, what we want to do since we're going to separate the conversations is you're going to teach people, and I suggest starting in your own warm market, your own connections, your own network, people in your cell phone, people you go to church with, people you play golf with, et cetera. Start with that, and in my book where to get the money now that I'll mail to you, I actually have you go through an exercise on how to make your initial list of people to contact and, by the way, you know, this does not have to all be one-on-one. I mean, I've raised $969,000 in new private money at one one hour luncheon. I call it the private lender luncheon, you know.
Speaker 2:So, back to how do you get this money without asking for it. So first you teach, expose them to the program. Back to how do you get this money without asking for it. So first you teach. Okay, expose them to the program. And, by the way, if they're listening to your program on private money, they're interested, or they or they wouldn't be listening they wouldn't be listening right, exactly.
Speaker 2:And so first you teach it and you know, they tell you verbally how much they've got to work with. You know, is it investment capital? Is it retirement funds? You now need to introduce them to your self-directed IRA company representative, where they can move their money over with no tax effect and earn either tax deferred or tax free income using their retirement funds. So they tell you what they've got, where it's located. And now, corey, I'm going to share with you and your audience right now the exact script come on, baby the exact words to use when you've got a deal for your private lender to fund. And this script that I'm going to share right now exactly what to say.
Speaker 2:Let's go you got a deal for them to fund and you are not pitching, you're not asking.
Speaker 1:So real quick, just to make the point. So you've already educated them on what private money is, you know how much they have, you know where it's good, where it's potentially coming from. Right now we've let the. Are we letting the dust settle here and then we're coming back?
Speaker 2:Because when so, corey, let's say that you are a new private lender with me.
Speaker 2:Let's say that I've taught you the program, the opportunity. You know the interest rate, which is 8%, by the way, there's no points, there's no origination fees. You know the length of the note is going to be two years. You know the maximum loan-to-value is 75% of the after repaired value, which, by the way, side note, that's one bit. One of the 20 reasons I love private money is I always bring home a big check when I buy the property. Who wants to get paid to buy properties? I never take any of my own money to the closing table in this world of private money.
Speaker 2:And so anyway so let's assume I've taught you the program, you love the program. And let's say, hypothetically, that you have told me that you've got $150,000 in a let's say it's in um Charles Schwab, in in in the, in the stock market, dedicated retirement funds and you're tired. You're sick and tired of the volatility, let's say, and you want a set rate, you know reliable return 8%. You're happy with that, you're excited about that. So I've introduced you to my self-directed IRA company that I recommend my private lenders to use.
Speaker 2:And let's say you've moved that $150,000 from your retirement account over to the self-directed IRA company and that took a couple of weeks to get that in place. And so now you've contacted me and you say, jay, I got the money, they're ready to go. And I've said, okay, corey. And here's exactly what I say. I said, corey, I'm going to put your money to work for you just as soon as possible, probably within the next couple of weeks or so. And you say, great. So a couple of weeks go by, I dial you up, you answer the phone which, by the way, I know people find this hard to believe. I actually still have a handset and a line.
Speaker 1:You're in North Carolina.
Speaker 2:Wow. So I call you up. You answer the phone. We have a little chit chat. I'm going to share the exact script right now that I would say to Corey that's, he's got $150,000 to put to work, he's waiting. This is what I call the good news. Phone call. Okay, this is the good news.
Speaker 1:Let's hear it. Let's hear it.
Speaker 2:I dial up Corey, corey answers the phone, we have a little chit chat and here's the script. Corey, I got great news for you. I can now put your money to work. I've got a house under contract in Newport with an after-repair value of $200,000. Now the funding required for the deal matches up to what you've got in your self-directed IRA. That's, $150,000 is what's required for the deal. Now, closing is going to be next Wednesday. Next week. I'm going to have my real estate attorney email you the wiring instructions, so you'll need to have your $150,000 wired to my real estate attorney's trust account by next tuesday. That's it that's it.
Speaker 1:That's it, more or less, just telling them what to do. They got the money. They want to put it to work so let's unpack that.
Speaker 2:Let's unpack that as to why that's the way it works.
Speaker 2:First of all, my private lender knows I'm not going to bring a deal to the conversation that does not meet the criteria of the program. I already taught them I'm not going to have them fund a deal that is more than 75% of the after-repaired value. They know that I'm going to be collateral, um, providing I'm going to be collateralized in the note with a deed of trust. Most people call it a mortgage here in North Carolina and some other States Texas it's a data trust. They know I'm on collateralized the note. So when I call up and I say I got an after repair value of 200,000, the funding requires 150, uh, there's your 75% of the after repaired value. So they know that. They know that I'm not going to bring a deal for them to fund that doesn't make the the the the criteria of the program.
Speaker 2:And secondly, for goodness sakes and the example we just went over Corey, whoever the private lender is, is not earning any money until I put their money to work. And let's unpack it a little bit further they, for goodness sakes, they moved their retirement funds over to the self-directed IRA company that I recommended. So they've already trusted me, they've already listening to my recommendation recommendation. They've moved their money over in hopes and an expectation that I'm going to invest that money just as soon as possible. Because, remember, that's what I said to corey after he moved his money over. I said I'm going to put your money to work just as soon as possible. So corey is sitting by the phone waiting for the good news phone call that I'm going to put the money to work. So you see, when we unpack this scenario, there's no chasing, no begging, no persuading, no selling. It's all about serving your private lenders talk to me real quick, jay.
Speaker 1:I want to unpack two things. There's two, two areas I want to go to real quick. Can you just explain to people in the shortest way what's a self-directed IRA and why is that so important?
Speaker 2:So a self-directed IRA company is a is also called a third party custodian is also what it's called. But a self-directed IRA company is a company that is approved by the IRS to be a um be a custodian of your retirement funds. So a self-directed IRA company. They can't give any financial advice whatsoever. That's why it's called self-directed. So the account holder at the self-directed IRA company totally makes their own decisions about how they're going to invest those retirement funds. And a self-retired IRA company depending on which company it is, they're going to charge a percentage, uh a fee, for being the custodian. Some of them charge a percentage of your asset value in your account. Some of them charge just a flat fee per transaction that you do, which, by the way, I prefer that way.
Speaker 2:And so it's a great way for your retirement funds for a private lender's retirement funds to grow either tax deferred or tax free Uh, it's going to grow. Tax deferred, uh, unless it's in a Roth IRA and that-tax dollars that are invested in the IRA, so all that income is tax-free.
Speaker 1:You can do a lot of damage in your retirement accounts in real estate, but also just growing with you at 8% tax-free is pretty incredible. Why can't they just take their Charles Schwab account and do it? I'm sorry, why can't they just use?
Speaker 2:their Charles Schwab account and do it. I'm sorry.
Speaker 1:Why can't they just use their Charles Schwab account and invest? Yes, that's a great question.
Speaker 2:So the reason they can't use Charles Schwab or any brokerage, edward D Jones, um, you know, uh, morgan Stanley, any of those they can't use that money to self-direct because when you have, when they have the retirement funds at those brokerages, they can only invest in what the brokerage offers right, and in addition to that, there's no commissions, there's no fees for the financial advisor. If they were to use those funds to invest in our deals, so they got them. If they want to do this, they got to move it funds to invest in our deals. So if they want to do this, they got to move it over to a self-directed IRA company.
Speaker 1:I think that's important for people to know, because I know we're like self-directed. When I first got into this, I'm like what is a self-directed IRA? I had no idea. And I'm like I had this exact question when I was there and I'm like, well, why can't they just take their retirement account from Charles Schwab and just let me go use it? So I appreciate you answering that for the audience, Cause I'm sure there's a lot of people out there.
Speaker 2:Now your other question was why do private lenders want to do business with us? Well, there's three big reasons why private lenders want to do business with us. Number one reason they're going to make a lot of money. Well, a lot of money compared to what? Compared to what? They're gonna make a lot of money compared to putting their money in a um certificate of deposit at the local bank. By the way, those rates are coming down fast, fast, fast.
Speaker 2:A year ago you could have gotten 5% in a seven month CD here at the local bank. Uh, today you're down to about 3%.
Speaker 1:Wow, it's down 2% already. Cd yeah, that's going to come down, even.
Speaker 2:I mean, and if you, if you put it in like a 18 months CD, it's a, it's even a much lower rate, because they're anticipating rates coming down, got it? You see, yeah, Number one, they're gonna make a whole lot more money. So I've been paying my private lenders ever since 2009,. The first six years I actually, corey, used local banks. I didn't know any better Okay. So from 2003 to January 2009,. I just used the local bank to fund my deals until they cut me off with the rest of the world. Yeah.
Speaker 1:Yeah.
Speaker 2:So that was the biggest blessing in disguise. So why do private lenders want to do business with us? They're going to make it. I mean, 8% is fantastic. By the way, I've been paying my private lenders the same 8% since 2009. And here we are in 2025. And one question I get is Jay, how in the world are you still paying 8% when the market's gone way up on on interest rates and all that? How do you do that? Well, there's two answers. Number one because I make the rules right.
Speaker 2:Remember, that's what's different in this world of private money we are our own underwriter. Instead of the lender making the rules, which is traditional, we make the rules. We're offering this opportunity. The other reason they're ecstatic with 8% is that's more than 5% and, it's for sure, a whole lot more than 3%. And you know when, right before COVID came along in 2020, the average 12 month CD in the nation got down to 0.17%. Wow, now you're like a hero. Then, when you're paying, oh my goodness.
Speaker 1:Yeah, tougher in the last couple of years because the you know like the treasuries were high and all those you know bonds and all that stuff were pretty comparable to getting up there anyway closer to the 8% mark. So the Delta between what you can offer right and and what this treasuries could give you was a lot closer than it has been in a long time.
Speaker 1:So I made it a little more difficult, I'm sure. For for some folks out there you know, that's what happened to us when we were raising a lot of money for flips. Uh, when we, when we shifted, when rates went up, we started flipping a lot more than we wholesale and, um, that was. That was a big conversation piece I would have with people all the time. It's like well, I can get five and a half or six over here, give it to you for eight. Uh, uh, you know so I had to go up to 10% for some of those folks to get them to make the move. But now, as you're saying, it's coming down a lot and you're just steady, eddie, at eight. They know they're getting eight. They like the consistency, they don't have the volatility. They know they're going to just consistently get an 8%. Why would they mess with it?
Speaker 2:Yeah. So three big reasons why they want to lend us money. Number one they're going to make a lot of money, yep. Number two they know that their investment with us is going to be safe and it's going to be secure. So how's it safe and secure? Well, it's secure because we're not borrowing unsecured funds. You can, you can borrow, and so you can just do a promissory note and be legal all day long. But don't do it. Protect your private lenders by giving them, by collateralizing the note with that mortgage or deed of trust that gives them the right to foreclose on you If you don't make the payments and of course you're going to make the payments because you're going to buy right. It's safe because it is a conservative loan to value. We're not borrowing more than 75% of the after repaired value, so that when that home is renovated, they have what I call a 25% equity cushion between what the value of the property is worth and the total loan to value that we've borrowed. And then the third reason that they love doing business with us is they don't have to worry about the value of their investment being volatile.
Speaker 2:And when I say that, of course I'm contrasting that to them putting their money in the stock market. If they invest in the stock market, first of all they already lost money. There's fees, there's commissions. In this world of private money, there are no fees, there are no commissions. If they, you know, loan or invest $200,000, they know that 8% if I use it all year, they're going to earn $16,000. So it's like putting money in the bank. They know exactly what the rate of return is going to be. And that's particularly important to older private lenders that, like, don't have enough time to live through another correction in the stock market.
Speaker 1:Sure you know what I mean, oh yeah so those three reasons they make a.
Speaker 2:They make a great return, uh. Secondly, it's safe and secure. Thirdlyly, the value is not volatile. The principal loan amount remains the same until we cash out. So when we sell the property they get all their principal back, unless we substitute the collateral, which we do a lot of. But that's another show.
Speaker 1:Well, I was going to get into that, so maybe we'll get into that. We'll see how much time we have.
Speaker 2:Okay, but anyway, we pay them all their money back, along with any unpaid accrued interest, and of course they want to reinvest just as soon as possible yes, exactly one other thing.
Speaker 1:I think, jay, on the safety, security side of things, you know we put our private and I'm sure you do the same thing, we put our private lenders on as the mortgage holder on the insurance.
Speaker 2:Absolutely so on the insurance policy the property and casualty insurance we name the private lender as the mortgagee, the mortgagee. The reason that's important to them that's another layer of protection is if there's ever a claim against that insurance policy, well, the check by the insurance company is going to be made payable to the mortgagee, your private lender and to your entity. So your private lender has got to sign off on that check before you get the money and so, again, that's just another layer of protection for them. We also name them on the title policy as an additional insured. So we're giving them all the safety and all the protection as a regular bank would get.
Speaker 1:Yeah, are there any laws Jay around like how you can go about raising the money, like I know, like, if you have a fund right, isn't there certain rules about accreditation and some of those things? Is there anything with what you're doing here, where you're using it really per transaction or, like you said, you're going to substitute collateral at times? Is there any kind of laws or anything anybody would need to know if they're going to go out and start soliciting what's?
Speaker 2:wonderful about the way that we do private money is that it's not sec regulated so we're not raising money for a fund?
Speaker 2:okay, you're raising money for a fund. You're now under the sec, uh regulatory, sec regulatory laws. But everything that we do with single family houses or duplexes, triplexes, quadplexes, a property itself, it's called in slang, it's called one-offs, okay, one-offs. So what in the world is a one-off? Well, a one-off is you've got a single family house that's being funded by a private lender, maybe two, maybe three. You can have multiple private lenders uh loaning money and they each have their own promissory note and they each have their own deed of trust protecting their note as well. But that's when we get into what's called total loan to value. So total loan to value means you add up all of your private lender notes that they are loaning on a property and you divide the total of the notes by the after repaired value. You still don't want that to exceed more than 75% of the value of the after repaired value of the property.
Speaker 1:Okay, so you're saying you can pair a few different lenders together on a deal. Is that what you're saying? But you just don't want to get over that 75%.
Speaker 2:The little scenario that we went over with you when we started on that $200,000 after repaired value house.
Speaker 1:Yep.
Speaker 2:I could get $100,000 from one private lender for the purchase. Yep, I could get $50,000 from one private lender for the purchase. I could get $50,000 from another private lender for the renovation. Add that together, you're still at 75% of the after-repaired value.
Speaker 1:Yeah, now what about the chain of mortgage? So some people are like I only want to be first-position mortgage holder. Right, I won't do anything unless I'm first-position. Can you just talk a little bit about what that means in this world?
Speaker 2:The reason a private lender would only want to be in first position is because any junior lien positions, second position, third position, if they had to foreclose, then they have to inherit any lanes that are above them. So if a junior lane was foreclosing on me which, by the way, that's not going to happen, never has, but anyway, if they were to foreclose, they're inheriting any senior lane positions. And just to comment on that, yes, in on that, yes. The only people that will ever have a problem and insist on only being in first position is if they have already been a private lender in the past. When you've got on your teacher hat and you are teaching people in your own connections, uh, there's a five-letter word that goes a long way, that starts with a t and that's the letter and that's the word trust, right? So you see these people are not really investing in your deals right, they're not investing in your deals.
Speaker 2:They are investing in. You is what they're doing.
Speaker 1:Yes, absolutely that's the biggest thing in private money right the relationship and the trust right that's it yeah, yep, I had.
Speaker 1:Uh, when we were raising a lot of money, I had some folks come up to me and they were like, hey, could I, could I get some funds from your, your private lenders, for some of these deals? And I was like, well, it doesn't really work that way, because they're investing in me. It's not like, yes, they want to return on their money, but they don't know you from adam, so like i're not going to probably let you. You have to go to your own network and get your own people.
Speaker 1:It's not as easy as just sharing a buyer's list.
Speaker 2:Yeah, it's like when I'm teaching and coaching other real estate investors on this world of private money, I say, look, I'm not loaning you money, I'm not connecting you with anybody that loans money.
Speaker 1:I'm going to teach you how to raise your own money? Yeah, cause you have to. It's the one thing. This is where, when I teach people about getting started in real estate, this is where grit comes in. This is where how bad do you want this comes in is are you willing to go out and raise some private money? Cause that's how I got started. My mom was my first private money lender. That's how I got my first deal was. I went to mom ma, do you want to get in on this deal? Yeah, let's do it. I'll give you 10% or 12% or whatever. I offered her at the time and we did a deal together. And then she's like exactly what you said, jay. I gave her her money back after we refinanced. And she's like well, do you have another deal that we can do this in? Because that was pretty cool.
Speaker 2:I like getting that kind of money right.
Speaker 1:And then she still is involved in real estate, she still invests the money in different ways and different deals and that kind of stuff. So you're giving people a great opportunity as well. I think that's the other important part.
Speaker 2:Well, and that's just it. One thing I discovered, and my community that follows me discovers, is it's all about creating win-win scenarios. And I mean we've received thank handwritten Thank you Notes from our private lenders, one I'm thinking of specifically, wayne and his wife. They've both passed away now.
Speaker 2:They were one of our first private lenders years ago and they gave us a handwritten note thanking Carol, join me for changing their retirement years, for changing their retirement years. They told us if we had not told them about this private money world and private money opportunity, they would not have been able to travel and see their grandkids as often as they did. So, um, so I mean you know you, as a real estate entrepreneur, you have this opportunity in this world of private money to make an impact and change people's lives by giving them. You know, this opportunity. The only complaint that I've ever heard from my private lenders are I wish I'd known about this sooner.
Speaker 1:Yeah, exactly For sure. Last question for you, jake, because I know you got a wrap here. You got a busy schedule and we appreciate you taking this time out. This is a question that I actually have. So you put them on a two-year note and we talked about substituting collateral and again, if we got to have you back on to cover this as it's totally separate episode, because it's going to be hard to do, we could totally do that. But my concern is always like hey, what if I don't have a deal for them? Are you doing that?
Speaker 2:and you're still keeping their money and paying them the eight percent if you don't have a deal to place it in? Or how are you handling that, you know? Or with some of your borrowers, or some of your? First of all, um, I'm not paying them interest, unless that uh note is being collateralized by a property. Okay, so, um, and then, secondly, when I have a new private lender, come on, I move them to to the top of what I call the queue, like who's the next private lender in line to use their money. So I want to show a new private lender coming on that, hey, I can perform, I can put your money to work.
Speaker 2:And then the others it depends on how much money they have to invest. Okay, like my minimum that I uh accept from a private lender is $50,000. I can't buy a house typically with 50,000, but I can. I can rehab a lot of houses at the $50,000 mark, and so it depends on how much they've got to work to work with. Have I got a new purchase coming up? Well then, I'll need to use one of my private lenders that has, you know, higher amounts of money I've got one private lender that's got 1.2 and 1 million 250 000, just one private lender.
Speaker 2:I got another one that's got 600 000. Okay, I've got many, uh, in the 500 000 range and then I have some that only have, you know, 50,000. So depending on the deal that's coming up, we'll determine, okay, which private lenders money am I going to use. Got it.
Speaker 1:Okay, very good, and there's a lot more to unpack here. Jay, I know you got to get to some other things in your day and I, you know, I know we got a little late start with some Zoom audio thing, so next time I'm going to have you back on. We're going to keep going. We're going to do Jay Conner part two here.
Speaker 2:Jay Conner 2.0. 2.0.
Speaker 1:And then I'm going to pop on your show too, so maybe, if people want to get over to your show, jay has a podcast as well where you're talking with people using private money all the time.
Speaker 2:Jay, do you want to just let the audience know where they can find it?
Speaker 1:find you absolutely so the name of my podcast, and by the way, we just started our eighth year.
Speaker 2:We're in our eighth year. That's amazing.
Speaker 1:Podcast episode number 717 I got, I got ways to go to catch you, buddy but anyway, the name of the show is raising private money.
Speaker 2:That.
Speaker 1:That's it.
Speaker 2:Easy. So your favorite platform on listening to podcasts? Uh, just type in raising private money. You don't even have to put in with Jay Connor, it'll pop up. And in addition to that, corey, as we promised.
Speaker 2:I want to give away my book for free, just cover shipping. It's where to get the money Now. I'll autograph it for you. I'll rush it out three day rush delivery, uh, for the united states postal service. And here's where you can get the book go to wwwjconner. J-a-y c-o-n-n-e-rcom. Forward slash book. That's jay connor, I'm an ER, not a OR J-A-Y-C-O-N-N-E-R dot com forward slash book. And we'll rush where to get the money now, right out to you.
Speaker 1:I love it, buddy. We'll put a link to that in the show notes, folks. So if you're listening to this and you want to just click the link, you can go to the link and pick up the book there from Jay, and again, there's so many good nuggets in that book. There's so many more things that we didn't get to cover today. If you want to hear more from Jay, go check out the podcast as well. There's a lot of great information there. People still tell me Jay, from three years ago and I think it was three or four years ago I was on your show. They still hit me up, so you got people all over the country listening to your show too, which is great Cause I'm like, oh, Corey, I heard first heard you on Jay Connors podcast. I'm like dang, that was like three years ago or something.
Speaker 2:I don't even remember Overdue. It's time to have you back.
Speaker 1:Yeah, I'll get back on and we'll freshen up and a lot more, a lot more stories war stories that we can share and and hopefully help your audience as well. Uh, for those of you guys listening, if you got some value out of this we say this on most of the shows now you could be the spark to change somebody's life here by sharing this episode. You're one conversation away from changing somebody's life, right. Whether they need private money conversation, like Jay and I talked about today, they just need to get introduced to this amazing world of real estate investing.
Speaker 1:I always bring up this family that I interviewed a few episodes ago who they had a conversation with a friend who was doing real estate investing Boom. Three years later, they're retired from their jobs and their homeschool and their kids doing real estate full time. That's the kind of power you guys have by sharing things like this. So appreciate you guys tuning in and listening and again, jay, appreciate your time. Brother, always great to see you and I always love your energy. Man. I always take a lot of your energy after these conversations, bro.
Speaker 2:That's awesome, Corey. I love your heart and thank you for having me on your show. God bless you.
Speaker 1:God bless you, buddy. We'll see you soon.
