How To Get Money For Real Estate Deals Without Relying On Traditional Money Lenders

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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 Click here to visit this podcast episode