Unlocking Unlimited Private Money Success with Jay Conner
Key Takeaways
- Private money gives investors the power to fund deals without relying on banks or institutional lenders.
- Educating and protecting private lenders builds trust and long-term funding relationships.
- Success is determined by mindset, strong networks, and taking 100% responsibility for outcomes.
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The REI Agent with Jay Conner
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The Power of Contentment and Financial Freedom
In this inspiring episode of The REI Agent Podcast, Mattias welcomes Jay Conner, famously known as The Private Money Authority.
The conversation begins with Mattias reflecting on the idea of seeking contentment rather than chasing happiness.
He shares, “If you seek to be content, it kind of sets the bar lower… and we probably would have less problems.”
This simple yet powerful concept set the stage for an episode that blends mindset with money.
From Banker Shutdown to Raising Millions
Jay’s journey began in the early 2000s in the mobile home business, but when financing collapsed, he turned to single-family homes. Then came the financial crisis of 2008.
With no notice, his banker closed his line of credit, leaving him stranded.
Instead of panicking, Jay asked himself a life-changing question: Who can help me with my problem?
That question led him to the world of private money.
He attended his first seminar in 2009, and within months, Jay raised over $2,150,000 in private money.
As Jay boldly states, “Since that time, I’ve never missed out on a deal for not having the funding.”
Turning the Tables: Making the Rules
Unlike traditional banking, where lenders dictate terms, Jay flips the script.
“Instead of asking for a mortgage, we’re offering an opportunity,” he explains.
By putting on his “teacher hat,” Jay educates people in his community about private lending, helping them achieve high returns safely.
One of his most effective tools is what he calls The Good News Phone Call. He doesn’t beg for money.
He calls potential lenders with confidence: “I’ve got great news for you. I can now put your money to work.”
The process builds trust, aligns expectations, and ensures investors are excited rather than skeptical.
Creating Win-Win Deals That Fund Themselves
Jay details how deals are structured so that he brings home a check at closing while also paying lenders with their own funds until resale.
He explains, “I buy a property, take no money to the closing table, bring home a check, and use the private lender’s money to make their monthly payments.”
This structure creates cash flow flexibility while protecting lenders with strong safeguards like deeds of trust and insurance coverage.
The Three Types of Private Lenders
Jay identifies three categories of potential lenders:
- Your warm market – family, friends, and close contacts.
- Your expanded warm market – people in groups like BNI who expand your network.
- Existing private lenders – investors already lending through self-directed IRAs.
His strategy is simple: educate, protect, and serve.
He emphasizes, “Desperation has a smell to it. The worst time in the world to raise private money is when you need it.”
The Ethical Foundation of Private Money
Jay insists on moral responsibility. Lenders trust him to protect their money, and he never takes that lightly.
He advises all investors, “Let the math make the decision and not your emotions. If the math doesn’t make sense, we don’t do the deal.”
This principle ensures his lenders’ money is always secured by sound investments.
The Golden Nugget of Success
When asked for his greatest lesson, Jay responded, “Your destiny is determined by the books you read and the people you meet.”
For him, masterminds and mentors have been the most profitable investments of all.
He encourages everyone to surround themselves with people who uplift rather than drain them.
The Book That Changed Everything
Jay highly recommends The Success Principles by Jack Canfield.
He highlights its foundational message: “Be one hundred percent responsible for everything that happens in your life.”
That principle, he says, is the key to unlocking the rest of life’s opportunities.
Free Gift for Listeners
Jay generously offers his bestselling book, Where to Get the Money Now, free to podcast listeners (just cover shipping).
The book reveals how to fund deals without relying on banks or hard money lenders.
He also includes tickets to his live private money conference, valued at $3,000.
A Path Toward Freedom
This episode with Jay Conner proves that financial freedom is not limited to those with perfect credit or banking connections.
By learning, teaching, and creating trust, anyone can raise private money and unlock a new level of opportunity.
As Jay says, “Being a private lender is a great way to be totally passive, just sit back, collect checks, and watch your account grow.”
The journey isn’t just about money. It’s about responsibility, relationships, and the courage to see opportunity in crisis.
Stay tuned for more inspiring stories on The REI Agent podcast, your go-to source for insights, inspiration, and strategies from top agents and investors who are living their best lives through real estate.
For more content and episodes, visit reiagent.com.
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United States Real Estate Investor
United States Real Estate Investor
Contact Jay Conner
United States Real Estate Investor
Mentioned References
- The Success Principles by Jack Canfield
- Chicken Soup for the Soul series by Jack Canfield and Mark Victor Hansen
- Where to Get the Money Now by Jay Conner
- Raising Private Money with Jay Conner
- Jay Conner Private Money Conference
- Business Network International (BNI)
- Ron LeGrand
United States Real Estate Investor
Transcript
Welcome to the REI Agent, a holistic approach to life through real estate. I'm Mattias, an agent and investor.
And I'm Erica, a licensed therapist.
Join us as we interview guests that also strive to live bold and fulfilled lives through business and real estate investing.
Tune in every week for interviews with real estate agents and investors.
Ready to level up?
Let's do it.
Welcome back to the REI Agent, Mattias here. We are getting through summer. We just had our summer holiday.
We went to Hilton Head. So you may have seen a one episode or two episodes where I was recording from our condo, but we're back now. Vacation just, you know, it was kind of hard.
Not going to lie. It was it was good. But it was also just kind of hard with kids.
That's kind of reality, I guess. We ended up deciding we were going to wake up really early, like 3 a.m. or something like that, and load the kids and drive home on a Friday. But we kind of just decided, you know what?
Let's see if we can pack up and leave tonight on the Thursday. So we that's what we did. We packed up.
I think we hit the road at six or seven, something like that, and we got food. Then we filled up the gas tank. Soon thereafter, we had them all go to sleep, all the kids.
And I drove an entire gas tank. I didn't stop until the gas light came on and we almost made it home. I was just shy of getting all the way home.
But that does not happen with kids very often. You can go an entire yeah, entire however many hours that was. We did pay for it a little bit.
I think I got four hours of sleep and then we hosted a friend in from out of town and I had to go out as obligated to go out and have fun the next couple of nights. So I've been paying for that a little bit. But we're kind of getting back in the swing of things.
Two of our kids are outside of their normal camp or summer school thing, gearing up for regular school here soon. So it's going to be a little bit interesting. Me covering the kids sometimes.
And it's just not that I mind doing it's more the scheduling headache that is hard for me is to just not to keep track of when I'm free and when I'm not with with kids as far as fulfilling all my other duties with with podcast recording, with taking clients out for showings or listing appointments, etc. So that's going to be the fun here recently. I've come across this saying and I might be talking about it because I'm kind of chewing on this idea, this concept.
I've heard it surprisingly. I don't know if it's one of those things where like you hear a you're looking at buying a toilet, a tundra, and then you just see them all over town. It might be kind of that bias, but I've heard it twice now of people saying that they don't seek happiness.
They seek contentedness. And I think the idea is, you know, you kind of maybe go too far if you expect to be happy or you try to fulfill yourself more than you need. That could be alcohol, that could be food, could be a lot of different things.
But if you seek to be contented, it kind of sets the bar lower. And I think that's an interesting concept. I mean, I know that I think a very relatable thing would be food.
If you seek to to just be content, to just have enough. I think there's even a Japanese word for it. I don't know where you just are full.
You're not stuffed. You're not full, full, but you have enough to eat. That is probably what we should all strive for because we are programmed for this like scarcity mindset where we need to consume and we want the fattiest, we want the like, you know, the things that, you know, in excess are not great for us because of the highest caloric content.
But if we if we seek to be content with what we eat, just filled up enough, we probably would have less problems with weight. So I'm preaching to myself for sure on that all. But it's kind of a new concept that I just I don't know.
I've never heard it before and we're just never registered with me. And so I'm just kind of chewing on that in the background. I'm beta testing it, if you will.
So that might come up more and more in the show as we go on. Maybe I'll find some new good examples of of how that applies in life. But today our guest is a private money borrower.
He he has real estate deals that he does and borrows people's money to do them. And it's so it's a great speaker. He has the he explains things very simply and easily.
And I think that's a very, a very good deal to have. And I think especially in this circumstance, because he's often talking to people who have no idea about this world. They're teaching them about it and it's just it is a very simple concept.
And I think it's it's interesting and there's it's a great way for people to diversify their portfolios and get into some real estate exposure without having to go through the hoops of buying a property, managing it, renting it out or flipping it, managing contractors, et cetera. So, yeah, but this is it was a great show. There's a lot of valuable nuggets.
He offers some freebies at the end. So if you like what he's saying, definitely stay tuned to the end to pick up those free book, et cetera. And he yeah, great, great show.
And if you like this content again and you haven't yet, please subscribe and review us. It always really helps grow this channel, share it with your friends, all that good stuff. But without further ado, here we have Jay Conner.
Welcome back to the RAI agent. We are here with Jay Conner. Jay, thanks so much for joining us today.
Mattias! Thank you so much for inviting me to come along and talk about what I'm so passionate and excited about, and that is private money. And the reason I'm so excited about private money is because private money alone has had more of an impact on our real estate investing business ever since we started in 2003, more so than any other strategy that we've implemented.
Yeah, that's the Holy Grail. That's kind of where people want to get to often in the real estate investing space. Tell us a little bit about how you got started in real estate in 2003.
Well, prior to single family houses, and that's been my focus since 2003, I was raised in the mobile home business, affordable housing and the financing for that product virtually went away in the early 2000s. So if I knew I knew if I ever got out of mobile homes and manufactured housing, I wanted to get into single family houses. And so that's what I did.
And from 2003, Mattias, until January of 2009, the only thing I needed to do to get my deals funded was go to the local bank or the mortgage company and fill out applications and get on my hands and knees and say, please fund my deal. And the banker made me pull up my skirt and I have to show my personal assets and get my credit score pulled and all that jazz. Well, that worked OK the first six years from 2003 to January 2009.
But then everything changed, Mattias. In January 2009, I called up my banker. I had two houses under contract and I thought I still had a line of credit at the bank.
But I learned like that over the telephone that my line of credit had been closed with no notice to me. And my banker's name was Steve. And I said, Steve, I said, what in the world are you telling me?
My bank, my line of credit is closed. We've done a ton of deals, always made my payments on time. He said, Jay, don't you know there's a global financial crisis going on right now?
I said, no, but you just gave me a financial crisis. I don't have a way to fund these two deals. And so I hung up the phone from Steve, the banker, and I thought for a moment and I asked myself a very powerful question.
I thought to myself and asked myself, who can help me with my problem? And, you know, when I asked myself that question, I immediately thought of Jeff Blankenship, a dear friend. He was living in Greensboro, North Carolina at the time.
And he was flipping houses. And I called up Jeff. I told him what had just happened.
And he said, well, welcome to the club, Jay. And I said, I'm not sure I want to be a member of that club. But what club are you talking about?
He said, well, that's the club of having your line of credit closed by your bank, he said. They shut me down last week. I said, well, what in the world?
I said, how are you going to fund your deals, Jeff? He said, well, have you ever heard of private money? I said, no.
He said, have you ever heard of self-directed IRAs and how individuals can use retirement funds and move those retirement funds to a self-directed IRA company and then lend that money to us and money we pay them? The interest we pay them is either tax deferred or tax free. I said, Jeff, I don't have a clue what in the world you're talking about.
I said, what is private money? He says, well, I'm not exactly sure. He said, but there's this gentleman down in Jacksonville, Florida by the name of Ron LeGrand that says we can get private money, I said, well, what is it?
He says, I don't know. But Ron says we can get a lot of it really, really fast. So that's when I went to my first real estate investing seminar in February of 2009.
I learned about private money and I came back and I was able to raise two million one hundred and fifty thousand dollars in new funding that I didn't have since being cut off from the bank. And, you know, Matias, since that time, I've never missed out on a deal for not having the funding.
Two million dollars in 2009 when the world was crashing. Yes, yes.
That's impressive. That's very impressive. Well, and I wasn't dealing with institutional money.
So you see all all these private lenders I'm talking about. There's an interesting a few interesting things about them. Number one, they'd never heard of private money.
They didn't know what private money was. They were not already private lenders. They'd never heard of self-directed IRAs.
So what did I do? Well, the first thing I did was I put my opportunity together that I was going to offer people, first of all, in my own connections, my own network. So I got my mindset right.
People ask me all the time, Jay, what's the how do you get started raising money? I said, well, the first thing you got to do is own the real estate between your ears, get your mindset right. So this whole world of private money, Matias, that we're talking about is it's one hundred and eighty degree shift from the traditional way people think about borrowing money.
Most people think when you borrow money, whoever's learning the money makes the rules, they think that whoever's got the money to loan is going to set the interest rate, is going to do the underwriting, is going to set the length of the note and all that. And so this world of private money, we turn that upside down. So we are our own underwriter.
Instead of asking for a mortgage, we're offering an opportunity. So what did I do? I just went about I put on my teacher hat, Matias, my teacher hat says private money teacher, private money teacher.
So I just went about sharing with people I go to church with, people in my own network, what this world of private money was all about and showing them how they can earn high rates of return safely and securely. And a big secret sauce to this, Matias, is is separating conversations with teaching what private money is to actually having a deal for them to fund. Here's a writer downer.
Desperation has a smell to it. The worst time in the world to be raising private money is when you need it for a deal. Hey, Matias, I want to ask you a question.
Have you ever heard the guru on stage teaching new real estate investors and say something to this effect? Oh, just get the deal under contract. The money is show up.
Yep. That makes me well, I want to be like the Kool-Aid guy on TV and run into a brick wall. That is the most stupid thing I ever heard in my life.
Or they'll say something to the effect of, oh, money finds good deals. Well, now, come on, you get a deal under contract. Is money going to just fall out of the sky and a big old box of money show up when you front doorstep?
No. So I practice and preach. Get them get the money lined up first.
There's always going to be deals. So another big secret sauce to this, Matias, is separating conversations, as I just said, between sharing the opportunity, teaching the opportunity, what kind of rates do I pay? How are they protected, et cetera?
And then having a deal for them to fund. So, Matias, whenever you cue me up here during the show, I will share with your audience the exact script. I call it the good news phone call.
The exact script is how I get my deals funded 100 percent of the time by my private lenders without ever asking or pitching the deal.
I love it. I it must be good because I'm still thinking I'm still kind of shocked that you're able to raise that much money when the real estate world was crumbling because I know it's not institutions. They may not have been lending, but I would imagine there was a mass amount of fear and that it would be harder to convince people into giving their savings, giving their, you know, self-directed IRAs to real estate when it felt like the you know, the world was falling in that world, in that realm.
So kudos to you. So let's go ahead and hear it. I I'm I'm got a bunch of money in my IRA.
Tell me tell me why I should invest with you.
Awesome. Well, let's do a little set up here and have a couple of hypothetical scenarios here. So, first of all, Matias, let's pretend that you and I have known each other a while.
Let's say we know each other through church and we see each other one to three times a week anyway. So we've already got the like the trust already in place. You know, we know each other.
We like each other. We trust each other. So we've known each other for some time.
Secondly, let's hypothetically suppose that you have one hundred fifty thousand dollars in a 401k and let's say that that's with a previous employer and it's still sitting over there in their plan in the stock market. And, you know, it's volatile. It goes up and down.
Let's also hypothetically suppose that I have shared with you how this how this program works. You know, I'm going to pay you eight percent. You know, there's no origination fees.
You never even heard of origination fees because you're not you haven't been a private lender. You haven't been a hard money lender. And let's also and so, you know, how the program works.
You know, I'm not going to borrow more than seventy five percent of the after repaired value. I didn't say seventy five percent of purchase price. Seventy five percent of the after value.
You know, the length of notice, you know, two years, et cetera. So, you know, the program. And so you've told me that you're interested.
You're interested in investing. And you and you tell me about this hundred and fifty thousand dollar IRA that you have or 401k at a previous employer. And so let's also hypothetically suppose I have introduced you already to a self-directed IRA company that I recommend and you have moved that hundred and fifty thousand dollars over to the self-directed IRA company with no tax effect, no tax consequences.
You just you just moved it over and they helped you do that. And that took a couple of weeks. And after you did that, I told you, I said, Mattias, I'm going to put your money to work for you just as soon as possible.
So that's the setup. That's where we are so far. And so now I'm going to call you with the good news phone call and here's the exact script.
So I call you up. We have a little chit chat. And then here's exactly what I would say to Mattias.
I said, Mattias, I've got great news for you. I can now put your money to work. I have a house under contract in Newport, North Carolina.
It's got an after repaired value of two hundred thousand dollars. Now, the funding required for this deal matches up to what you have at the self-directed IRA company. One hundred fifty thousand dollars and closing is going to be next Tuesday.
So I'll need for you to have your funds wired to my real estate attorney's trust account by next Monday. I'm going to have my real estate attorney email you the wiring instructions. That's the end of the conversation.
I mean, I mean, for goodness sakes, I mean, there are three huge reasons why Mattias is excited and can't wait to fund my deal. The first reason is he trusted me to move his money over to the self-directed IRA company. He'd never heard of self-directed IRA companies until I told him about it.
And he'd never heard of this private, this world of private money lending until I told him about it. And I told him how the program works, the interest rate, the length of the note, the frequency of payments, how he's protected, not borrowing unsecured funds. I'm going to give him a deed of trust.
Most people call it a mortgage. North Carolina, it's a deed of trust. I'm going to name as a name, as a mortgagee on the insurance policy.
So Mattias knows all that stuff already. He's been sitting by the phone waiting for me to give him the good news phone call. So first of all, he trusted me.
Secondly, Mattias knows I'm not going to bring a deal to the phone call for him to fund unless it matches the criteria of the program that I already taught him. Did you did you hear the numbers? I told him the after repair value was two hundred thousand dollars and the funding required for the deal is one hundred fifty thousand.
That's seventy five percent of the after repair value. And the third reason Mattias is ecstatic to fund my deal is because he's not making any money until I put his money to work. And so now because I'm not paying any interest until he's actually funded a deal.
So those are the three reasons that Mattias is sitting by the phone ready to fund my deal.
I mean, that's yeah, I mean, is it is it difficult? I mean, I guess you'd almost have to be able to guarantee a deal fairly quickly because I would imagine somebody wouldn't want to have their money not earning any interest for months waiting around for something. Right, exactly.
I mean, that's one of the first questions a new private lender is going to ask is how fast can you put my money to work? Right. And so, of course, I tell people typically with my deal volume, it's with a new private lender coming in, typically it's going to be 30 to 60 days before we'll actually be closing.
And when I have a new private lender come in, I do what's called I move them to the top of the queue because I want to show them when I say top of the queue, like when I pay off a private lender, then their cash is sitting there ready to go. And of course, it's just what you said, Mattias. They want their money working.
They want their money making money, earning interest. And when you and when you cash out and you get ready to pay them off, they don't want their money back. They're going to say, can't you just keep the money?
Right. And the answer is, no, I can't keep the money unless I can secure it. And so I do a lot of what's called substitutions of collateral where I'm cashing out or selling a single family house and I've got another house.
I'm getting ready to close on right away or I may have equity in another house. And so I'll just get my attorney to do a loan modification, keep their promissory note open to where they keep earning interest and then we just change the property. That's collateralizing that note.
OK, and can you put multiple private lenders onto one property?
Absolutely. So now what we have is what we call total loan to value. So total on the base.
So, you know, I don't borrow more than 75 percent. And all of my members of my private money community and students, they do the same thing. We're not borrowing more than 75 percent of the after-repaired value.
So let's use that same example of the after-repaired value of two hundred thousand dollars. And so in the example we went over, you are my only private lender at one hundred fifty thousand. Well, with a total on the value of seventy five percent, I have one private lender in first position, say at one hundred thousand dollars.
I have another private lender in a second lane position, say with fifty thousand. So I'm going to add the hundred thousand to the fifty thousand. That's a total of one fifty divided by two hundred after-repaired value is still a total on the value of seventy five percent of the after-repaired value.
OK, yeah, that makes sense. And yeah, I was curious to know one of the things that's beautiful about like you had mentioned this, like you're making the rules. I mean, this is you're creating these scenarios and offering them to people.
You know, one would expect if they were getting a mortgage that they'd be making monthly payments. That doesn't have to be the case in this circumstance, if you're flipping the house, for example, it could be that they get their payment upon completion with totaling up the interest. Are you in this scenario, are you paying them monthly?
It depends on the private lender and their objectives. So I have some private lenders that are elderly and they're not using a cell, they're not using IRA funds, they're using liquid investment capital, and they want the interest that it earns to supplement their income. So if the private lender needs monthly income to supplement their income, then I pay them monthly.
That's fine. Um, I've got a lot of private lenders that are using retirement funds and they move their funds over to the self-directed IRA company that I recommended. And so I'll pay them either quarterly or semi-annually.
Some they don't care if I'm doing a flip and I'm and I'm going to be in and out of that maybe in nine months or so, then, as you just said, we can let the interest accrue and not make any payments. But let's follow the cash flow on that. Let's say that I have a private lender and they require and they need monthly payments to supplement their income.
Well, let's stop and think about this. You see, I'm bringing home a big check every time I buy and it's going to be a renovation or a rehab. So let's go back to that scenario of an after-repaired value of two hundred thousand dollars.
I'm borrowing up to one hundred and fifty thousand. Well, if that home needs a renovation, say thirty thousand, thirty five thousand dollars, I'll buy that property all day long for one hundred thousand dollars. Fifty percent of the after-repaired value because it needs renovation.
Well, let's follow the cash. One hundred and fifty thousand dollars comes wired into my real estate attorney's trust account. Most states use a title company here in North Carolina.
We use real estate attorneys. So the hundred and fifty thousand is wired to the trust account. Well, one hundred thousand dollars of that hundred and fifty is going to go to the seller of that property.
So now what do we have? We have this thing called excess cash to close. And for all of you all that are real estate agents and realtors, you know what excess cash to close means.
That means there's excess cash sitting in a trust account that's now going to come to me, the buyer of that property. So in that scenario, I'm bringing home a fifty thousand dollar check, plus some closing costs. Now, the majority of that check is going to go towards the renovation.
But let's stop and ask this question. Notice I do not take any of my own money, the buyer, to the closing table. I'm picking up a check, right?
Here's the question. Who wants to get paid to buy houses? Right.
And so here's a writer downer and a good double check. If you are doing a renovation and a flip. If you can't bring home a big check when you purchase the property, you're paying too much for the property.
And and you can sometimes get that with the bank, maybe not a big check, but sometimes you can get you can get that. I've had that a couple couple of times, but it's a lot harder and you probably can't get seventy five percent. They'll probably be a lot more conservative just depending on who you're working with.
That's right. But but yeah, that's that's that's awesome. So so like you were saying, a hundred thousand dollar purchase, thirty thirty five thousand dollars in.
So you still have fifteen thousand dollars there that you're making interest payments with if you're doing it monthly or whatever.
That was the point of the story. If I'm making monthly payments to them initially, whose money am I using to make their monthly payments? I like it.
I mean, let's stop and think about this. I buy I buy a property. I take no money to the closing table.
I bring home a check and I use the private lender's money to make their monthly payments. I mean, it doesn't get any better than that.
And if anybody's scratching their head, it all makes sense then once the property is sold. Right. So then you are able to pay back their their principal.
So in total, like the one hundred fifty. Right. That's right.
That's right. So so there might have been. I can't do the math here quickly, but, you know, you might have paid them another five thousand, three thousand, whatever, in interest.
And then you'll have that additional one hundred fifty back to them. So they will in turn get their whole eight percent back. It's just the way it crumbles.
You're able to use their funds to pay that interest until that, yeah, that you realize the plan overall. I love it because you could also refinance. You could put it on to a traditional mortgage in theory.
Right. You could do what's called the Burr method if you wanted to at that point. Right.
Let's say the interest rates on a secondary market product is going to be less than eight percent. And it's six just to throw that out there. You could, in theory, then also put it on to a regular mortgage and then pay them back and, you know, and then have a property that you keep instead of selling it.
That's correct. And that brings up a good point right there, Mattias, in this world of private money. And remember, I'm not talking about hard money.
This is not institution. This is not institutional money. And by the way, I'm not poo pooing hard money lenders.
Some of my best friends are hard money lenders and they use my techniques to go raise more money from their investors to invest in their fund that they turn around and loan out to real estate investors. If the math makes sense, you can still do the deal, of course. Sure.
But yeah, you know, what's interesting is I got forty seven private lenders and not one of them, not one of them ever heard about private money or self-directed IRAs and this world until I put on my teacher hat and exposed them to him, which reminds me, Mattias, there's three categories where you can find private lenders. Where are these people? Where are these where are these private lenders or potential private lenders?
Well, the first category are what I call people in your own warm market, your own connections. Where do you go every day, every week and see the same people, right? So they're in your cell phone, right?
You go to church with them. You play golf. They're your co-workers.
Any of those connections. The second category of private lenders are what I call your expanded warm market. Because if you want to scale your business and do multiple deals simultaneously, you're going to run out of your own contacts sooner or later.
So how do you grow your own network very, very quickly? Well, I can tell you one very, very quick way to grow your network is join your local B and I business networking international. I mean, every every city and small town has got a B and I and I have raised millions of dollars by being an active B and I member.
The third category of where you find private lenders are existing private lenders. These are ordinary people just like you and me that are already loaning money out to real estate investors, either using investment capital or using retirement funds. Well, did you know over 70 percent of account holders in self-directed IRA companies want to loan you money?
They want to be a private lender. They are already a private lender. But there's one little caveat to that.
Instead of putting on your teacher hat, you're not going to teach those people about private money. They already know what it is. So now you're going to have a negotiation conversation versus a teacher student relationship.
And I'd much rather be a teacher than a negotiator.
Sure. Now, that makes sense. Another thought that comes to mind is in this is this is different, but and maybe you can help me explain the difference here, but when you get into a syndication and there are private investors in the syndication, limited partners, those all have to meet certain requirements.
They typically have to be an accredited investor. And that means that they have a net worth of a million dollars outside of their personal residence. Or they make, I think it's 200,000 personally or 300,000 jointly a year for the past two years.
Yeah, 250. So it doesn't sound like this has the same requirements. It sounds like this is also not a security.
And that might be one of the main differences. But can you can you talk about that a little bit? Sure.
So a syndication, which I don't do because I'm not in commercial. So typically, if you're doing a larger project such as apartments, a commercial building, self storage, any kind of multifamily, et cetera, then you're going to do as far as raising capital goes, you're going to do what's called syndication or you're going to syndicate. And what that means is that you're going to hire a you're going to hire an SEC attorney to draw up what's called a private placement memorandum, PPM.
And that's going to be the document that you disclose how your deal works and what the opportunity is. Well, all that is regulated by the SEC. The Security Exchange Commission regulates all syndication activity in this world of single family houses, which would also include duplexes, triplexes and quadplexes in this world.
We're not syndicating. So here's a writer downer. Everything that we're doing here is called asset backed debt, asset backed debt, right?
So this is not a security in the form or as relates to syndication. So the SEC is not regulating what we're doing with single family houses with this being an asset backed debt, meaning we're not borrowing money unsecured, we're borrowing money and we're securing that note with a deed of trust or a mortgage. So everything that we do with single family houses is called one offs.
You've got a property that is being funded by one or two or three, whatever private lenders, each one of them has their own promissory note, each one of them has their own mortgage or deed of trust. So as a result, there's no limit to the number of private lenders we can have. They do not have to be accredited.
In fact, here's what's funny, Mattias, of my forty seven private lenders, I do have some of those that are accredited. But you know what's funny? They don't even know they're accredited.
They don't even know what an accredited investor is.
Right.
I mean, I've got some private lenders that's got, you know, over a million dollars with me, but but all the notes are secured by individual properties.
Yeah, that makes sense. That's a key difference there between when you invest in a syndication. Yeah, you're not going to get that.
And so you said there's no limit. So you could have no limit on the number of investors in a deal if it's secured. I mean, I know you already mentioned that it would have to be first, second, third mortgages.
And it sounds like you go in order with how much you invest. So that would be there's no real limit there, either. How many people you could have in one deal?
I know it would be a nightmare and you wouldn't want 30 people on it. That's right.
Yeah, I mean, typically on a single family house or on average, you're probably not going to have more than one to three private lenders, you know, depending on, you know, depending on how what the after repaired value is, you know, on that property. When I said there's no limit to the number of private lenders you can have. I mean, overall, like, you know, properties, multiple properties, you know, I got forty seven.
So which means there's no limit to the amount of private money that you can borrow at any given time. And the reason I bring that up is that's in contrast to doing business with the local bank or mortgage company, because I had a limit to my line of credit before it was shut down. And so, yeah, it was a huge blessing in disguise over time because if the bank did not shut me down, Matias, odds are you and I would have never met.
Sure, sure. It's and it is a really different world. So I have a deal with a, you know, seller financing deal.
So basically what we're talking about, except the person used to own the house and it is just it was just so much fun to get creative with the whole process, as it was, there were no preset rules like, you know, there's there's no preset rules what the interest rate is going to be. There's no preset rules of what the length of the note will be. There's a balloon.
There's just all sorts of moving. There's no preset rules about what the down payment would be, all that kind of stuff. Now, you now you teach good principles where you're not wanting the people to get over leveraged because they could and get themselves in hot, hot water.
Right. That's where that 75 percent rule comes in. Right.
Correct.
Yeah. And I mean, you know, we are morally and ethically bound to protect these private lenders. Because, you know, when you're when you're exposing people to this world and teaching them how this works, they never heard of this.
Right. So they're looking to you to be the person that's going to look after them and protect them. Right.
And and so you got to do that. You got to look after your private lenders.
Now, it makes sense. And obviously, that's the best way to get repeat business. And I would imagine some of them are telling their friends as well about the opportunity.
And all my lands, they can't keep their mouth shut. I mean, I haven't I haven't actually had to put my teacher hat on in a long time because the referrals just come and come and come and you mentioned it when we started out. But it is a challenge to be able to use all the money, which is a good problem.
Yeah, yeah, yeah. To find enough deals. I mean, I think around our area right now, it is it has been a little bit since I found a good deal that pencils out where we finished one, not as actively pursuing currently at flips and that kind of things.
But, you know, if the right one comes across my plate, I'll definitely jump. So I could I could see how that would be a challenge. And I know that in the syndication world, sometimes people get tempted to keep the lights on by by, you know, lessening their standards as to what the deal is itself.
Do you ever feel that that gives a problem, like a pressure to, you know, get their money working and that you might. I could see that being a trap, picking up a deal that isn't as good because they really want their money working.
Yeah, so I follow the rule of let the math make the decision and not your emotions. So I stick to the same hard and fast formula as to what my maximum amount is that I will pay for a property when I'm using private money. And if the math doesn't make sense, then we don't do the deal.
Yeah.
And ultimately, I would rather pass on the deal than put my private lenders money at risk.
Yeah, yeah, absolutely. That makes sense. But no, that's that's a super interesting.
I think that there is definitely a big. Yeah, I think what could be cool for people and one thing that you probably do talk to people about as well is that if they are heavily invested in stocks, want to have some diversification, want to get into real estate, they don't want to be a flipper. They don't want to be an active property manager.
They don't want to do all the work involved with it. This is a great way to diversify their portfolio.
Oh, absolutely. Being a private lender is a great way to be totally passive for someone that doesn't want to negotiate deals, oversee deals, deal with all the different vendors, but just sit back, collect checks or watch their account grow. This is a wonderful, passive way to get involved.
Now, and I would imagine for the investors, they would not be able to capitalize on depreciation. Is that correct? That's correct.
Yeah. The income that in order to capitalize on depreciation, then it's your company that has got to own that property so they can depreciate it. So the income that the private lender earns, if they're using just liquid investment capital, then that's they get a 1099 dash INT at the end of each year and that's the interest income they earned is taxed at their ordinary income tax rate if they're using retirement funds, dedicated retirement funds and a self-directed IRA company.
Then there's no tax. There's no 1099 INT. There's no taxes because they don't pay any taxes.
They don't pay any taxes at all. If they're using a Roth IRA, that's all after tax.
Yeah.
But if it's if it's a 401k that they moved over or whatever, then that's all tax deferred and they won't pay any taxes on that until they take any distributions.
Yeah, that makes sense. And yeah, like you said, that that Roth could be the real sweet spot there. Oh, yes.
And if anybody's out there wanting to invest themselves, they can also obviously invest their own deals with with the same strategy of self-directed IRA. Absolutely. I I've I've been tempted to do.
I've kind of used that as my balance because most of my net worth, most of my world is in real estate. So I have maintained some in stocks, but it has been tempting to to convert to a self-directed and and go all in. Well, well, she will convert part of it.
There you go. There you go. Yeah.
So I got to ask if you have any golden nuggets for our listeners that you want to pass on could be about this space. It could be general mindset, et cetera.
Well, there's lots there's lots of golden nuggets. My most expensive lessons that I've learned is through my mistakes, I guess I guess a golden nugget I would share to your audience is that. One of my favorite quotes is your destiny is determined by the books you read and the people you meet.
And so when I say the people you meet, I'm talking about who are you hanging around, some of my most most profitable money that I've invested is being member is being a member of mastermind groups, hanging around people that are like minded, that you can serve each other and help each other grow. So I highly recommend getting involved in a mastermind that's got, you know, like minded people of whatever it is that you're that you're trying to work on. So that would be my golden nugget for today.
No, I love it. It's so true. It's so true.
And people can really pull you down, even like negative people. So it's it's good to curate your friends.
You're absolutely absolutely. You don't get to pick your parents, but you do get to pick your friends.
I love it. Now, how about a favorite book? If you're watching this, Jay has a background of a bunch of books and he just mentioned that reading was a recommended thing.
Do you have any fundamental books you think that would be helpful in the space or or just maybe one that you currently really enjoy?
Well, I got a long list of that, but I'll share one that is very, very impactful. And that is by Jack Canfield. He's the co-author of the Chicken Soup for the Soul series.
And he wrote a book called The Success Principles. The Success Principles. There's sixty five success principles in the book.
And he just came out with his I think it was 10 year anniversary edition. But anyway, very impactful book. I highly recommend it.
The chapters are not long. It's easy to read and digest. And the very first principle in that book out of all sixty five is foundational to all the other principles, and that is be one hundred percent responsible for everything that happens in your life until you take one hundred percent responsibility for everything that's happening.
Then the rest of the principles don't matter. That's so true.
That is so true. That is such a fundamental shift. When you stop blaming everybody else and everything that happens to you on on outside circumstances.
That's when you can truly start growing. That's great. I haven't read that one.
So thank you that you're welcome. Jay, what about if people want to find out more about you, follow you on social media, learn more about your private money, you have a private money program. Is that correct?
Actually, I would love to give your audience, Matias, a free copy of my best selling book, which is called "Where to Get the Money Now," and the subtitle is "How and Where to Get Money for Your Real Estate Deals without Relying on Hard Money Lenders or Institutional Money." The book is 20 bucks on Amazon, but let me give it to you as a gift. Just cover shipping and I'll autograph it and I will express mail it to you.
I'm also going to include two tickets valued at three thousand dollars to my live and in-person private money conference that I put on three times a year. The next one coming up is in October. And so I'll include those tickets for the book.
You can pick up the book at www.jayconner.com/book. So, I'm an E.R. not a O.R. So that's www.jayconner.com/book. I'll rush it right out to you. And if you've enjoyed this podcast, let me invite you to come over and check out my podcast. I'm now in my eighth year and it's easy to find on all the podcast platforms.
All you do is search for Raising Private Money . Imagine that. Raising Private Money with Jay Conner. Conner and I have two shows a week.
We release some early Monday mornings and Thursday mornings or twice a week. I interview other real estate investors about how they have gone out raising private money. And so we learn from two other guests every week.
I love it. It's fantastic. Thank you so much.
Definitely check that out, guys. And yeah, thanks so much for being a guest on the show. I really enjoyed this conversation.
Mattias, thank you so much for having me and God bless you.
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