February 26, 2025 • 35 mins
Click here to view the episode transcript
ABOUT JAY CONNER
Jay Conner began investing in real estate in 2003. At the start of his career, he relied on his local banker and was able to put together a few deals. After years of feeling owned by the bank, he learned how to buy properties using creative financing, including subject to and using lease-options.
After the market crashed in 2008, he had to abandon everything he knew about how to finance his deals. Then he heard about the world of private money. He developed his own system for gathering millions of dollars for real estate deals. Jay's unique system allows him to enjoy 7-figure profits year after year.
THIS TOPIC IN A NUTSHELL:
Jay’s transition from traditional financing to private money
Building trust and relationships with private lenders
Investing in Manufactured housing to single-family homes
Advantages of operating in a smaller market
The distinction between private money and hard money lending
Mechanics of Private Money and Self-Directed IRAs
Educational conversations vs. Funding request
Misconception on raising capital
Strategies for new investors to secure private money
Jay's new private money challenge
About the book "Where to Get the Money Now"
Connect with Jay
KEY QUOTE:
“The worst time to be raising money is when you need it for a deal.”
ABOUT THE WESTSIDE INVESTORS NETWORK
The Westside Investors Network is your community for investing knowledge for growth. For real estate professionals by real estate professionals. This show is focused on the next step in your career... investing, for those starting with nothing to multifamily syndication.
The Westside Investors Network strives to bring knowledge and education to real estate professionals that is seeking to gain more freedom in their life. The host AJ and Chris Shepard, are committed to sharing the wealth of knowledge that they have gained throughout the years to allow others the opportunity to learn and grow in their investing. They own Uptown Properties, a successful Property Management, and Brokerage Company. If you are interested in Property Management in the Portland Metro or Bend Metro Areas, please visit www.uptownpm.com. If you are interested in investing in multifamily syndication, please visit www.uptownsyndication.com.
#RealEstateInvesting #RealEstate #CreatingWealth #HardMoney #RaisingCapital #PrivateMoney #PrivateMoneyLending #PrivateMoneyAuthority #CreativeFinancing #DealFinancing #PrivateMoneyLenders #PrivateLenders #TraditionalFinancing #FundingSolutions #SellerCarryDeals #Loans #PrivateLending #SelfDirectedIRAs #ManufacturedHousing #InvestmentStrategies #HardMoneyLending #Acquisition #RealEstateInvestments #InvestmentOpportunities #SteadyCashFlow #LatestPodcastEpisode #PassiveWealth #JoinTheWINpod #DealDeepDive #WestsideInvestorsNetwork
CONNECT WITH JAY:
Website: https://www.jayconner.com
Facebook: https://www.facebook.com/jay.conner.marketing
Linkedin: www.linkedin.com/company/jay-conner-private-money-authority-real-estate-investing
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Intro speaker (00:03):
Welcome to the Westside Investors Network. Win,
your community of investingknowledge for growth. This is
the Real Estate ProfessionalsInvesting podcast for real
estate professionals by realestate professionals. This show
is focused on the next step inyour career, investing. Thank
you for listening.
And please, if you like ourcontent, rate us on your podcast
(00:23):
provider. Just a quickdisclaimer, the views and
opinions expressed in thispodcast are for educational
purposes only and should not beconstrued as an offer to buy or
sell any shares or securities,make or consider any
investments, or take any otheraction.
Trent Werner (00:40):
Welcome back to another episode of the Deal Deep
Dive segment on the WestsideInvestors Network podcast. I'm
your host, Trent Werner. In thissegment, our featured guests
will share their unique storieson a specific deal they've
invested in. We will dive deepinto finding the deal, financing
the deal, writing an offer, andthe due diligence. Do us a solid
and smash that subscribe button,leave us a rating, and share
(01:02):
this episode.
And now, let's dive deep.Welcome back to the Westside
Investors Network podcast. I'myour host, Trent Werner. On
today's episode, we're joined byJay Conner. Jay is going to
share about his real estatecareer and how he started in a
manufactured home sellingbusiness that his dad started,
and has since turned it into aprivate money lending business
(01:23):
for over the last twenty twoyears.
Jay is going to share how he'sclosed over 500 deals and how
he's maintained relationshipswith 47 different private money
lenders. He'll also note that intwenty two years of doing this,
he's never asked for money once.He's also gonna share how you
can get started in this and someresources to help you build your
(01:44):
business using private moneylending. Now let's welcome Jay
Conner. Alright.
We got Jay Conner joining theWestside Investors Network
podcast today. Jay, thanks forjoining us.
Jay Conner (01:55):
Trent, oh my lands. I'm so excited to be here, and
thank you so much for invitingme to come along and talk about
my favorite subject and topicand that being private money
because that's had more of animpact on our real estate
investing business since westarted all the way back in
02/2003.
Trent Werner (02:13):
Now there's so many different directions we can
go with this conversation interms of private money. Before
we get into all those differentavenues that we're gonna talk
about today, I wanna hear howJay Conner got into real estate
to begin with. 02/2003 is, Iguess, twenty two years ago now.
So you've been in the businessquite a while, and I wanna hear
what got you into real estate inthe first place.
Jay Conner (02:34):
Sure. Well, it's a good question. So I I was raised
in the mobile home business. Nowout there in Oregon, I don't
know if you know what mobilehomes are, but, they're they're
very popular in the South.People some people called them
back in the day wobbly boxes,trailers, mobile homes,
manufactured housing when we gotall fancy.
(02:54):
But, anyway, that was myfather's business. By the way,
he's 91 years old and stilldeveloping real estate. I wanna
be like him when I grow up. Butat one time, my father had the
largest retailing company ofmanufactured homes, mobile homes
in the nation. So I grew up inthe environment of helping
people, purchase affordablehousing.
(03:19):
Well, in 02/2002, '2 thousand'3, that entire industry fell
out of favor with Wall Street,which means there was no
financing to speak of availablefor a consumer to finance the
product and purchase it. So wedidn't have any way to to sell
it, really. So we woke up onemorning and had 22,000,000 of
(03:39):
wholesale inventory and no wayto sell it. So we almost had to
file bankruptcy, but we didn't.We worked out with our vendors
and we eventually sold off theinventory.
So it's a whole lot more funstarting up a company than it is
shutting down a company. So,that's when it was in 02/2003. I
knew if I ever got out of,manufactured housing, I wanted
(04:01):
to get into single family homes.And so, that's that's why I did
and, and as
Intro speaker (04:08):
of today, we've flipped, a little over 500
houses. Here in our local area,we're in
Jay Conner (04:14):
a very, very small market. Only two counties here
in Eastern North Carolina. Andwe don't do a lot of deals, we
do two to three transactions amonth, but our average profit
per transaction right now is$82,000. And I don't share that
from a a place of ego orbragging at all. The reason I
share that is that makes anargument for the fact that
(04:36):
there's a lot of advantages tobeing a smaller market where you
can dominate the market, right?
As I say our total target marketis only 40,000 people or so. So
we we dominate the market. I'drather be a big fish you know in
a small pond than in a citysomewhere competing with a bunch
of other real estate investors.So anyway, it was a change of
(04:59):
career, change of industry, sothat's why we switched over back
in 02/2003.
Trent Werner (05:04):
And you said you that you you kinda knew that you
wanted to get into single familyhomes. Was there anything that
you did in the manufacturedhousing space that maybe nudged
you aside from shutting down thecompany, but made you want to
get into single family homeswhen you were still doing
manufactured?
Jay Conner (05:19):
Absolutely. So, ten years before we, got out of
manufactured housing, my wife,her name's Carol Joy. We've got
really, really good friends inNew Bern, North Carolina, which
is still here in Eastern NorthCarolina, and their names are
Craig and Kim. Anyway, they weregetting ready to build a house
and, good friends. We go tochurch with them and that type
(05:42):
of thing.
And so this was all the way backin 1993. Well, they didn't have
any money for a down payment. SoKim's father was a real estate
investor for decades down inFlorida. And he said, well, look
y'all. What I'll do is I'll comeup to North Carolina and we'll
find a fixer upper.
He says I'll buy it and you alldo the sweat equity, on nights
(06:05):
and weekends and then we'll sellit and you can keep the profit
and that'll be your seed moneyfor you to build your house. And
so that's what they did. He cameup here, they bought a fixer
upper upper or through Kim'sfather, and they fixed it up,
sold it. And, Trent, theypocketed $30,000 in ninety days.
And I said, wait a minute.
(06:26):
Wait a minute. Wait a minute.I'm out here on the Sales Center
trying to sell a single widemanufactured home, mobile home,
and get a profit of $3,000, andthey're making $30,000. I'm
going, I like that programbetter. So I heard their story
ten years prior to, closing thecompany for manufactured homes,
(06:51):
but I I already knew.
I mean, I'd already startedreading books, and I was just,
you know, and, you know, andthis was before the HGTV days
Intro speaker (06:59):
as
Jay Conner (07:00):
to where it became, you know, so popular type of
thing. So, yeah, I had beenthinking about it before ten
years before I did it.
Trent Werner (07:08):
Was there any was there any deals or work that you
did in manufactured housing thatgave you the skills to then
start flipping houses right whenyou wanted to?
Jay Conner (07:16):
Well, I thought I did. So my first piece of advice
to your audience is don't startin this business the way I did.
So I was relying on my businesssense and experience that I'd
had in manufactured housing. Isaid, well, you know, it's it's
all housing. I mean, you know, II I can do this.
(07:37):
And so so I started in this justby reading books. I didn't get
my first mentor or coach in thisbusiness until 02/2009, to tell
you the truth. Six years. Andthere's I'm oh my word. I made
so many costly mistakes.
I mean, losing hundreds ofthousands of dollars that if I
(07:58):
had been coached and, you know,worked with somebody that had
already knew the business andand knew where the the
minefields were, I I would havebeen so much further ahead. So,
yeah, my most valuable lessonsare the ones that cost me
dearly.
Trent Werner (08:16):
So you started you started this this flipping
business after closing downmanufactured homes. You
obviously you heard the story ofyour friends getting, you know,
a a boost from the dad or thefather-in-law. And where did
this whole private money conceptbegin once you started flipping
homes?
Jay Conner (08:37):
Right. So, I I should be clear to make sure
everybody understands when wesay private money in this
context, I'm not talking abouthard money. You got a lot of
hard money lenders out there inthe industry that call
themselves private moneylenders, but there's a big
difference. A hard money lenderis typically a broker of money
(08:58):
that has gone out and raisedprivate money from investors to
invest in their fund, and thenthey turn around and loan that
money out to us real estateinvestors. That's a hard money
lender which they now callthemselves private money.
And by the way, I'm not knockinghard money lenders. Some of my
best friends are hard moneylenders. In fact, they use my
(09:19):
techniques to raise privatemoney to get people to invest in
their funds. Right? It's all thesame money.
It's just a matter of whatthey're investing in. So how did
I get how did I get into thisworld? Well, I backed into it,
Trent. I backed into this worldof private money. And here's
what happened.
The first six years that I wasin this business, from 02/2003
(09:40):
to February, the only thing Iknew to do, Trent, was go to the
local bank, get on my hands andknees, and beg and sell and, you
know, pull up my skirt so thebanker could look at my personal
assets and pull my credit scoreand give financial statements
and a colonoscopy, you know,before all was said and done to
(10:02):
get my loans. Well and so thatworked okay. That worked okay. I
missed out on some deals becauseI had a limited line of credit
at the bank, so I had to pass onsome deals, you know, that that
never feels good. So anyway,those first six years, I just
relied on commercial lending,institutional lending at the
(10:23):
local bank.
And so again, that was from02/2003 to 02/2009. Well, here's
what happened. In February, Icalled him a banker. His name
was Steve. By the way, Trent, Iknow you will be shocked to see
that we actually still havehandsets.
Most people don't even know whata handset is with a cord
(10:44):
attached to it. But, anyway, Ipicked up my my landline
telephone, and I called Steve,my banker. Now Steve and I have
been doing business together forsix years. He had funded a lot
of my deals. And I called him upand I told him about these two
houses that I had under contractthat I needed him to fund from
my line of credit.
(11:05):
And these two houses representedover $100,000 in projected
profit. And I learned like thatover the telephone from Steve
that my line of credit at thebank had been closed with no
notice whatsoever to me. AndSteve tells me that, and I said,
Steve, what in the world are youtalking about? Why is my line of
(11:26):
credit closed? We got a greatrelationship.
Always made my payments on time.I got a great credit score right
around 800. Why are you closingmy line of credit? He said, Jay,
don't you know there's a globalfinancial crisis going on right
now? I said, no.
But you just gave me a financialcrisis because I don't have a
(11:46):
way to fund these two deals thatI've got under contract. And
back in those days, you couldn'tget your earnest money back,
here in North Carolina. And sohe says, well, we're not loaning
money out to real estateinvestors anymore because of the
global financial crisis. So Ihung up the phone, I sat here,
and I asked myself a question.Trent, now I want to share this
(12:08):
question that I asked myselfwith your audience because this
question is so powerful, it willhelp anyone fix any problem they
got that they've got going on.
I don't care if it's financial,career, business, personal
relationships, health, doesn'tmatter. By the way, Trent, these
(12:28):
people running around saying,oh, every problem is an
opportunity. I wanna throw up. Ididn't have an opportunity. I
had a problem.
Right? So I need help getting myproblem fixed. Now, you're gonna
find out in a minute, this wholeproblem did turn into an
opportunity because if I didn'thave this problem, you and I
wouldn't even be visiting todayhere on your show. So here's the
(12:51):
question that I asked myself. Isaid, Jay, who, there you go,
who do you know that can helpyou with your problem?
When I asked myself thatquestion, I immediately thought
of Jeff Blankenship who lived inGreensboro, North Carolina at
the time. And he and his wife,they're great friends of mine
(13:14):
and Carol Joy. And, he wasinvesting in single family
houses in Greensboro, NorthCarolina at the time. So I
called him up. I told him whathad just happened with me and my
banker conversation.
He said, well, Jay, welcome tothe club. I said, what club is
that? He said, that's the clubof having your bank shut down
your line of credit. My bankshut me down last week. I said,
(13:35):
well, Jeff, how are you gonnafund your real estate deals?
He said, well, have you everheard of private money and
private lending as to how anindividual can loan money out to
you, from their investmentcapital? You just do business
with individuals and they fundyour deals? I said, no. I never
heard of that. He said, have youever heard of self directed IRAs
(13:56):
that allows an individual that'sgot a retirement account to move
it over, and then they can loanyou money, and they can earn
unlimited interest per yeareither tax deferred or tax free.
I said, Jeff, I have got no ideawhat you're talking about. So he
told me about private money andwhat he was doing and what he
was going to do and and selfdirected IRAs and etcetera. And
(14:19):
so after he and I talked, I didsome research. I did some
studying. And then as a result,I was able to raise $2,150,000
in less than ninety days justfrom my own network, my
community.
And you know what's interesting,Trent? Since that time, I've
yet, even through today, I'veyet to ask anybody for money.
(14:43):
I've never pitched a deal. I'venever, I've I've no chasing, no
begging, no selling, nopersuading. And people ask me
all the time, they say, Jay, howin the world have you got 47
private lenders, which we havenow.
How do you have 47 privatelenders and you never ask them
for money? And how do you getyour deals, funded without
pitching the deal? And here'sthe secret sauce. You see, we
(15:07):
separate the conversations ofteaching. There's the important
point.
You see, I put on my teacher hatwhich says private money teacher
and I simply just, so firstthing I did was I put my program
together that I was going toteach without having any deals
(15:28):
attached to them. So, I decidedwhat interest rate I was going
to pay, 8%, been paying the samething since 02/2009. What
interest rate I was going topay, what the length of each
note was going to be, whensomeone got involved, the
frequency of payments, themaximum loan to after repaired
value. And so put the programtogether for me to just share
(15:50):
with people that I go to churchwith, rotary club, etcetera.
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Trent Werner (16:28):
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Jay Conner (16:52):
And so I went about teaching this opportunity. I put
on private lender, a luncheon,raised 969,000 at just one
private lender luncheon with nodeal attached to it. So then
when I'd have a deal for myprivate lenders to fund, I'd
call them up with what I callthe good news phone call. So
(17:14):
here's the exact script as towhat I say when I've got a deal
for my private lenders to fundwithout asking for money. And
here's this.
Let's say, Trent, let's sayyou're one of my private
lenders. Let's say you've gotyou've told me you've got a
hundred and $50,000 in yourretirement funds that you're not
happy with, and you want toinvest those. And so I've
(17:36):
introduced you to a selfdirected IRA company. You've
moved that money over, andyou're waiting for the good news
phone call. So I call you up.
I say, hey, Trent. I've gotgreat news for you. I can now
put your money to work. I've gota house under contract to
purchase with an after repairedvalue of $200,000. The funding
(17:58):
required is $150,000, whichmatches up to what you have.
And closing is gonna be nextThursday, so you'll need to wire
your funds to my real estateattorney's trust account, by
next Wednesday. I'm going toemail I'm going to ask my real
estate attorney to email emailyou the wiring instructions. End
(18:20):
of conversation. Let's unpackthat for a second. I didn't ask
you if you wanted to fund thedeal.
Of course you want to fund thedeal. You have been relying on
me to put your money to workthat you moved over to the self
directed IRA company at myrecommendation. So again, people
ask me all the time, they say,Jay, I'm fear of rejection. How
(18:41):
can you be how can you have anyfear of rejection if you're not
asking anybody for anything?You're leading with a servant's
heart.
You're teaching them about this.Not one of my 47 private lenders
today ever heard about privatemoney or private lending until I
shared it with them and taughtthem about it. And so, that's
(19:03):
the process. Right? You know,desperation has got a smell to
it.
The worst time to be raisingmoney is when you need it for a
deal. You know, something drivesme crazy, Trent, and I'm gonna
hand it back over to you.Something drives me crazy, and
and I don't know. I'm taking arisk here. I might be getting
ready to say something that youdon't agree with.
(19:25):
But let me ask you a question.Have you ever heard one of the
gurus or speakers on theplatform or stage that's
teaching new real estateinvestors? Have you ever heard
them say, oh, just get the dealunder contract. The money will
show up. You ever heard of that?
Trent Werner (19:42):
Yeah. Too many times.
Jay Conner (19:44):
That drives me crazy. Where's the money gonna
show up? I mean, they'll say,oh, the money finds good deals.
How is the money I mean, themoney ain't got, you know, lips
and ears and a brain. How's themoney gonna find good deals?
I mean, that's the most stupidthing I ever heard in my life.
(20:06):
That's why I say, look. It don'ttake long at all. Get the money
lined up first and think abouthow much more confident, how
many more offers you're gonnamake when you've got hundreds of
thousands of dollars burning ahole in your pocket to make
offers. Anyway, that was a longanswer to a short question.
Trent Werner (20:25):
So I I have a question that kinda encompasses
everything that you just talkedabout for an a newer real estate
investor. You just mentioned alot of people are taught, go
find a deal, go find a deal. Themoney will just poof show up in
an account to help you fund it.I've heard that plenty of times,
and I know that that's notalways the case because you can
find deals, but if you don'thave any money to close on it,
(20:46):
well, then you can't close onit. So as a new
Jay Conner (20:50):
And and and they'll say buy creatively. They'll say,
you know, buy with sellerfinance and buy subject to the
existing note. I've done a lotof that. Right? Mhmm.
But after reviewing thousands ofproperty lead sheets and
negotiating with, you know, allthese sellers, my statistics
show only 13% of for sale byowners will sell creatively.
(21:11):
What do the other 87% require?All the money.
Trent Werner (21:16):
Absolutely. So for for a newer investor, I know a
lot of people will think or hearor are taught, you know, just
just start telling people whatyou're doing. Tell people what
you're doing. Tell them thatyou're gonna flip houses. Tell
them you're gonna invest inwhatever fashion.
And then people start doingthat, right? And if they're
telling people that without anyexperience, what would you say
(21:38):
to them if, you know, I'mtelling someone, hey, I'm going
to go invest and flip houses,just be on the be on the
standby, but I don't have anyexperience doing that. How
likely are those people, thoseprivate money lenders going to
invest with that person? Andwhat would you tell that person
that might be in that situation?You know, do I start looking for
deals?
Do I partner with people to getmore experience? You know, what
(22:00):
would you say to someone likethat?
Jay Conner (22:01):
That's a that's a great question, and I get it all
the time. So there's more thanone answer. The first answer is
people are not really investingin your deals. They're really
not loaning money on your deals.What they're doing is they're
investing in you.
That's what they're doing.They're investing in you. And if
they're not if they're notloaning you money or investing,
(22:22):
that's because for whateverreason they don't trust you.
Right? For whatever they don'ttrust that you can do it.
So the first thing that you cando as a new real estate investor
is lean on and leverage thesuccesses that you've already
had. I mean, people,particularly in your own warm
market, if they know you, theyknow if you've been successful
(22:43):
at what you've been doing.Right? So you can leverage the
past experience you've got inwhatever kind of business, that
you've been in. Secondly,another comment or answer that
I've that I would tell apotential private lender that's
not comfortable, and here's aquote, here's a writer downer,
(23:03):
and that is, if I don't pay you,because that's what they're
concerned about, right?
If I don't pay you the propertydoes. Now, what does that mean?
You see, you're not going to beborrowing any unsecured money.
You can legally, but forgoodness sakes don't do it. You
want to give a mortgage or adeed of trust depending on the
(23:25):
state that you're in.
You want to collateralize thatnote and you don't want to
borrow more than 75% of theafter repaired value. I didn't
say 75% of the purchase price.75% of the after repaired value.
That's why I always bring home abig check when I buy and take
none of my own money to theclosing table ever. I mean, the
(23:47):
question is, who wants to getpaid to buy houses?
Right? We always bring on bigchecks when we buy. So there's
one answer if I don't pay youthe property. It does because
it's a conservative loan tovalue. And then thirdly, if
you're brand new, for goodnesssakes, now as I as I mentioned
earlier, don't be out there onan island by yourself.
(24:10):
I mean, you wanna be you wannabe partnered up either with a
coach, a mentor, or somebodyright there in your local area,
they can hold your hand asyou're doing those initial
deals. So if you have partneredup with a coach or a mentor,
like, you know, I've hadthousands of, students and,
(24:31):
mastermind members and etcetera.And for those newbies, what do
they do? They leverage thebusiness relationship that they
have with me. And so since we'reworking together, they can when
someone asks them what kind ofexperience do you have, you can
say, well, my business partner,Jay Connor, has rehabbed and
flipped over 500 houses and hasgot 47 private lenders with 8
(24:55):
and a half million dollars.
And he and I are workingtogether on every deal that
we're doing. So, if you like meto introduce you to Jay, I can
introduce you to Jay. So,leverage a relationship that
you've got, and quite frankly,you need to have that
relationship anyway.
Trent Werner (25:15):
Yeah. I appreciate that answer, and I think a lot
of people that are listening tothis and maybe want to branch
out into a new niche of realestate, especially if it's
flipping houses, are gonna takewhat your answer was there and
and put that in their pocketbecause that is a fear that a
lot of newer investors have. Youknow, they keep running in
circles.
Jay Conner (25:34):
It's a common sense fear. I mean, they're they're
gonna ask themselves a question,who in the world is gonna invest
with me or loan me money, andI've never done a deal? You
should be asking yourself thatquestion. And, of course, I just
gave the answer.
Trent Werner (25:49):
So, Jay, after twenty two years of of flipping
houses, what are the what arethe best ways to make money in
flipping houses using privateequity? Obviously, you wanna buy
it for less than you sell it forand and and those things. But
for someone that, you know,maybe that's the only way that
they think that you can makemoney, are there other ways that
(26:10):
you can make money using privateequity to acquire properties and
and flip them?
Jay Conner (26:15):
Absolutely. That's a great question. So you number
one, you don't have to flip. Imean, right now, what I'm paying
my private lenders an interestis less than what the commercial
rate is at the bank. Right?
I've got a friend that's beenwith, the bank here in Morehead
City for, shoot, over twentyfive years. He just closed a
(26:36):
commercial loan last week at8.1%. I'm paying my private
lenders eight percent. Right? Soyou can buy and hold.
You don't have to flip. I'vesold a lot of houses over the
past twenty two years on ourrent to own or lease purchase
program, and those houses arefunded with private money. So
(26:56):
the question is, what's thepositive cash flow that you can
make per month between whatyou're paying your private
lender in interest and what youcan bring in. And, of course,
when you sell creatively on arent to own or lease purchase,
you'll be able to collect alarge non refundable option fee
as well. Now how else can youuse private money?
(27:17):
And here's a great strategy. Youcan combine two strategies
together in order to make a dealwork. Here's what I mean. Let's
say that a FSBO for sale byowner has agreed to sell to you
subject to the existing note,which means they have agreed to
(27:37):
sell you their house, leavetheir mortgage in their name,
and you're agreeing to maketheir payments or bring their
payments current or whatever.And you say, who in the world
would do that?
A distressed seller that needsdebt relief. I've done it many,
many times. So what you can dois if there is equity in the
property, you can purchase itsubject to the existing note.
(28:02):
Then, if you if it needs somerepairs, if it needs some past
due payments brought current, orif it's got equity in it and you
just want to pull some cash out,you can borrow private money in
second position. So I've got alot of private lenders in junior
lien positions, not all of themare in first position, right?
(28:23):
I use smaller amounts of moneysuch as rehab money or whatever
in second position. So, now youwould have two notes on that
property. In this example youwould have the original mortgage
in first position that theseller has in their name. Then
you would have private moneyfrom your private lender in
(28:45):
second position. But, here'swhat you want to be careful
about.
Now, we need to take a look atwhat's called the total loan to
value. Total loan to value. Andthat total loan to value, again,
I don't want to exceed 75%. So,just for just for an example,
right? Just for e ease, just foreasy figuring.
(29:06):
Let's say that I got a housethat's got an after repaired
value of $200,000 Let's say thatI buy it for $125,000 which I
could all day long if it needsrehab. And so, let's say the
rehab is only $25,000 which is asmall rehab. So, they owe a
hundred and $25,000 right? Theysold it to me for their payoff,
(29:31):
for their payoff amount of ahundred and 25,000. That
mortgage is in first position.
So, now I can come over here toa private lender and I can
borrow a little $25,000 note,put them in second position.
Now, I'm going to add the 125 tothe 25. Now, I got a total loan
(29:51):
to value of 75% because my totalamount of loans that I have
secured by that same property is$150,000, which is 75% of the
after repair value.
Trent Werner (30:06):
So when when some when someone is doing a subject
to to where that first loan isgonna remain in the seller's
name, are you able as the buyerto make those payments directly,
or do you have to pay the sellerto then pay the bank when it's
in that first position?
Jay Conner (30:23):
I'm not relying on the seller to make the payments
to the bank. Tell me ifparticularly if they're behind
on their payments, if theycouldn't make them prior to
them, why am I gonna trust themwith with my money? So no. We'll
take ownership, so that deedwill actually come into our
company entity name. And then,we have all the correspondence
(30:46):
changed to our mailing address,so we get all the monthly
statements, etcetera.
And we also have the seller signwhat's called an authorization
to release, which gives me andmy team the authority to talk to
their lender or bank if we needto in the future on their
behalf. Authorization torelease.
Trent Werner (31:08):
Okay. That was just a, a curiosity question
that I've personally been askedbefore, but I've never done a
subject to myself. So I figuredI'd ask the professional and the
expert, the expert on this one.
Jay Conner (31:20):
Sure.
Trent Werner (31:21):
So, Jay, out of the handful of different
strategies that you'vementioned, what would you say is
your bread and butter or yourfavorite one to leverage private
money with?
Jay Conner (31:32):
In order what's my favorite strategy in order
Trent Werner (31:35):
I guess deal yeah. Purchase strategy, whether it's
subject to seller carry, youknow, wholesale off market, on
market. Do you have a favoritekind of bread and butter way of
purchasing?
Jay Conner (31:48):
Well, I'll answer it this way. I'll tell you how I'm
getting most of my deals rightnow and, and how we're funding
them. So most of our deal flowthat's coming in is from a
Google pay per lead, not pay perclick. So I've got, five or so
different vendors, companiesthat I pay per lead. My average
(32:10):
lead cost right now is around$300 per lead that's coming into
us from individual owners thatare going on Google and
searching for, you know, buy myhouse fast or sell my house
faster, any of those 75different phrases.
On average, it's taking about 10of those leads in order to
actually close a purchase. So wegot about $3,000 invested in
(32:34):
marketing on average to get a tofor each deal. But who cares if
your average profit is $82,000.Right? I mean, I'll spend as
many $3,000 as I can to to getthat return.
So that's the deal flow comingin. And then, as I say, on about
15% of them or so, we'll buycreatively and then put private
(32:54):
money in second position if weneed to. And the rest of them,
we're just paying all cash forprivate money.
Trent Werner (33:01):
Okay. That's that was a good answer to a a very
unclear question that I that Ithrew you away.
Jay Conner (33:09):
No worries.
Trent Werner (33:10):
So are you only and I know you're in a the
Eastern North Carolina market.Are you only targeting on your
Google leads, are you onlytargeting that market
specifically, or are you lookingelsewhere as well?
Jay Conner (33:20):
For my own deals, yes. Right here in my local
area. But I also JV and partner,you know, with my mastermind
members and and some of mycoaching clients.
Trent Werner (33:30):
Okay. That makes sense. And if someone wanted to
hear more or maybe learn morefrom you in terms of a
mastermind or coach, how wouldthey do that?
Jay Conner (33:39):
Trent, I am so glad you asked because I'm so excited
about my brand new private moneychallenge, which people can read
about atprivatemoneychallenge.com,
private money challenge Com. Andwhat is that? Well, that's a
series of seven videos that Ijust recently recorded, and each
video is like fifteen to twentyminutes long, not long at all.
(34:02):
And it really does a great deepdive into explaining eve even
more details about what privatemoney is. I've got scripts in
there as to what you actuallysay to potential private
lenders.
How do you start conversations?Right? I mean, how do you even
bring it up? And so, we go intoall that. So, I invite you, if
you're listening here to Trent'sshow, go to
(34:23):
www.privatemoneychallenge.comprivate money challenge Com,
and, and I I'd love to interactwith you there.
Trent Werner (34:34):
Perfect. And we'll make sure we get the link down
in the the show notes below.Jay, thank you so much for
sharing about private moneytoday and your vast real estate
knowledge and career.
Jay Conner (34:44):
Trent, thank you so much for having me. God bless
you.
Intro speaker (34:47):
Thank you for listening to this episode of the
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you or someone that you knowwants to be on, please visit
(35:07):
westsideinvestors.com and fillout our form to be on the show.
Thank you again and enjoy yourday.
Welcome to the Westside Investors Network. Win,
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And please, if you like ourcontent, rate us on your podcast
(00:23):
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investments, or take any otheraction.
Trent Werner (00:40):
Welcome back to another episode of the Deal Deep
Dive segment on the WestsideInvestors Network podcast. I'm
your host, Trent Werner. In thissegment, our featured guests
will share their unique storieson a specific deal they've
invested in. We will dive deepinto finding the deal, financing
the deal, writing an offer, andthe due diligence. Do us a solid
and smash that subscribe button,leave us a rating, and share
(01:02):
this episode.
And now, let's dive deep.Welcome back to the Westside
Investors Network podcast. I'myour host, Trent Werner. On
today's episode, we're joined byJay Conner. Jay is going to
share about his real estatecareer and how he started in a
manufactured home sellingbusiness that his dad started,
and has since turned it into aprivate money lending business
(01:23):
for over the last twenty twoyears.
Jay is going to share how he'sclosed over 500 deals and how
he's maintained relationshipswith 47 different private money
lenders. He'll also note that intwenty two years of doing this,
he's never asked for money once.He's also gonna share how you
can get started in this and someresources to help you build your
(01:44):
business using private moneylending. Now let's welcome Jay
Conner. Alright.
We got Jay Conner joining theWestside Investors Network
podcast today. Jay, thanks forjoining us.
Jay Conner (01:55):
Trent, oh my lands. I'm so excited to be here, and
thank you so much for invitingme to come along and talk about
my favorite subject and topicand that being private money
because that's had more of animpact on our real estate
investing business since westarted all the way back in
02/2003.
Trent Werner (02:13):
Now there's so many different directions we can
go with this conversation interms of private money. Before
we get into all those differentavenues that we're gonna talk
about today, I wanna hear howJay Conner got into real estate
to begin with. 02/2003 is, Iguess, twenty two years ago now.
So you've been in the businessquite a while, and I wanna hear
what got you into real estate inthe first place.
Jay Conner (02:34):
Sure. Well, it's a good question. So I I was raised
in the mobile home business. Nowout there in Oregon, I don't
know if you know what mobilehomes are, but, they're they're
very popular in the South.People some people called them
back in the day wobbly boxes,trailers, mobile homes,
manufactured housing when we gotall fancy.
(02:54):
But, anyway, that was myfather's business. By the way,
he's 91 years old and stilldeveloping real estate. I wanna
be like him when I grow up. Butat one time, my father had the
largest retailing company ofmanufactured homes, mobile homes
in the nation. So I grew up inthe environment of helping
people, purchase affordablehousing.
(03:19):
Well, in 02/2002, '2 thousand'3, that entire industry fell
out of favor with Wall Street,which means there was no
financing to speak of availablefor a consumer to finance the
product and purchase it. So wedidn't have any way to to sell
it, really. So we woke up onemorning and had 22,000,000 of
(03:39):
wholesale inventory and no wayto sell it. So we almost had to
file bankruptcy, but we didn't.We worked out with our vendors
and we eventually sold off theinventory.
So it's a whole lot more funstarting up a company than it is
shutting down a company. So,that's when it was in 02/2003. I
knew if I ever got out of,manufactured housing, I wanted
(04:01):
to get into single family homes.And so, that's that's why I did
and, and as
Intro speaker (04:08):
of today, we've flipped, a little over 500
houses. Here in our local area,we're in
Jay Conner (04:14):
a very, very small market. Only two counties here
in Eastern North Carolina. Andwe don't do a lot of deals, we
do two to three transactions amonth, but our average profit
per transaction right now is$82,000. And I don't share that
from a a place of ego orbragging at all. The reason I
share that is that makes anargument for the fact that
(04:36):
there's a lot of advantages tobeing a smaller market where you
can dominate the market, right?
As I say our total target marketis only 40,000 people or so. So
we we dominate the market. I'drather be a big fish you know in
a small pond than in a citysomewhere competing with a bunch
of other real estate investors.So anyway, it was a change of
(04:59):
career, change of industry, sothat's why we switched over back
in 02/2003.
Trent Werner (05:04):
And you said you that you you kinda knew that you
wanted to get into single familyhomes. Was there anything that
you did in the manufacturedhousing space that maybe nudged
you aside from shutting down thecompany, but made you want to
get into single family homeswhen you were still doing
manufactured?
Jay Conner (05:19):
Absolutely. So, ten years before we, got out of
manufactured housing, my wife,her name's Carol Joy. We've got
really, really good friends inNew Bern, North Carolina, which
is still here in Eastern NorthCarolina, and their names are
Craig and Kim. Anyway, they weregetting ready to build a house
and, good friends. We go tochurch with them and that type
(05:42):
of thing.
And so this was all the way backin 1993. Well, they didn't have
any money for a down payment. SoKim's father was a real estate
investor for decades down inFlorida. And he said, well, look
y'all. What I'll do is I'll comeup to North Carolina and we'll
find a fixer upper.
He says I'll buy it and you alldo the sweat equity, on nights
(06:05):
and weekends and then we'll sellit and you can keep the profit
and that'll be your seed moneyfor you to build your house. And
so that's what they did. He cameup here, they bought a fixer
upper upper or through Kim'sfather, and they fixed it up,
sold it. And, Trent, theypocketed $30,000 in ninety days.
And I said, wait a minute.
(06:26):
Wait a minute. Wait a minute.I'm out here on the Sales Center
trying to sell a single widemanufactured home, mobile home,
and get a profit of $3,000, andthey're making $30,000. I'm
going, I like that programbetter. So I heard their story
ten years prior to, closing thecompany for manufactured homes,
(06:51):
but I I already knew.
I mean, I'd already startedreading books, and I was just,
you know, and, you know, andthis was before the HGTV days
Intro speaker (06:59):
as
Jay Conner (07:00):
to where it became, you know, so popular type of
thing. So, yeah, I had beenthinking about it before ten
years before I did it.
Trent Werner (07:08):
Was there any was there any deals or work that you
did in manufactured housing thatgave you the skills to then
start flipping houses right whenyou wanted to?
Jay Conner (07:16):
Well, I thought I did. So my first piece of advice
to your audience is don't startin this business the way I did.
So I was relying on my businesssense and experience that I'd
had in manufactured housing. Isaid, well, you know, it's it's
all housing. I mean, you know, II I can do this.
(07:37):
And so so I started in this justby reading books. I didn't get
my first mentor or coach in thisbusiness until 02/2009, to tell
you the truth. Six years. Andthere's I'm oh my word. I made
so many costly mistakes.
I mean, losing hundreds ofthousands of dollars that if I
(07:58):
had been coached and, you know,worked with somebody that had
already knew the business andand knew where the the
minefields were, I I would havebeen so much further ahead. So,
yeah, my most valuable lessonsare the ones that cost me
dearly.
Trent Werner (08:16):
So you started you started this this flipping
business after closing downmanufactured homes. You
obviously you heard the story ofyour friends getting, you know,
a a boost from the dad or thefather-in-law. And where did
this whole private money conceptbegin once you started flipping
homes?
Jay Conner (08:37):
Right. So, I I should be clear to make sure
everybody understands when wesay private money in this
context, I'm not talking abouthard money. You got a lot of
hard money lenders out there inthe industry that call
themselves private moneylenders, but there's a big
difference. A hard money lenderis typically a broker of money
(08:58):
that has gone out and raisedprivate money from investors to
invest in their fund, and thenthey turn around and loan that
money out to us real estateinvestors. That's a hard money
lender which they now callthemselves private money.
And by the way, I'm not knockinghard money lenders. Some of my
best friends are hard moneylenders. In fact, they use my
(09:19):
techniques to raise privatemoney to get people to invest in
their funds. Right? It's all thesame money.
It's just a matter of whatthey're investing in. So how did
I get how did I get into thisworld? Well, I backed into it,
Trent. I backed into this worldof private money. And here's
what happened.
The first six years that I wasin this business, from 02/2003
(09:40):
to February, the only thing Iknew to do, Trent, was go to the
local bank, get on my hands andknees, and beg and sell and, you
know, pull up my skirt so thebanker could look at my personal
assets and pull my credit scoreand give financial statements
and a colonoscopy, you know,before all was said and done to
(10:02):
get my loans. Well and so thatworked okay. That worked okay. I
missed out on some deals becauseI had a limited line of credit
at the bank, so I had to pass onsome deals, you know, that that
never feels good. So anyway,those first six years, I just
relied on commercial lending,institutional lending at the
(10:23):
local bank.
And so again, that was from02/2003 to 02/2009. Well, here's
what happened. In February, Icalled him a banker. His name
was Steve. By the way, Trent, Iknow you will be shocked to see
that we actually still havehandsets.
Most people don't even know whata handset is with a cord
(10:44):
attached to it. But, anyway, Ipicked up my my landline
telephone, and I called Steve,my banker. Now Steve and I have
been doing business together forsix years. He had funded a lot
of my deals. And I called him upand I told him about these two
houses that I had under contractthat I needed him to fund from
my line of credit.
(11:05):
And these two houses representedover $100,000 in projected
profit. And I learned like thatover the telephone from Steve
that my line of credit at thebank had been closed with no
notice whatsoever to me. AndSteve tells me that, and I said,
Steve, what in the world are youtalking about? Why is my line of
(11:26):
credit closed? We got a greatrelationship.
Always made my payments on time.I got a great credit score right
around 800. Why are you closingmy line of credit? He said, Jay,
don't you know there's a globalfinancial crisis going on right
now? I said, no.
But you just gave me a financialcrisis because I don't have a
(11:46):
way to fund these two deals thatI've got under contract. And
back in those days, you couldn'tget your earnest money back,
here in North Carolina. And sohe says, well, we're not loaning
money out to real estateinvestors anymore because of the
global financial crisis. So Ihung up the phone, I sat here,
and I asked myself a question.Trent, now I want to share this
(12:08):
question that I asked myselfwith your audience because this
question is so powerful, it willhelp anyone fix any problem they
got that they've got going on.
I don't care if it's financial,career, business, personal
relationships, health, doesn'tmatter. By the way, Trent, these
(12:28):
people running around saying,oh, every problem is an
opportunity. I wanna throw up. Ididn't have an opportunity. I
had a problem.
Right? So I need help getting myproblem fixed. Now, you're gonna
find out in a minute, this wholeproblem did turn into an
opportunity because if I didn'thave this problem, you and I
wouldn't even be visiting todayhere on your show. So here's the
(12:51):
question that I asked myself. Isaid, Jay, who, there you go,
who do you know that can helpyou with your problem?
When I asked myself thatquestion, I immediately thought
of Jeff Blankenship who lived inGreensboro, North Carolina at
the time. And he and his wife,they're great friends of mine
(13:14):
and Carol Joy. And, he wasinvesting in single family
houses in Greensboro, NorthCarolina at the time. So I
called him up. I told him whathad just happened with me and my
banker conversation.
He said, well, Jay, welcome tothe club. I said, what club is
that? He said, that's the clubof having your bank shut down
your line of credit. My bankshut me down last week. I said,
(13:35):
well, Jeff, how are you gonnafund your real estate deals?
He said, well, have you everheard of private money and
private lending as to how anindividual can loan money out to
you, from their investmentcapital? You just do business
with individuals and they fundyour deals? I said, no. I never
heard of that. He said, have youever heard of self directed IRAs
(13:56):
that allows an individual that'sgot a retirement account to move
it over, and then they can loanyou money, and they can earn
unlimited interest per yeareither tax deferred or tax free.
I said, Jeff, I have got no ideawhat you're talking about. So he
told me about private money andwhat he was doing and what he
was going to do and and selfdirected IRAs and etcetera. And
(14:19):
so after he and I talked, I didsome research. I did some
studying. And then as a result,I was able to raise $2,150,000
in less than ninety days justfrom my own network, my
community.
And you know what's interesting,Trent? Since that time, I've
yet, even through today, I'veyet to ask anybody for money.
(14:43):
I've never pitched a deal. I'venever, I've I've no chasing, no
begging, no selling, nopersuading. And people ask me
all the time, they say, Jay, howin the world have you got 47
private lenders, which we havenow.
How do you have 47 privatelenders and you never ask them
for money? And how do you getyour deals, funded without
pitching the deal? And here'sthe secret sauce. You see, we
(15:07):
separate the conversations ofteaching. There's the important
point.
You see, I put on my teacher hatwhich says private money teacher
and I simply just, so firstthing I did was I put my program
together that I was going toteach without having any deals
(15:28):
attached to them. So, I decidedwhat interest rate I was going
to pay, 8%, been paying the samething since 02/2009. What
interest rate I was going topay, what the length of each
note was going to be, whensomeone got involved, the
frequency of payments, themaximum loan to after repaired
value. And so put the programtogether for me to just share
(15:50):
with people that I go to churchwith, rotary club, etcetera.
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Jay Conner (16:52):
And so I went about teaching this opportunity. I put
on private lender, a luncheon,raised 969,000 at just one
private lender luncheon with nodeal attached to it. So then
when I'd have a deal for myprivate lenders to fund, I'd
call them up with what I callthe good news phone call. So
(17:14):
here's the exact script as towhat I say when I've got a deal
for my private lenders to fundwithout asking for money. And
here's this.
Let's say, Trent, let's sayyou're one of my private
lenders. Let's say you've gotyou've told me you've got a
hundred and $50,000 in yourretirement funds that you're not
happy with, and you want toinvest those. And so I've
(17:36):
introduced you to a selfdirected IRA company. You've
moved that money over, andyou're waiting for the good news
phone call. So I call you up.
I say, hey, Trent. I've gotgreat news for you. I can now
put your money to work. I've gota house under contract to
purchase with an after repairedvalue of $200,000. The funding
(17:58):
required is $150,000, whichmatches up to what you have.
And closing is gonna be nextThursday, so you'll need to wire
your funds to my real estateattorney's trust account, by
next Wednesday. I'm going toemail I'm going to ask my real
estate attorney to email emailyou the wiring instructions. End
(18:20):
of conversation. Let's unpackthat for a second. I didn't ask
you if you wanted to fund thedeal.
Of course you want to fund thedeal. You have been relying on
me to put your money to workthat you moved over to the self
directed IRA company at myrecommendation. So again, people
ask me all the time, they say,Jay, I'm fear of rejection. How
(18:41):
can you be how can you have anyfear of rejection if you're not
asking anybody for anything?You're leading with a servant's
heart.
You're teaching them about this.Not one of my 47 private lenders
today ever heard about privatemoney or private lending until I
shared it with them and taughtthem about it. And so, that's
(19:03):
the process. Right? You know,desperation has got a smell to
it.
The worst time to be raisingmoney is when you need it for a
deal. You know, something drivesme crazy, Trent, and I'm gonna
hand it back over to you.Something drives me crazy, and
and I don't know. I'm taking arisk here. I might be getting
ready to say something that youdon't agree with.
(19:25):
But let me ask you a question.Have you ever heard one of the
gurus or speakers on theplatform or stage that's
teaching new real estateinvestors? Have you ever heard
them say, oh, just get the dealunder contract. The money will
show up. You ever heard of that?
Trent Werner (19:42):
Yeah. Too many times.
Jay Conner (19:44):
That drives me crazy. Where's the money gonna
show up? I mean, they'll say,oh, the money finds good deals.
How is the money I mean, themoney ain't got, you know, lips
and ears and a brain. How's themoney gonna find good deals?
I mean, that's the most stupidthing I ever heard in my life.
(20:06):
That's why I say, look. It don'ttake long at all. Get the money
lined up first and think abouthow much more confident, how
many more offers you're gonnamake when you've got hundreds of
thousands of dollars burning ahole in your pocket to make
offers. Anyway, that was a longanswer to a short question.
Trent Werner (20:25):
So I I have a question that kinda encompasses
everything that you just talkedabout for an a newer real estate
investor. You just mentioned alot of people are taught, go
find a deal, go find a deal. Themoney will just poof show up in
an account to help you fund it.I've heard that plenty of times,
and I know that that's notalways the case because you can
find deals, but if you don'thave any money to close on it,
(20:46):
well, then you can't close onit. So as a new
Jay Conner (20:50):
And and and they'll say buy creatively. They'll say,
you know, buy with sellerfinance and buy subject to the
existing note. I've done a lotof that. Right? Mhmm.
But after reviewing thousands ofproperty lead sheets and
negotiating with, you know, allthese sellers, my statistics
show only 13% of for sale byowners will sell creatively.
(21:11):
What do the other 87% require?All the money.
Trent Werner (21:16):
Absolutely. So for for a newer investor, I know a
lot of people will think or hearor are taught, you know, just
just start telling people whatyou're doing. Tell people what
you're doing. Tell them thatyou're gonna flip houses. Tell
them you're gonna invest inwhatever fashion.
And then people start doingthat, right? And if they're
telling people that without anyexperience, what would you say
(21:38):
to them if, you know, I'mtelling someone, hey, I'm going
to go invest and flip houses,just be on the be on the
standby, but I don't have anyexperience doing that. How
likely are those people, thoseprivate money lenders going to
invest with that person? Andwhat would you tell that person
that might be in that situation?You know, do I start looking for
deals?
Do I partner with people to getmore experience? You know, what
(22:00):
would you say to someone likethat?
Jay Conner (22:01):
That's a that's a great question, and I get it all
the time. So there's more thanone answer. The first answer is
people are not really investingin your deals. They're really
not loaning money on your deals.What they're doing is they're
investing in you.
That's what they're doing.They're investing in you. And if
they're not if they're notloaning you money or investing,
(22:22):
that's because for whateverreason they don't trust you.
Right? For whatever they don'ttrust that you can do it.
So the first thing that you cando as a new real estate investor
is lean on and leverage thesuccesses that you've already
had. I mean, people,particularly in your own warm
market, if they know you, theyknow if you've been successful
(22:43):
at what you've been doing.Right? So you can leverage the
past experience you've got inwhatever kind of business, that
you've been in. Secondly,another comment or answer that
I've that I would tell apotential private lender that's
not comfortable, and here's aquote, here's a writer downer,
(23:03):
and that is, if I don't pay you,because that's what they're
concerned about, right?
If I don't pay you the propertydoes. Now, what does that mean?
You see, you're not going to beborrowing any unsecured money.
You can legally, but forgoodness sakes don't do it. You
want to give a mortgage or adeed of trust depending on the
(23:25):
state that you're in.
You want to collateralize thatnote and you don't want to
borrow more than 75% of theafter repaired value. I didn't
say 75% of the purchase price.75% of the after repaired value.
That's why I always bring home abig check when I buy and take
none of my own money to theclosing table ever. I mean, the
(23:47):
question is, who wants to getpaid to buy houses?
Right? We always bring on bigchecks when we buy. So there's
one answer if I don't pay youthe property. It does because
it's a conservative loan tovalue. And then thirdly, if
you're brand new, for goodnesssakes, now as I as I mentioned
earlier, don't be out there onan island by yourself.
(24:10):
I mean, you wanna be you wannabe partnered up either with a
coach, a mentor, or somebodyright there in your local area,
they can hold your hand asyou're doing those initial
deals. So if you have partneredup with a coach or a mentor,
like, you know, I've hadthousands of, students and,
(24:31):
mastermind members and etcetera.And for those newbies, what do
they do? They leverage thebusiness relationship that they
have with me. And so since we'reworking together, they can when
someone asks them what kind ofexperience do you have, you can
say, well, my business partner,Jay Connor, has rehabbed and
flipped over 500 houses and hasgot 47 private lenders with 8
(24:55):
and a half million dollars.
And he and I are workingtogether on every deal that
we're doing. So, if you like meto introduce you to Jay, I can
introduce you to Jay. So,leverage a relationship that
you've got, and quite frankly,you need to have that
relationship anyway.
Trent Werner (25:15):
Yeah. I appreciate that answer, and I think a lot
of people that are listening tothis and maybe want to branch
out into a new niche of realestate, especially if it's
flipping houses, are gonna takewhat your answer was there and
and put that in their pocketbecause that is a fear that a
lot of newer investors have. Youknow, they keep running in
circles.
Jay Conner (25:34):
It's a common sense fear. I mean, they're they're
gonna ask themselves a question,who in the world is gonna invest
with me or loan me money, andI've never done a deal? You
should be asking yourself thatquestion. And, of course, I just
gave the answer.
Trent Werner (25:49):
So, Jay, after twenty two years of of flipping
houses, what are the what arethe best ways to make money in
flipping houses using privateequity? Obviously, you wanna buy
it for less than you sell it forand and and those things. But
for someone that, you know,maybe that's the only way that
they think that you can makemoney, are there other ways that
(26:10):
you can make money using privateequity to acquire properties and
and flip them?
Jay Conner (26:15):
Absolutely. That's a great question. So you number
one, you don't have to flip. Imean, right now, what I'm paying
my private lenders an interestis less than what the commercial
rate is at the bank. Right?
I've got a friend that's beenwith, the bank here in Morehead
City for, shoot, over twentyfive years. He just closed a
(26:36):
commercial loan last week at8.1%. I'm paying my private
lenders eight percent. Right? Soyou can buy and hold.
You don't have to flip. I'vesold a lot of houses over the
past twenty two years on ourrent to own or lease purchase
program, and those houses arefunded with private money. So
(26:56):
the question is, what's thepositive cash flow that you can
make per month between whatyou're paying your private
lender in interest and what youcan bring in. And, of course,
when you sell creatively on arent to own or lease purchase,
you'll be able to collect alarge non refundable option fee
as well. Now how else can youuse private money?
(27:17):
And here's a great strategy. Youcan combine two strategies
together in order to make a dealwork. Here's what I mean. Let's
say that a FSBO for sale byowner has agreed to sell to you
subject to the existing note,which means they have agreed to
(27:37):
sell you their house, leavetheir mortgage in their name,
and you're agreeing to maketheir payments or bring their
payments current or whatever.And you say, who in the world
would do that?
A distressed seller that needsdebt relief. I've done it many,
many times. So what you can dois if there is equity in the
property, you can purchase itsubject to the existing note.
(28:02):
Then, if you if it needs somerepairs, if it needs some past
due payments brought current, orif it's got equity in it and you
just want to pull some cash out,you can borrow private money in
second position. So I've got alot of private lenders in junior
lien positions, not all of themare in first position, right?
(28:23):
I use smaller amounts of moneysuch as rehab money or whatever
in second position. So, now youwould have two notes on that
property. In this example youwould have the original mortgage
in first position that theseller has in their name. Then
you would have private moneyfrom your private lender in
(28:45):
second position. But, here'swhat you want to be careful
about.
Now, we need to take a look atwhat's called the total loan to
value. Total loan to value. Andthat total loan to value, again,
I don't want to exceed 75%. So,just for just for an example,
right? Just for e ease, just foreasy figuring.
(29:06):
Let's say that I got a housethat's got an after repaired
value of $200,000 Let's say thatI buy it for $125,000 which I
could all day long if it needsrehab. And so, let's say the
rehab is only $25,000 which is asmall rehab. So, they owe a
hundred and $25,000 right? Theysold it to me for their payoff,
(29:31):
for their payoff amount of ahundred and 25,000. That
mortgage is in first position.
So, now I can come over here toa private lender and I can
borrow a little $25,000 note,put them in second position.
Now, I'm going to add the 125 tothe 25. Now, I got a total loan
(29:51):
to value of 75% because my totalamount of loans that I have
secured by that same property is$150,000, which is 75% of the
after repair value.
Trent Werner (30:06):
So when when some when someone is doing a subject
to to where that first loan isgonna remain in the seller's
name, are you able as the buyerto make those payments directly,
or do you have to pay the sellerto then pay the bank when it's
in that first position?
Jay Conner (30:23):
I'm not relying on the seller to make the payments
to the bank. Tell me ifparticularly if they're behind
on their payments, if theycouldn't make them prior to
them, why am I gonna trust themwith with my money? So no. We'll
take ownership, so that deedwill actually come into our
company entity name. And then,we have all the correspondence
(30:46):
changed to our mailing address,so we get all the monthly
statements, etcetera.
And we also have the seller signwhat's called an authorization
to release, which gives me andmy team the authority to talk to
their lender or bank if we needto in the future on their
behalf. Authorization torelease.
Trent Werner (31:08):
Okay. That was just a, a curiosity question
that I've personally been askedbefore, but I've never done a
subject to myself. So I figuredI'd ask the professional and the
expert, the expert on this one.
Jay Conner (31:20):
Sure.
Trent Werner (31:21):
So, Jay, out of the handful of different
strategies that you'vementioned, what would you say is
your bread and butter or yourfavorite one to leverage private
money with?
Jay Conner (31:32):
In order what's my favorite strategy in order
Trent Werner (31:35):
I guess deal yeah. Purchase strategy, whether it's
subject to seller carry, youknow, wholesale off market, on
market. Do you have a favoritekind of bread and butter way of
purchasing?
Jay Conner (31:48):
Well, I'll answer it this way. I'll tell you how I'm
getting most of my deals rightnow and, and how we're funding
them. So most of our deal flowthat's coming in is from a
Google pay per lead, not pay perclick. So I've got, five or so
different vendors, companiesthat I pay per lead. My average
(32:10):
lead cost right now is around$300 per lead that's coming into
us from individual owners thatare going on Google and
searching for, you know, buy myhouse fast or sell my house
faster, any of those 75different phrases.
On average, it's taking about 10of those leads in order to
actually close a purchase. So wegot about $3,000 invested in
(32:34):
marketing on average to get a tofor each deal. But who cares if
your average profit is $82,000.Right? I mean, I'll spend as
many $3,000 as I can to to getthat return.
So that's the deal flow comingin. And then, as I say, on about
15% of them or so, we'll buycreatively and then put private
(32:54):
money in second position if weneed to. And the rest of them,
we're just paying all cash forprivate money.
Trent Werner (33:01):
Okay. That's that was a good answer to a a very
unclear question that I that Ithrew you away.
Jay Conner (33:09):
No worries.
Trent Werner (33:10):
So are you only and I know you're in a the
Eastern North Carolina market.Are you only targeting on your
Google leads, are you onlytargeting that market
specifically, or are you lookingelsewhere as well?
Jay Conner (33:20):
For my own deals, yes. Right here in my local
area. But I also JV and partner,you know, with my mastermind
members and and some of mycoaching clients.
Trent Werner (33:30):
Okay. That makes sense. And if someone wanted to
hear more or maybe learn morefrom you in terms of a
mastermind or coach, how wouldthey do that?
Jay Conner (33:39):
Trent, I am so glad you asked because I'm so excited
about my brand new private moneychallenge, which people can read
about atprivatemoneychallenge.com,
private money challenge Com. Andwhat is that? Well, that's a
series of seven videos that Ijust recently recorded, and each
video is like fifteen to twentyminutes long, not long at all.
(34:02):
And it really does a great deepdive into explaining eve even
more details about what privatemoney is. I've got scripts in
there as to what you actuallysay to potential private
lenders.
How do you start conversations?Right? I mean, how do you even
bring it up? And so, we go intoall that. So, I invite you, if
you're listening here to Trent'sshow, go to
(34:23):
www.privatemoneychallenge.comprivate money challenge Com,
and, and I I'd love to interactwith you there.
Trent Werner (34:34):
Perfect. And we'll make sure we get the link down
in the the show notes below.Jay, thank you so much for
sharing about private moneytoday and your vast real estate
knowledge and career.
Jay Conner (34:44):
Trent, thank you so much for having me. God bless
you.
Intro speaker (34:47):
Thank you for listening to this episode of the
Real Estate ProfessionalsInvesting podcast on Wynn, your
community of investing knowledgefor growth. We hope that this
episode has increased yourknowledge and added value to
your path to freedom. If youwould, please take a second to
rate us so that we can get moregreat investors to interview. If
you or someone that you knowwants to be on, please visit
(35:07):
westsideinvestors.com and fillout our form to be on the show.
Thank you again and enjoy yourday.
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