First vs. Second Position Loans and Total Loan‑to‑Value

***Guest Appearance

Credits to:

https://www.youtube.com/@larryshakman 

"The Real Estate Radio Show | Jay Conner | The Private Money Authority"

https://www.youtube.com/watch?v=PdyWho_RwPg&t=244s 

In the world of real estate investing, access to funding is crucial. Jay Conner, a seasoned expert in private money lending, brings a wealth of knowledge to those looking to elevate their investing game. On a recent episode of the Raising Private Money podcast, Jay Conners joins Larry Shakman on the Real Estate Radio Show, and shares how private money transforms the landscape for investors and why it could be a game-changer for those looking to enter the market without depending on traditional bank loans.

The Concept of Private Money

Private money in real estate revolves around securing funds from individual investors rather than institutional lenders like banks. Jay explains that this approach provides unparalleled flexibility. As a borrower, you can set the terms and conditions, including interest rates, loan periods, and the loan-to-value ratio. This power dynamic shift is significant compared to the traditional loan process, where banks dictate terms.

Why Choose Private Money?

Jay outlines several strategic advantages of using private money:

1. Control Over Terms: As the borrower, you establish the rules—eliminating the tedious approval processes and credit checks typically required by banks.
2. Fast Access to Funds: Investors can close deals quickly, often within seven days, making their offers more competitive in fast-moving markets.
3. Unlimited Potential: Because there is no limit to the number of private lenders you can work with, there's also no cap on the amount you can borrow. This provides a pathway to scaling your investment portfolio more aggressively.

Building Relationships with Lenders

Jay emphasizes the importance of cultivating relationships with potential lenders, often within one's personal or professional network. Many individuals are not aware of the benefits of shifting their investments from traditional savings to real estate through self-directed IRAs or liquid capital. By educating them, investors open up new avenues for funding. Jay shares an anecdote about raising over $2 million in less than 90 days just by teaching his network about private lending.

Finding Motivated Sellers

Understanding where to find deals is as crucial as having the funds to purchase them. Jay discussed how he connects with motivated sellers, focusing on for-sale-by-owners (FSBOs) and properties not listed on the traditional market. He leverages Google pay-per-lead vendors, ensuring that potential sellers reach out to him, creating warmer and more fruitful conversations. This proactive approach not only saves time but also enhances negotiation power by making investors a welcome guest rather than an unsolicited cold caller.

Structuring Deals for Maximum Profit

Jay outlines a threefold strategy for maximizing profits on deals:

1. Buying Right: Use private money to purchase at a discount and always aim to buy a property at 50% or below the after-repaired value.
2. Efficient Selling: Whether flipping or opting for a rent-to-own agreement, the goal is to secure a substantial return on investment quickly.
3. Receiving Multiple Checks: Jay's method ensures investors receive payments at different stages—when buying, holding, and selling. This flow of funds supports the cash flow and adds to the profitability of each transaction.

Conclusion

Jay Conner's insights on private money reveal a blueprint for real estate success that goes beyond traditional financing methods. By tapping into private money and strategically appr