Raising Private Money with Jay Conner Building Sustainable Funding Sources: Jay Conner’s Approach to Private Lending
***Guest Appearance
Credits to:
https://www.youtube.com/@mymenrichard
"Private Money Lending with Jay Conner"
https://www.youtube.com/watch?v=hTl7M1X3qb4
When it comes to scaling a real estate investing business, one of the biggest challenges investors face is sourcing reliable funding. Traditional routes—think bank loans and institutional finance—often come with red tape, long waits, and restrictive requirements. In a recent Raising Private Money podcast with Richard Lesperance and Jay Conner, they cracked open the secrets of raising private money—a game-changing alternative for investors looking to close more deals, faster and with greater flexibility.
What is Private Money?
Put simply, private money refers to funding provided by individual investors rather than banks or hard money lenders. Jay highlights a key distinction: while hard money lenders act as intermediaries between investors and funds, private lenders are direct, one-on-one relationships. These individuals use their liquid capital or retirement accounts (often through self-directed IRAs) to passively invest in real estate, earning a healthy return while the borrower benefits from quick, customizable funding.
Jay’s Journey from Banks to Private Money
Jay shares his own story: after years of relying on banks, his line of credit was suddenly cut off during the 2008 financial crisis, leaving him scrambling. This “problem” forced him to look for solutions outside the conventional system. A friend introduced him to the concept of private money, and within 90 days, Jay raised over $2 million in new funding—without ever asking for money directly.
The secret? Jay adopted the role of a teacher. Instead of pitching or selling, he educated potential lenders about how private money works and the advantages it offered. This educational approach attracted 47 private lenders (and counting), many of whom had never heard of private lending or realized their retirement accounts could be used in this way.
Where to Find Private Lenders
Jay breaks it down into three main categories:
- Your Warm Market: Friends, family, colleagues, and contacts in your phone and social networks.
- Expanded Network: Connections made through networking, real estate events, and referrals.
- Existing Private Lenders: Individuals already lending to other investors, often found at self-directed IRA company networking events.
According to Jay, over 70% of self-directed IRA holders are interested in loaning money to real estate investors, making these events rich ground for connection.
Advantages of Using Private Money
The benefits, as Jay enthusiastically outlines, are many:
- Control: The borrower sets the terms—interest rate, payment frequency, and loan-to-value ratio.
- Speed: With no bank bureaucracy, deals can close in as little as seven days—a major advantage in a competitive market.
- No Application Hassles: No credit score checks or drawn-out approval processes.
- Unlimited Potential: Unlike banks, there’s no cap on how much private money you can access or how many deals you fund.
- Attractive Returns for Lenders: Lenders earn solid, secured returns (often much better than a local bank), creating a true win-win.
Is it Safe?
Investor and lender protection is paramount. Jay describes several safeguards:
- Funds are wired directly to the attorney or title company’s escrow account, never to the investor personally.
- Each loan is secured by a mortgage or deed of trust, never unsecured.
- A conservative loan-to-value (typically 75% of after-repair value) ensures a cushion for market fluctuations.
- Lenders are listed on insu