From Local Deals to Millions: Jay Conner’s Private Money Success in Real Estate

***Guest Appearance

Credits to:

https://www.youtube.com/@multifamilyap360 

"How I Raised $2 Million in 90 Days for Property Deals with Jay Conner"

https://www.youtube.com/watch?v=5rzX5J_zDaA  

Private money has become a cornerstone for many successful real estate investors. Unlike traditional bank loans, private money offers terms generally set by the borrower, enabling rapid deal closures and often leading to significant profits. Jay Conner, a seasoned expert in private money lending, shares his insights in this enlightening episode of the Raising Private Money podcast.

Understanding Private Money

Jay Conner's journey into the realm of private money began out of necessity. After his bank abruptly shut down his line of credit during the financial crisis of 2009, Jay had to find alternative funding sources. Fortunately, his close friend Jeff introduced him to the concept of private money — funds sourced from individuals looking to invest their capital or retirement savings in real estate deals. Unlike institutional banks and hard money lenders, private lenders don't require you to jump through hoops. 

Jay emphasizes that using private money is more about educating prospective lenders than making a hard sell. "I put on my teacher hat and started teaching people in my own network what private money is," he says, which allowed him to raise over $2.1 million in the first 90 days after his bank cut him off.

The Mechanics of Private Money

Terms and Timelines

In Jay's model, the private money loans he secures are typically for a two-year period. However, the actual use of the money rarely extends that long. Most deals — from acquisition, and renovation, to sale — are wrapped up within six to nine months. 

Returns for Private Lenders

Jay started paying his private lenders an 8% annual percentage rate (APR) back in 2009 and remarkably, he still offers the same rate today. One might wonder how he sustains such favorable terms for himself, especially given today's higher interest rates. The answer lies in two points: first, 8% is still considerably higher than the 4.5% or 5% one might earn through conventional methods like certificates of deposit; second, Jay makes the rules. He sets the terms that allow him to offer 8% because he is not competing with the strict, often opportunistic terms of larger financial institutions.

Finding Success with Private Money

Finding Private Lenders

Jay categorizes potential private lenders into three main groups:

1. Warm Market: 

People you already know — friends, family, colleagues.

2. Expanded Warm Market:

This entails deliberately expanding your network, often through organizations like Business Networking International (BNI), which Jay highly recommends.

3. Existing Private Lenders:

These are individuals already lending money to real estate investors, often found through self-directed IRA custodians who offer regular networking events.

Strategies for High-Profit Margins

Jay’s average profit per deal is a whopping $82,000, achieved through two key strategies:

1. Targeting Off-Market Properties:

Jay primarily acquires off-market properties via Google pay-per-lead services. These properties, usually owned by motivated sellers, are not listed on MLS, allowing for better deals.

2. Quick Closures: 

Thanks to private money, Jay can close deals rapidly, often within seven days, which is attractive to sellers in urgent situations, such as impending foreclosures.

The Exit Strategy

Jay's exit strategy varies depending on how he financed the property. If he financed it with cash through private money, h