On this episode of the InvestFourMore Real Estate Podcast, I speak with Jay Conner. Jay has been a full-time real estate investor for 14 years. He used to use banks for his financing. During the financial crisis, banks cut off his line of credit, and he had to find a new source of funding. Jay was able to obtain over 2 million dollars in private-money financing in a very short period of time. Private money has allowed Jay to fund over 350 rehabs in his career, and it has helped him build a very impressive business. On this show, we discuss how Jay got started in real estate, how his career evolved, and how he sources so much private money.
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How did Jay go from the mobile home business to investing in single family homes?
Jay grew up in the real estate business but made a big change early in his career. His father was one of the biggest mobile-home dealers in the nation, and Jay started following in his father’s footsteps. Right around the year 2000, bank financing dried up for mobile homes, and Jay decided to completely shut down the business. He moved into rehabbing stick-built homes using bank financing. He completed 3 rehabs in his first year of flipping houses. Before the mid-2000s housing crisis, Jay had no problem getting lines of credit from banks. But 6 years into his flipping business, and with no notice, banks cut off his lines of credit.
How did Jay finance his flips after the banks stopped financing him?
Jay had two deals he was trying to buy when the banks said they were closing his lines of credit. He had to find money in a very short period of time and had to start asking people he knew if they wanted to lend him money. It was not easy for Jay to ask people for a loan, but he realized that he could offer a great service. He could pay a much higher rate than people could earn investing in CDs or other secured investments. Instead of begging for money, Jay offered people a way to earn a much higher return. Jay was able to fund his deals and obtain millions in private money, both from people he knew and even from people he didn’t know.
How does Jay find private-money lenders and what does he pay them?
Jay loves to use private money because it is cheaper than hard money and has less hassles. Jay typically pays his lenders 8 percent interest over a two-year term. He uses a two year term because he often sells his houses using rent-to-own deals, and it takes a couple of years to finish the deals. He secures the loans with a first position-mortgage that equals 75 percent of the repaired value.
Jay finds his lenders from many different sources. He found his first lender through his church. The best candidate for a private-money lender is someone who is:
- A non-aggressive investor.
- Someone with money already invested in something.
He finds his lenders through a number of outlets:
- Social networks
- Business Networking International
- Rotary Club
- Public records
What does Jay say to potential private-money lenders?
Asking for money is one of the toughest things many people do. Jay says investors need to realize they are not asking for money but giving others an opportunity to earn more money. When trying to secure private funding, you need to have the right mindset. Jay also stresses that people have to be prepared before they talk to a potential lender. He suggests role playing with others regarding how the conversation will go. Jay has a list of questions he asks lenders, and we go through a script on the podcast detailing exactly how he asks for money.
How can you learn more about private money and contact Jay?
Jay has two free gifts for InvestFourMore listeners (and readers). Go to Jayconner.com/investfourmore to get in touch with him and get the free gifts, which discuss private money even further.
How to get a free book from me
I am still running my free-book promotion. I have published two new books this year:
- How to Buy a House: What Everyone Should Know Before They Buy or Sell a Home.
- The Book on Negotiating Real Estate: Expert Strategies for Getting the Best Deals When Buying & Selling Investment Property
I am giving away free copies of these books (either a PDF or paperback version). All you have to do is leave a review on Amazon and send me an email on any of my paperback books, and I will send you a free book of your choice. You can find all of my books here: https://www.amazon.com/Mark-Ferguson/e/B00FP1LZ1C. My email is [email protected]