TRP099: Private Money Gets the Deal Done!! With Guest Jay Conner
September 22, 2020
Transcription
Randy:
Hey, I want to welcome you to today’s show. We have got an amazing episode. I’ve got one of my great friends, Jay Conner on the show today. He is a compadre from the Collective Genius where we connected together, but I want to share with you and give justice to his background and really just give you a rundown about what Jay’s doing and done and why we’re on the show today. He’s been buying and selling houses for 14 years, and he’s redeveloped over 30 houses, over $52 million in transactions. In the past seven years, Jay’s been able to automate his seven-figure income business, where he’s spending less than 10 hours a week doing it. He’s consulted with over 2000 other real estate investors and raised over $2 million in 90 days for private money.
He’s been a commercial developer and still continues to be involved as a national speaker on private money, automation, foreclosure selling, offers, and The New Masters of Real Estate: Getting Deals DONE in the New Economy, great book. And also, he’s one of the leading experts on private lending marketing and business development. He’s also a podcast host on Real Estate Investing with Jay Conner and his wife, Carol Joy. I love that because it’s their job. They reside in Morehead City, North Carolina. So Jake, welcome to the show today, my brother. Good to have you.
Jay:
Hello, Randy. Thank you so much for having me come on, brother.
Randy:
So I know…maybe other people don’t know. I know because of my dad’s side of the family in North Carolina. Where is Morehead City for those that don’t know?
Jay:
Morgan City is a teeny tiny little town, only 8,000 people in Morehead City. My total target market, where we invest in single family houses since 2003, is only 40,000 people, but Morehead City is located right on the coast, more of North Carolina, we’re in the Southernmost tip of the outer banks.
So we’re halfway in between the South Carolina border and your state, Virginia.
Randy:
Well, so let’s talk about private money. How did you get involved in private money? What does that mean? And what did that look like? Let’s share that with the group.
Jay:
Sure. So back in 2003, Carol Joy and I invested in our first single family house here in the local county and lived there from 2003 until January 2009. So for six years, we relied on the local banks’ mortgage companies to fund our deals. At that time, I didn’t know Randy, or anything about creative financing. I didn’t know anything about buying subject to or wrap around notes or lease options. I thought you just have to pay all the money, right? So in January of 2009 with no notice like the rest of the world, I got cut off from my funding at the local banks and mortgage companies. Well, you’re like this, Randy, cause we’re both Christians. My definition of coincidence is God’s way of staying anonymous. In less than two weeks of being cut off from the banks, I was introduced to this world of private money. And when I say private money, I’m not talking about my friends that have brokerages or our hard money lenders.
I’m talking about actually doing business with private money lenders who are individuals, human beings, just like you, just like me, who loan money from their investment capital or their retirement accounts and invest in our real estate business. I primarily do single family houses. We’ve rehabbed a little over 400 and it’s all been focused right here in Eastern North Carolina. So since I was introduced to the wonderful world of private money, I started educating and coaching real estate investors on how we get this funding back in 2011. And so since 2009, we have never missed out on a deal because we didn’t have the funding. You know, a lot of people say, ‘Hey, I don’t need private money because I don’t want to invest in ugly houses.’ Well guess what? My research shows after reviewing thousands of property lead sheets, only 13% of those off market sellers will sell to me creatively. That means the other 87% of the deals require all the money. So when somebody says, if they won’t sell it to me on terms, no deal. My mantra is if they won’t sell to me on terms, private money gets the deal done.
Randy:
Absolutely. The old saying cash is King. And for some people that’s true. They want to sell their property and they want cash.
Jay:
Well case in point, Randy. Just this morning, I had my acquisition shoot me a communication. We looked at this house in Newport, adjacent to us here in Morgan City, beautiful house. The home needs nada. I mean, it’s already been rehabbed. And the current value as it sits right now is $170,000 and the seller will sell for their payoff. So of course we first negotiate with what strategy we want to buy that house subject to the existing note. Guess what? He won’t do it. Perfect credit. But his real motivator is his ex wife lives in the house next door to the subject property. And his girlfriend said to him, and he said to me, my butt, ain’t got enough left on it to chew on from my girlfriend. I want nothing left in on this.
Randy:
No, he’s gotta be gone, gotta be gone.
Jay:
I’m using private money, paying off his mortgage at 125. I’ve got an immediate $45,000 in equity and private. I even negotiated on a wrap around seller financing. He wants to buy another house. Hey, you can do it. Private money got the deal.
Randy:
He’s gotta be out of there cause of the ex wife and the girlfriend thing. Well, and that’s the thing…a lot of times, you don’t know what the circumstances are and just like you said, it’s necessary. And so let’s talk about, with the private money, where you’re working with an individual, like you said, just a regular person, what do they expect out of it? Right. So again, you’ve got this person you meet from church or the country club or wherever, what does it look like to them? So that house there it’s 125,000. What does it look like to this person? That’s bringing the private money in.
Jay:
There are three main reasons that my private lenders or any private lender wants to do business with me or any other real estate investor. First of all, they want high rates of return safely and securely. So they want a high rate of return. I mean, right now a 12 month certificate of deposit in this craziness, this economy and situation we’re in our country. You know, last week I checked, the average 12 month certificate of deposit is paying a whopping 0.2, two. That’s less than a quarter percent. We just had an ad come out in the paper two weeks ago here, locally from a bank, they said, we will pay you five times return of the average. Or do you have a deposit? They’re offering a whopping 1.2.
Randy:
Yeah. Wow.
Jay:
So we come along and pay our private lenders 6%, 7%, 8%. Yeah. That’s a lot more money.
Randy:
For sure. And they’re secure with that piece of real estate…you can’t get much more secure than that. That’s the fast way.
Jay:
Oh, and that’s the second reason. They didn’t want just the high rate of return. But secondly, we don’t borrow money unsecure. Some people lend to me unsecured. Sure. But I don’t do business that way. I want to give all my private lenders a collateral. So they will get here in North Carolina that trust. Most people call it a mortgage. So that collateral realizes their note. And typically I don’t borrow more than 75% of the after/repaired value. The third reason they want to do business with us, particularly the older someone is that’s a private lender, older in age. They don’t want volatility in their investment. What am I contracting private money to? I’m contrasting that with the stock market, right? So somebody invest in the stock market. As you know, Randy, you are a money manager and you know, in stocks for years, you invest in a stock. You already lost money because of fees and commissions management fees and et cetera. But in this world of private money, the principal loan amount, their investment remains the same until cash out because we’re paying or accruing interest only payments. So the private lender knows exactly what their rate of return is going to be. Nothing comes out of their principal loan amount and they get it all back when we cash out and then we go do another deal just as soon as possible.
Randy:
Wow. I think we’ve had people that have invested with us both on the house side and the apartment side for 17 years and you’ve just hit the nail right on the head. It’s like, you’ve got a higher rate of return. You’ve got security for the money that’s there. And then you’ve got consistency. I don’t want to know if I’d use the term impossible, but it’s darn sure hard to get that anywhere else. I mean, you know, yeah. The stock market people will tell that as a 10 or 12% return, but you have such, like you said, the volatility where again, I had one guy that called us up where he’d been planning to liquidate some. And then in March he called me, and his 3 million dropped by like $850,000.
That’d be enough to take the wind out of your sale. Thankfully it came back. But at this point, he’s like, look at my age. I don’t need this kind of fluctuation. And that’s the truth. I think that what you’ve been tapping into is that Holy grail for people to see that there’s a better way than just maybe leaving it in the bank where you’re getting nothing. And even when you’re earning 1%, inflation may be at three, you’re going backwards. Right? So no wonder all the people that you’ve connected together have come and said, ‘Hey, I want to do business with Jay.’ Talk about now, what have you done to, I know you’ve helped a lot of other real estate investors that maybe didn’t know what you’ve learned. You’ve helped them to understand how to do this, to talk about that for a minute.
Jay:
They became known as the private money authority back in 2011. The reason I did is first of all, I have a passion for teaching and educating and inspiring, but I found myself, Randy, in 2011, frankly, bored with the business. We had put together saying goodness to God, we put together an amazing team, contractors, crew leaders, project managers, acquisitionist marketing team. VA’s I mean, we got the settler lead flow coming in, not relying on multiple listing service, which you for sure can’t rely on that today. That’s a bonus. Yeah. Anything in the MLS. So I went to one of my mentors and I said, what’s next? In fact, his name is Ron Legrand. I went to Ron grant in 2011, thought of all of him, respect him, still do. I said, Ron, what’s next? He says, do what you’re really good at doing, teach what you’re really good at.
He said, what are you good at? And he knew it. I said, well, I’m pretty good at raising a lot of money. He says, well, what’s the two biggest things that real estate investors are always looking for more deals and more funding. Yeah, those are the two. He says, you fixed the money and you are going to be in high demand. So again, in 2011, Carol Joy and I started traveling the nation, inspiring teaching, educating, real estate investors, newbies and seasoned real estate investors on how to get connected to the funding without relying on your credit score and local bank mortgage company. I mean, in this world we make the rules, we set the interest rate, we set the term, we’ve got our program. And as matter of fact, Randy, did you know that since I started attracting private money in 2009, I have yet to ask anybody for money.
And people look at me like I got three eyes. They say, how in the world have you got millions of dollars? And you ain’t ask anybody for money. It’s simple. I put on my education hat, these people never heard of private money in all likelihood. They never heard of self-directed IRAs. So I simply educate them on what the program is. It works. And if they have investment capital or retirement or retirement funds, they want to know more. And most of the time they are totally in without me even asking.
Randy:
Yeah. Well, you just hit on a key point about educating people and what the opportunity is versus trying to sell people, you know, and that’s where, again, when you are in the space of a giver like you or I you’re delivering value to help people. And it’s kind of like the biblical principle where it says, when you sow, you reap. And so you’re helping to transform people from their financial life where now they begin to understand, Hey, I don’t just have to accept 1% at the bank. I can get six, seven, 8%. I can get consistency. Wow. Hey, I want to find out more about that. You know, same thing, even for the real estate investor side, where being able to teach them how to go about doing this in a ethical, correct way that brings value to people in their sphere of circle. It’s kind of funny where you think of the old Sunday school thing, where it talks about doing to others. And you know, a lot of times, especially in business, people just kind of slough that off. But the truth is, it is the truth. If you help others, then it comes back to you. Cause I mean, I love what you just said. You’ve not asked for any money and money just flows in and out.
Jay:
You made a really, really important point. There’s no selling. There’s no convincing. There’s no chasing. There’s no begging. There’s no arm twisting. And I’ll tell you part of that secret, right? Part of that secret is when I’m first talking to a new potential private lender, I don’t educate them on what private money is and self-directed IRAs and how the program works, and in the same visit, present a deal. That is stupid. Why? In my opinion, because now you already sound like you’re begging.
They liked the program. They understand the program. And I did without asking for money, I just simply asked them, you got any more questions? No. Understand it. But my only question is when would you like to start getting high rates of return? Well now great. I’ll go find us a deal. Well, I might have a deal sitting on the shelf, but I sure ain’t bringing it up. And that first conversation now I may come back to them a day later, two days, three days later and I call them up. I don’t ask them if they want to do the deal. That’s all so stupid. Of course they want to do the deal. They told me they like the program. All I do is call him up, tell him I got good news. I tell him the township, the after-repaired value, the funding required to fund it. And the date we close. Boom, that’s it.
Randy:
Yeah. Yeah. For sure. Now is that all of the focus of what you do? Is it there in that greater North Carolina area where you’re located at, right?
Jay:
Yeah. I joint venture with my students, my telephone. I didn’t hang up a joint venture with my students, but as far as my own properties, that Carol joy and I invest in we’re in a total target market of only 40,000 people. We do two to three houses a month, but thanks to private money, our average profit is $67,000 per deal. All right. Around here in a geographical population of 40,000.
Randy:
Well, you know, I love to add that if you focus on the right things, you can get the right results, you’re all, I’m only in a place where there’s 40,000 people. No, I can get the results that I want by helping people, regardless, whether it’s 40,000 or 400,000 as an MSA. And you know that you’ve also focused in on what you’re doing and then that’s the system, you know? And I see so many people both on the investors side, and/or the passive investor side where it’s like the shiny object syndrome…they go for this and this and this instead of the discipline of looking at here’s what I’m going to do. Here’s this methodical process. And it’s like, man, you’ve nailed it down. And the results speak for itself.
Jay:
Absolutely. Thank you for sure.
Randy:
One last thing here as we look at this and we look at what you’ve accomplished, what would you say to the folks that are listening, either that are considering investing in real estate or looking at investing as a private investor, what would be your encouragement or admonition?
Jay:
Well, my encouragement is to learn from somebody that has already done it, right? So if you’re a real estate investor looking to attract private money, then you need to hang around somebody who’s already been involved in a lot of private money and, don’t go try and buy a book off of Amazon that’s got private money in the title. Go try to figure this out on your own. So, you know, join hips with somebody that has already been doing it for a long period of time.
Randy:
One of the greatest things, it’s been a blessing to me, that’s helped accelerate our success is connecting together and mentoring with people who are doing what I want to do. I have lunch regularly with a guy that owns 13,000 apartments. I mastermind with another group of people and they own 20,000 apartments. And they’re doing the things that we are going to be doing and are on the pathway to doing. And just like with what you’re saying, I know you’ve got a private money Academy. And so I want to share with the folks that are listening, that if they want to connect together with you and again, no doubts, that’s a key component to be able to learn from somebody that’s been doing. You’d go to Jay conner.com/trial, www.jayconner.com/trial. And you’ve got the private money Academy. Just share briefly with our folks listing what that is and what that entails.
Jay:
Sure. Thank you, Randy. So first of all, I know you got a ton of listeners that may be spelling my name with an OR and I’m not one of those guys. So I am www.jayconner with an ER, JAY all spelled out J A Y C O N N E R.com/T R I A L. And that gives you free access to all the training for 30 days. The big thing, the benefit that you get there is all the members get me live twice a month for a live zoom conference, coaching call, where you can bring any questions about real estate investing to the call. We talk about private money, how to get plugged into it, how to find motivated sellers off-market. We talked about not only single family houses, but commercial land and self-storage and all that. We are live twice a month that you’ll be invited to. In addition to that, we put one of the members in the hot seat and we analyze your business, help you overcome your challenges and take your business to the next level. And then thirdly, we’re updating the membership site every month with additional training and content. So again, to get 30 days free access, www.JayConner.com/trial.
Randy:
Awesome brother. Well, that is a great word to close out with…connect together with the right people. I’m going to do a Facebook post on this. I see in different groups, even to people posting questions about is this underwriting look good on buying this apartment complex? I’m thinking, dear God, here’s a person. They don’t even know what they’re doing. They’re trying to vet buying this apartment complex. And then worse than that is, they’re going to try to induce people to want to invest with them. It’s almost the blind leading the blind. So, you know, you’ve got definitely be connected together with people that are time tested, true. That they’ve been through some of the good, the bad, the ugly, and they’ve got a proven results in Jay Conner is one of those folks.
Randy:
And so Jay, I really want to thank you for coming on the show today, been a blessing and again, connect together with Jay at jayconner.com/trial. Jay, thank you so much, my brother for being a part of the show today and thank you folks for listening and I just want to thank you for being a part of our universe. We hope and pray that today’s show was a blessing to you. Thanks for listening to another episode of the Real Estate Preacher podcast. I hope today that you learn something that you can immediately apply in your life or business. Make sure that you check us out on iTunes or at therealestatepreacher.com for more information, if you want to find out more about partnering together with me personally, on real estate deals, including apartment complexes, go to therealestatepreacher.com and click on the Invest with Randy link. I look forward to talking with you personally, have a blessed and victorious week four. This is the week God has ordained for you.