Raise More Private Money Than You’ll Ever Need!

Steve Trang: Thank you for joining us for today's episode of Real Estate Disruptors. Today, we've got Jay Connor, the private money authority. Jay flew in from Jacksonville, North Carolina to talk about how to raise more private money than you'll ever need without even asking for it. If this is your first time tuning in, I'm Steve Trang, sales trainer for some of the top wholesalers in the country, and I'm on a mission to create 100 millionaires. Question I get all the time is how to become one of the 100 millionaires.

The information on this podcast alone is enough to help you become a millionaire in the next five to seven years. Take consistent action, and you will become one. When you hear a nugget, please type it into the comment section. And after the show, identify your single biggest takeaway and focus on just that for the next seven days. If you get value out of this show, please tag it from below or share this episode right now.

That way we can all grow together. And this is a live show, so please ask your questions for Jay to answer. You ready?

Jay Connor: I'm sitting on ready, Steve.

Steve: Alright. Perfect. So first question is, what got you into real estate?

Jay: Oh, wow, Steve. So what got me into real estate was actually, it started out as a selfish reason to tell you the truth, and that is back in prior to 2003. My wife, Carol Joy, and I started in 2003 full time. And prior to that time, I was trading dollars for hours and hours for dollars. I was in retail and I had work when everybody else was working, and I had to work when everybody else was playing.

And, some real good friends of ours in Newbern, North Carolina, about thirty minutes away, they needed a down payment for their house. That they wanted to buy. Didn't have a down payment. So the wife's daddy lived down in Florida. He was a flipper.

He said, I'll tell you what. Their names are Craig and Kim. So I'll tell you what. I'll come up to New Bern, North Carolina from Florida. We'll find a fixer upper.

You order the sweat equity, fix it up, and you can keep the profit to put a down payment on your house. So they did. In ninety days, they pocketed $30,000, and this was back in the nineteen nineties. I knew if I ever got actually, I was in mobile homes. I was raised in mobile home industry, helping people get an affordable house.

And I and I was trying to get $3,000 on a single wide. Right? Mhmm. They're making 30,000 in ninety days on a single family house. So I know if I ever got out.

So the consumer finance went away on the mobile home industry. And, when did it go out? Mhmm. When did it? Pretty much 2001, 2002.

There's only 5% of the financing for mobile homes, manufactured housing today as there was back then. So I said, 30,000, 3,000. So what got me into it was one, the industry I was in went away. Number two, I wanted to be able to have freedom. And I really didn't have my definition of freedom fully defined.

Mhmm. But I knew I'd I wanted to work when I wanted to work and not be confined to the amount of money that I can make. So, actually, it was a necessity to change industries. And, so our friends, you know, did that one house. And so Carol Joy and I started full time 2003.

Our first year, we only did three houses, our first year, and of course, it's grown quite a bit from there.

Steve: So you say retail, can you elaborate what retail means?

Jay: Yeah. So retail meaning we were selling mobile homes, had retail sales centers, and when I was running the sales center or the retail sales centers, we had to be open. And I was responsible for all those people to I mean, I'll never forget. It was on a Labor Day. And, you know, most people are off on Labor Day.

Mhmm. But, no, here I am, they're work working. So it was like, I'm working the sixty to seventy hours a week. Gotcha. And it's like, I'm looking for the lifestyle to where, you know, I'm not having to be there when everybody else is off.

Steve: So you're working in a mobile home park, or you're working at a place where they're selling manufacturers?

Jay: Selling. Where they were selling them.

Steve: Okay. So people walk into your store.

Jay: Yeah. The sales center Yeah. Where it was displayed. So we were open seven days a week. You know, Monday through Friday You

Steve: get to work seven days a week.

Jay: Kinda gotta work seven days a week. Now my reason or my bigger why that maybe we'll talk about later changed over time. Yeah. Yeah.

Steve: So if you sold, a manufactured home, that was a $3,000 commission?

Jay: $3,000 profit.

Steve: Yeah. Okay. And so I imagine you were selling, like, 10 of these a month. I mean, how many

Jay: No. Like, three or four, maybe.

Steve: Okay. So maybe you make 10,000 a month.

Jay: That's the profit. I didn't get that. I went to the company. The

Steve: company made it.

Jay: A share of that.

Steve: Okay. Well, what what was your share?

Jay: So, you know, at that time, I was at about maybe 50,000 a year.

Steve: Okay. So that. The honor of working seven days a week for 50,000 a year. And that that wasn't cutting it. No.

Alright. And so you got to witness a friend flip a house.

Jay: Yeah.

Steve: At that time, were you exposed to flipping, or this is just this other thing? Like, what are you guys doing over there?

Jay: I I had had no idea what that flipping thing was other than in concept. I knew the wife's daddy funded the deal. How they found the deal, I don't know. Still don't know to this day. I know they fixed it up themselves, which I don't even know how to hold a hammer, much less swing one.

Steve: Mhmm.

Jay: And but they made $30,000 in ninety days, and I'm going, I'm remembering that right there. So when necessity came along to make a move, I said, I know what I wanna try.

Steve: So you witnessed this. Your friend's doing it. Yes. But you didn't jump on it. You kept you kept grinding.

Jay: I yeah. I kept that in the back of my mind.

Steve: Until necessity called. Correct. Okay. So and the necessity was financing kind of fell apart.

Jay: Yeah. I mean, so there was no way to sell them anymore.

Steve: Was this because of the 09:11?

Jay: It was actually because Wall Street and the secondary market that would buy the paper

Steve: Mhmm.

Jay: Right, from the finance companies that were financing mobile homes, they fell out of Wall Street fell out of favor. Gotcha. They didn't want the paper anymore. So there was no way to sell the funding or the paper off. So people aren't walking around with 20 or $30,000, you know.

Right. So no financing, no business.

Steve: Okay. Alright. So you had to make a move. Yes. So what was the first thing you did to get into this flipping business?

Jay: So the first thing I did, I don't recommend.

Steve: I'll see you how it goes.

Jay: Don't recommend start. However, it worked out well. I mean, so what did I do? I did what I don't recommend. I didn't go to any seminars.

I didn't get a mentor. I didn't get a coach. I read some books. And I've been reading some books for about a year, year and a half on this flipping thing. Oh, because you were

Steve: educating yourself this whole time?

Jay: Yeah. I mean, I was reading books. Right? So I'll never forget it, Steve. I'll never forget it.

And that is I went to look for our first I say our, mine and Carol Joy's first house. I didn't have her buy in yet, if you will. So what did I do? I mean, back in 2003, what did the realtors and real estate agents agents have? They actually had homes magazines

Steve: Mhmm.

Jay: That they published every month with, you know, color pictures. And what did I do? If I read in one of those books that if I would look for the nastiest, ugliest, worst smelling house I could find that nobody else wanted. There could be opportunity. Mhmm.

So I

Steve: looked at Smells like money.

Jay: Yeah. Smells like money. So what do I do? I got the local homes magazine. I don't even have a realtor, like, identified.

So I'm looking through the homes magazine, and I find the house. It is bad looking even on in the picture. So I call up the real estate agent, come to find out this house had been on the market for nine months. This is in 2003. It was a bank owned property.

It had been shown over 60 times with no offers. I said, that sounds like my house.

Steve: Mhmm.

Jay: And it's right there in Morehead City, North Carolina. I mean, Morehead City where we live is only got 8,000 people. So I go look at the house. Now bear in mind, Steve, you'll recall back in 2003, if you could blow your breath and fog a mirror Mhmm. You could get an unsecured line of credit at the at the local bank, which is what I did.

I went to the local bank. I got a $250,000 unsecured line of credit burning a hole in my pocket. So we looked at this house, made an offer, got it under contract for 50,000. I was so excited. I brought Carol Joy to take a look at it there in Morehead City.

And, I couldn't even get her to get out of the car to look. She was scared to death. Well, then I got excited. I said, look, I'll bring my dad. I brought my dad.

He got out of the car, walked in the front door. He said, son, have you lost your mind? I said, well, we're getting ready to find out. So I bought it for 50. We rehabbed it for 50.

And so I had a 100 in it. What do I do? I put it in the mobile listing service to sell it. No showings in forty five days. And it's absolutely gorgeous.

So I'd read in one of those books. If I put a ad of owner financing available in the local newspaper, my phone will ring off the hook. And it did. Available in the local newspaper, my phone would ring off the hook. And it did.

And I met a guy there to show it to him. And he offered me a nonrefundable lease option deposit, and I didn't know what that was. He says, I'll give you $18,000 if you're just lease option this home to me. I don't know what lease option was. And, but my daddy told me if somebody offers you money, you take it and you'll figure it out.

So I took his money. I was a mortgage broker at the time. Okay. He had a five eighty score. I got him financed, sold it to him for a 140,000 with no realtor involved.

So we pocketed $40,000 on our first house in 2003, not knowing really what we were doing. So thank you, Lord. We made it through that. We just did two more houses that first year.

Steve: So So 40,000, why don't you recommend it?

Jay: Well, I got lucky to tell you the truth. I mean, it it really I mean, I was really got lucky on the, crew that I could find to rehab it. They knew what they were doing. They didn't take me to the cleaners. There was a lot of trust going on, right, with these people.

And and they made it absolutely beautiful. But, I

Steve: I You didn't have the systems.

Jay: I didn't have systems.

Steve: Processes. I

Jay: didn't have processes. I was doing everything myself. I I wasn't rehabbing. I mean, actually doing the work, but I was, you know, I was my own general contractor, and I was pulling the subs in. And, thank goodness I had a nice staging person to help us.

But, no. There's a better way to get started.

Steve: Okay. So that was your first one.

Jay: Yeah. Bought it

Steve: from Homes Magazine. It's like one of those magazines you see at the grocery store where you're just like

Jay: Yes. Yes.

Steve: Alright. So you do that for your first deal. What about the other two deals?

Jay: Yeah. So the other two, were very similar. I I didn't wanna do more than one deal at a time as I was starting out. So I did one house from start to finish. Then we did another one.

Then we did another one. And so I was funding my deals, Steve, with the local bank. And then as time went on, you know, I I mean, you only do so much with an unsecured line of credit of $250,000 when you're trying to flip. So then I actually established a line of credit, at the local bank, and I used that line of credit and mortgage companies for the first six years that we were in the business from 2003 to 2,009. That's what we lot we relied on was the local bank and mortgage companies.

Steve: Gotcha. So then what were some of your early struggles? I mean, it sounds like you just hit out of the park and it's been amazing since.

Jay: No. So one of the big struggles was, again, us trying to do everything ourselves Mhmm. Without checklist, without systems, without a process of, okay, we're gonna do this first, we're gonna do this thing. It was like it was so like running it from your hip.

Steve: Mhmm.

Jay: Right? And so I remember one night, Carol Joy and I were at Lowe's Home Improvement at quarter to nine picking out blinds for windows and, knickknacks to stage one of those homes. And I looked at Carol Joy, and I said, what in the world are we doing here at quarter to nine at Lowe's Home Improvement doing this stuff. It's like I got I wanted to get in this job so I could work when I wanted to work and have freedom. Now what is still owning me and owning us?

So that was that was really a wake up call. So one of the struggles was letting go. Yeah. Getting the team in place, actually putting processes together to where this could be duplicatable without me being involved, like, all the time. I mean, that's one of the biggest differences that I see between myself and Carol Joy and some of our other dear friends that are in real estate.

They're, like, still crazy busy working the fifty, sixty hours a week. And so part of that process came along for us by establishing, okay, what are the pillars of this business that we're running? And we really got four pillars that our entire business stands on. It's a foundation. And those pillars are how do we find deals consistently?

So there's the finding of the deals consistently. How do we fund these deals without being at the mercy of banks? So finding funding. The third pillar is flipping or rehabbing or dispositions. Mhmm.

Because we don't rehab every house we do. But what's the disposition of those funds? How they gonna get out the door. Right? And the fourth pillar, which makes all the first three pillars smooth, is the automation pillar or what I call freedom.

So finding, funding, flipping, or selling, and freedom. What are the processes in place on those first three pillars that allows me to actually work in this business six to eight hours a week? Me. Six to eight hours a week to and and and that takes an amazing team, and that didn't happen overnight.

Steve: So you said it was 2009 that you kinda came to this realization?

Jay: No. 2010. Okay. So you were still 10.

Steve: So you were still doing a lot of the work yourself.

Jay: Yes. 2010. Now I had the wake up call one even when Carol Joy was at the kitchen table crying with bookwork stacked up. And that was that was really my wake up call on automation. I said, you know what?

You can be making over a million dollars a year, which we were. And we have been blessed to do in a town of I mean, a population of 40,000 people all since that time. But that wake up call to me, Steve, was, you know, you can be netting a million. You can be netting $2,000,000 a year, which we've done in that little town in a year, and it ain't worth it whatsoever if it's running you Mhmm.

Steve: And

Jay: you're not running it. And I made myself a promise that night at 10PM. I said, you know what? I will never have my Carol Joy. I'll never have us in the position to where I'm you know, we're sitting at the kitchen table at night crying because we can't handle it.

It's too much.

Steve: Yeah. So

Jay: that's where I really started focusing on getting the team in place.

Steve: At that time, it was still just you and Carol Joy.

Jay: Yeah. I mean, it was like

Steve: And what kind of volume were you doing the two of you?

Jay: So what we've been doing since that time, two to three deals a month, averaging over 60,000 a month, but working a lot more hours

Steve: Yeah.

Jay: Back then.

Steve: Right?

Jay: People ask me today. They said, well, Jay, if you're working six to eight hours a week, what in the world do you do with your time? Well, there's really two things I do with my time, and that is what I'm passionate about. I say, do what you love, outsource the rest. Mhmm.

Right? One thing that was hard hard for me to let go of is I guess I'm a control freak. I don't know. But it was and what I discovered was most all the activities I was doing, somebody else can either do as well or better than I was. Mhmm.

So what I do in the six to eight hours a week now is the marketing. I I keep on the responsibility myself because I love it. I'm passionate about marketing. I love testing new new lists, you know, new strategies on locating people that need help and need to be served in distress. That's what this business is all about, is making win wins.

But marketing and making decisions on what I wanna make offers on and how much I wanna make the offers on, on on the properties. And, and the team takes care of everything else.

Steve: So let's take a step back because I think a lot of people that we're talking to that are listening right now are probably in the phase where they're still doing a lot of the work. So you had a basically come to Jesus moment.

Jay: Oh, big time come to Jesus moment.

Steve: And you had to say, okay. Well, we're gonna change this. So how did you go from being overwhelmed to having a team to support you? What what were the things that you did?

Jay: Yeah. First thing I did was get someone to talk to those buyers and sellers. Mhmm. Because I was still talking to the majority of those, and we thought all of them. Right?

So you talk about getting the getting the life sucked out of your life. You know? Talking to sellers, talking to buyers. So we hired a full time acquisitionist that was also so put on the hat of talking to buyers. So the first thing I had to do is turn my phone off and to automate all the marketing leads coming in.

I already had it pretty much automated as far as direct mail goes. I had that outsourced and helped. But when people were responding to the marketing, who's gonna talk to all them people? Right? So that was the first thing.

Steve: So acquisitions and dispositions?

Jay: Yes. Acquisition and dispositions. Is that one guy or two guys? That was one. Okay.

Get that person in place to where I can step back and be running this business. I mean, I mean, I was in it. I mean, I was in it in the weeds. Mhmm. And I say you can't grow your business.

You certainly can't in for me, I can't enjoy the business for the reason I got in it, to have freedom if I'm, like, in the weeds all the time.

Steve: Right. Well and I think that takes some, what's the some awareness. Right? Because, like, I I say this all the time. We all get into this business so we can have more time and money, and we end up being a slave to our own business.

And we're actually our own worst bosses. Absolutely. Yeah. So you had the wherewithal to figure out, like, okay. I'm actually not happy.

Yeah.

Jay: All the

Steve: money in the world doesn't matter. No. I'm not happy. No. So you hire an acquisition disposition person.

What was after that?

Jay: Yeah. So we got the acquisitions, dispositions. Then I got two crew leaders for the rehabbing end of the business that I would not have to go around and look at houses every day or every other day. Mhmm. So today and also right around 2010, 2011, I don't go in a house at all during the process.

Mhmm. I learned oh, and we also hired that time our designer, our interior designer. So the interior designer, when it comes to rehabbing, the interior designer and either the so I do business for general contractors and we have our own crews as well on 1099. Mhmm. I had to do that because I all the time got three or four five houses in the wings waiting right for the rehab process.

So we got the designer. And so now I don't even go into a house during the process, and I learn very quickly. I actually save money by not going back in the house during the process because I show up and I go, why aren't we doing this or why aren't we doing that? I just let people do what they do best and I stay out of the way.

Steve: You're a change order machine if you walk into the house.

Jay: Oh, yeah. Yeah. I'm a change order machine. It's only what you said.

Steve: And, you're, so you going to Lowe's at 09:45, now you get that designer to figure all that stuff out.

Jay: Yeah. She goes at 09:45. Not me. I know she didn't go there either. So getting so getting the the rehab end of it, and we don't rehab every house.

We do it. We sell a lot of homes on rent to own. And, Carol Joy also found our bookkeeper.

Steve: Mhmm.

Jay: So Carol Joy got help big time on the bookkeeping end of things. Right. I mean, my word. We didn't I mean, we were, like, archaic. I mean, everything we were doing in the accounting and bookkeeping was, like, Excel spreadsheets and such.

I mean, give me a break. And it was, like, you know, it was, like, well at the time.

Steve: It's what worked at the time. Yeah.

Jay: And so it's like dying and going to heaven when you actually have someone that knows what they're doing with QuickBooks Mhmm. And get your real estate investing business set up on QuickBooks. I mean, that's a hallelujah moment right there. So we got the we got help with the bookkeeping.

Steve: Gotcha. Okay. So then you've got your systems in place. Things are working fine. And then you had another crisis.

The biggest crisis. What's the biggest crisis?

Jay: The biggest crisis. So as I mentioned a moment ago, 02/2009, I'm relying on banks, mortgage companies, etcetera.

Steve: They'll be around forever. Right?

Jay: That's not gonna be forever. And, you know, some of your listeners may know the name Dan Kennedy. I don't know. But one thing I learned a lot from Dan Kennedy. But one thing I learned from Dan Kennedy was the most dangerous number in any business is the number one.

And I had one primary banking relationship. And I remember it, Steve, like it was yesterday on my lens. It was in January 2009. I'm sitting in my office. I pick up the phone.

I have two houses under contract right there in our area. These houses represent over $100,000 in potential profits. They're all gonna make on these two houses. So I pick up my phone. I call my banker.

His name was Steve. My banker was Steve. The operative word in that sentence is was my banker. I called him up. He answers the phone.

We have our little chitchat. And, Steve, I had had this conversation hundreds of times in six years with my banker. I told him I had these two deals under contract. The after repaired value was x. They're located over one's in Newport, one's in Morehead, and the funding that's required is x, And I'm looking to close of course, back then, even then, you know, it's gonna take thirty days, three weeks to close.

And when I had the closing date set up and Steve went quiet on the other end of the phone, which is never a good sign when your banker goes quiet.

Steve: Right.

Jay: And he clears his throat and he says, Jay, I'm sorry, but the bank is closed and, you no longer have a line of credit.

Steve: The bank is closed.

Jay: The bank has has closed my line of credit. Closed

Steve: your line of credit.

Jay: Closed my line of credit. No. They're they're open.

Steve: Okay.

Jay: And I said, what do you mean, Steve? He says, well, the bank's just not loaning out money to real estate investors anymore these days. My first thought was, it sure would have been nice to know that Mhmm. Before I put earnest money down that I can't get back. In 2009 in North Carolina, you put earnest money down, you're done.

You're you're not getting that back. My next thought was, what in the world am I gonna do? Mhmm. That was my only my only funding relationship. And so I hung up the phone, and I created one of my new mantras right there, sitting there in my chair.

I said to myself, you know what? It's impossible to fail unless you choose to quit Jay Conner.

Steve: Mhmm.

Jay: And quitting wasn't an option for me. So I called up my buddy Jeff who lived in Greensboro, North Carolina at the time. Jeff had, been a real estate investor for a number of years and we were friends. And I told him what had happened. I just got cut off.

He said, welcome to the club. The bank cut me off last week. My line of credit is gone. I said, well, what are we gonna do? And so he said this phrase called private money.

And I'd never heard about private money. Didn't know what private money was. Didn't know private what private lending was or any of that. So I made a focus of learning very very quickly what private money and private lending is all about. Mhmm.

So I did. In less than ninety days, I was able to attract over $2,000,000 in funding, which was more than a million dollars of the line of credit that I had at the bank. And since that experience, Carol Joy and I have not missed out on a deal since '2 since February 2009 for not having the funding lined up. So we were able to make the rules.

Steve: Right.

Jay: I was able to make the rules. And so, I mean, that was the it was the biggest blessing in disguise. Of course, you know, many of your listeners, some do, some don't, remember what was going on in 2008, 2009 with the global financial crisis. I mean, we just this globe just about went under. Mhmm.

But anyway, it was the biggest blessing in disguise. Because you know what, Steve? I would not be here on your podcast today had it been for that experience. I would not have had the opportunity to have such an impact with other real estate investors without that experience. And it's just well, my favorite definition of coincidence is god's way of staying anonymous.

And if that hadn't happened, then I mean, our first twelve months of losing the line of credit and learning about private money and private funding, our first twelve months, our income tripled.

Steve: Wow.

Jay: Tripled. And remember what was going on in 2008 and 2009? Foreclosures all over the place? Well, if I didn't have private money and short sales were huge Mhmm. Back then.

I believe they're coming back too. That's another conversation. But if I didn't have all that private money lined up ready to go, I would I've missed out on a ton of opportunities to serve people in distress. Carol Joy and I actually started tracking people in foreclosure before their houses went to sale and offering to help them out of foreclosure, which, of course, the banks weren't gonna do. Nope.

But if I hadn't, and that's why we create there's four wins we create in all the transactions that we do where unless we got a bunch of people winning, I really don't wanna be involved in it. But if I hadn't had that crisis, if you will, that blessing in disguise, then our business would not have flourished. Our business would not have grown like it has. And I wouldn't have had the opportunity for the two of us to make the impact that we have.

Steve: Now those two properties you had under contract that Steve was unable to fund, were you able to get those Yes.

Jay: Done? Yeah. They still they kept them under contract

Steve: and Just took a little longer to close.

Jay: We got the it took a little longer to close, but we got the private money, and we closed on those two deals with private money. And you

Steve: still made your 100,000. Yes. Yeah. Well, I think the the key here, right, because you're mentioning, like, you would not have these opportunities. I think kind of just to put some more light on it is that everyone else is relying on banks.

And so when Jay's got the private money and everyone else is relying on banks, there's a lot more opportunities for Jay because other people have basically been eliminated from the from the game, the competition.

Jay: That's right. Yeah. That's right.

Steve: So you want to elaborate specifically what private money means? Sure. So a lot of

Jay: times, real estate investors hear this phrase private money, where, actually, a lot of times when people are talking about private money, they're talking about hard money or hard money brokers. And, you know, you and I are in mastermind groups. We got some good hard money broker friends. Right? I say establish as many relationships Mhmm.

As you can. But in my world of private money, what I'm talking about is doing business with individuals, human beings like you and me and your audience, doing business with individuals to where they loan money from either their investment capital or their retirement funds. I never heard of self directed IRAs until this crisis, if you will, blessing in disguise happen. Yeah. So they they loan us.

So Carol Joy and I right now, we've got 46 individuals, private lenders, that are funding our deals, loaning money to us, and over half of them are loaning us money, funding our deals from their retirement funds. So it comes down to doing business for these individuals. You know, the question comes up, well, Jay, where do you find these people?

Steve: Mhmm.

Jay: Right? Well, these individuals, right at half of them in fact, all of them, all 46 of them never heard of private money or private lending. These were all people in our warm market or expanded market. There's really three categories of where you get private money. One category is who do you know?

Who's on your cell phone? Who's on your email list? Who's your Facebook friend? Your real Facebook friend. I don't mean your fake Facebook friend.

Who's your LinkedIn connections that you really know? So those are your people you already have a connection with, your social groups, church, rotary clubs, etcetera. Then the second category of where you find private lenders is what I call expanding your warm market. Like, a lot of people, they'll say to me, Jay, you know, all my people are broke. My people ain't got no money.

Well, first of all, I don't believe them. But it is but I say expand your war market. So I'm all the time encouraging and showing real estate investors how to I say go to where the money is. The more money you roll in, the more sticks to you. So go to where the money is.

The third category are existing private lenders.

Steve: The more money you roll in?

Jay: Yeah. The more money you roll in, the more sticks to you. So if you're not hanging

Steve: I have not heard that expression before.

Jay: And you've interviewed a lot of people. But I say go to where the money is. So let's back up for a second. And you say, well, Jay, okay. That's where the people are.

How how do you ask for money? How how do you get the money from them? Steve, did you know in all these years since 2009 of funding our deals with private money, I've never asked anybody for money. I never asked anybody for money. I said, well, Jay, how do you get the money?

It's simple. And this is all about mindset. It's called put your teacher hat on. Mhmm. I educate people in that I know that I've got some kind of association within.

Sometimes I'll I'll speak to what's called a cold group educator rotary club, you know, group that's they never heard of private money, and they for sure never heard of self directed IRAs.

Steve: Mhmm.

Jay: That's an actionable item right there, Steve. As friends of ours would say, that's a rider downer. Mhmm. If you wanna attract a lot of private money the way I do, you gotta have a relationship with a good self directed IRA company, and there's good ones out there Mhmm. That you can refer people that you're teaching, that you're talking to so they can move their retirement funds over to a self directed IRA company approved by the IRS.

So then they can loan money to you on deals either tax deferred or tax free depending on, you know, the type of account they got. So, you know, I just love starting up conversations with people. One of my favorite phrases to start a conversation with someone is, did you know? Mhmm. Did you know?

I might be having lunch with somebody. I say, did you know there is a legal way approved by the IRS for you to make tax free or at least tax deferred income unlimited per year with your retirement funds? Of course, they aren't they never heard of it. So it's all about putting your teacher hat on and educating people what private money's about. And that's what I did my first ninety days, and that's what I still do today.

Steve: That's incredible. So you raise all the money you need.

Jay: Oh, yeah. Well, I have a problem.

Steve: What's your problem?

Jay: My problem right now is I have over 1 and a half million dollars Mhmm. For my local market sitting on what I call the shelf, waiting to be deployed. Right? So it's like a balancing act. I mean, it's I mean, it's gonna be a nice problem for your audience to have, having more money than you need.

But it's sort of a balancing act, keeping your private lenders happy. And how do you keep them happy? You keep their money invested.

Steve: Right. So, when you got a one and a half on the shelf, unused Right. Are you paying interest on that?

Jay: No. Okay. So good question.

Steve: So is it in an escrow account or is it in their bank account?

Jay: It's in their bank account. Now so so let's talk about that for a second. When I have a a house and let's say we're rehabbing it and now we're cashing out, so what do I do? Well, I am not going to keep well, my attorney is not my real estate attorney, is not going to keep unsecured, unassigned funds in their trust account Mhmm. With it just sitting there.

Real estate attorney's not gonna be the savings, like the savings account. So what I do is now you and I have got some friends Mhmm. That keep that money, right, in between houses paying interest on it. And there is a legal way to do that. But the way I do it is when we cash out, either the the private lender is paid off, and now they're waiting for the next.

Well, I'm not borrowing unsecured funds. Mhmm. All the funds we borrow are backed by real estate. The promissory note is collateralized with either a mortgage or a deed of trust. However, I've got some private lenders that only have 30 or $40,000 of investment capital or retirement funds that they want to use.

Well, I can't buy a house for that Right. In our area, but I can use it for rehab money. So on those smaller amounts, when we cash out a house, I do a lot of and I know your audience can handle this advanced strategy. Right? I do a lot of substitutions of collateral Mhmm.

Or a lot of loan modifications with my real estate attorney to where I'm cashing out on this house, but now I can use that money on another house for rehabbing. And so we'll just keep the note in play, keep the promissory note open Mhmm. But recollateralize that note with a different property.

Steve: Yeah. And there's two things here. First is I made a lot of stupid decisions in beginning part of my career where someone's like, I got 20,000. Like, I can't do anything with 20,000. Right?

So I was like, hey. We don't need it. Now I know we can rehab a kitchen with 20,000. Absolutely. Right?

So that was the first stupid thing. Second thing was, I read an article today. Our friend, Corey Corey Boatwright, and said this to me. There's a guy who just got in trouble. Right?

Big name. I won't say who. Sure. But, you know, you mentioned the importance of collateralizing

Jay: Yes.

Steve: And securing. Yes. Right? We got another friend, Jamil Damji, and he says, like, he refuses to raise money because he says that's the fastest way to turn into an accidental Ponzi scheme. And you hear some of these other guys who are not securing it No.

Who who turn into this Yeah. Accidental Ponzi scheme.

Jay: Yeah. Yeah. So the reason there's two reasons that we collateralize every note with real estate. First of all, you see, when we're teaching these private lenders

Steve: Take a step back. For everyone that's listening that doesn't know what collateralize mean. Can you explain it?

Jay: Yeah. So when we say collateralize, what remaining is so there's two primary documents that are in play that are in use when we're borrowing money from a private lender. And I don't create the documents. The real estate attorney creates the documents. There's the promissory note, which is what it sounds like.

It's me promising to pay the private lender x number of dollars, principal loan amount, frequency of payments, interest rate, etcetera. And then the collateralization means that that note is gonna be backed or collateralized by a mortgage or deed of trust, which attaches, is a lane against that house, in my case, to where if I don't hold up my end of the bargain and if I don't pay the private lender, they have recourse and protection. They can foreclose. Mhmm. They can foreclose on the real estate.

And so in essence, if I don't pay the private lender, the Right.

Steve: That'll be me a hold. Okay. So you said there's two reasons to collateralize.

Jay: There's two reasons. Number one, I want to protect my private lender. I mean, I want them to stick around. I don't want them going anywhere because I want them to keep loaning me money over and over and over again on future deals. But secondly, what you just said I mean, Carol Joy and I, we I regard ourselves as very ethical, hard serving people, but I don't wanna put myself in a position to where I've got all this money borrowed.

And it's like a it's just money with a free line of credit with no built in accountability on, well, where's that money gonna get paid back and when Mhmm. Instead of it just staying open forever. So it doesn't put my it protects my private lender, and it protects me from being in a position that I just don't wanna be in. Right. It forces me even though my intentions are always fantastic, it forces me by collateralizing the note to do everything what is said to be done in writing.

You know? It backs that note.

Steve: Right. So one question I always hear is when you're asking for the money, what terms do you offer?

Jay: Sure. Sure.

Steve: And I've got my own opinions on it, but I'd love to hear yours first.

Jay: Sure. So first of all, we pay everybody the same. The interest in fact, I got a question from, a connection I recently made on LinkedIn this morning. He says, and the question he said was, well, what does your negotiations sound like when you're beginning a conversation with a new private lender? There are no negotiations.

There are no negotiations. I don't negotiate the interest rate. I don't try to talk anybody into doing anything. I'm not selling. I'm not begging.

I'm not chasing. I have a private lending program that we pay everybody the same. Everybody. Everybody's paid the same for two reasons. Number one, we're in a small community, and people talk.

Yeah. And people that are private lenders refer other private lenders. Mhmm. Right? I mean, I mean, Carol, Joe, and I got over $1,000,000 and 1,300,000.0 last year just referred to us.

Just word-of-mouth. So I don't want Tom, Dick, and Harry private lenders talking to each other and discovering, oh, he's paying me 6. He's paying you 8, and he's paying you 10. What's up with that? So that's one reason.

Number two, I don't have to remember but one program. Right. I got I got one program. So So we pay now I would not have due to recent economic conditions, I would not have to pay as much as I am now. Mhmm.

But I've spoiled them for many years. Mhmm. By the way, we do not joint venture. This is not partners.

Steve: Mhmm.

Jay: So the difference between joint venturing I'll tell you I'll answer in a second. But the difference between joint venturing and private lending, the private lender does not own the property. Mhmm. Private lender acts in the same capacity as a bank. Right.

I think it's the same protection as a bank. Joint venturing is a private lender would share in the profits. So that's not my program. What's my program look like? I pay a straight 8%.

8%. The frequency of payments I leave up to the lender. So I've got we've got some elderly lenders that are relying on the monthly income, and they don't wanna touch their principal. Right? So monthly, some we pay quarterly, some as, semiannual, some annual.

Now that's if they're loaning us just straight investment capital. If they are loaning us money from their retirement account, and I've introduced them to a self directed IRA company that I would recommend, and now that money's coming to us from that retirement account, then we're gonna pay that either quarterly. I mean, the money's not coming back to them. Right. They're not living off of that money.

So and it's the same money. They're gonna earn the same money. It's just a matter how many checks do you get, right, a year. So we're gonna pay that either quarterly, semiannual, or annual. The length of the note is either two years or five years depending on where they're getting the money from.

So we do a straight two year term if it's just investment capital. I know in all likelihood, I would have been through using the money within two years on that deal.

Steve: Right.

Jay: But if they're loaning us money with retirement funds, we'll go ahead and set the term up for five years, and here's the reason. A lot of homes we still sell today on rent to own. It's been my discovery that the most profitable way over time is to sell on lease purchase or rent to own. And so sometimes we will it'll take people a little longer to get ready for the mortgage to cash us out. So I know if I borrowed the money with a term of five years from the retirement account, even if the rent to own buyer didn't cash out, which we have 80% of our rent to own buyers cash us out.

That's unheard of.

Steve: That's really high.

Jay: That's unheard of. Yeah. There's a reason for that. We require credit repair, which is very different than what most people do. Yeah.

Steve: That's impressive.

Jay: We, we require their credit repair. That's another conversation about why we do that. But, anyway, either two years or five years for the length of the note.

Steve: Gotcha. Okay. So what I was gonna say is, a lot of people that ask, like, you know, how do you negotiate terms and so on, for us, it's the same way you negotiate with a homeowner. Right? Like, well, what are you hoping for?

Sure. Right? What are you making right now?

Jay: Sure.

Steve: And then that's what we negotiate on.

Jay: Right.

Steve: So, you do seconds.

Jay: Absolutely. I do second mortgages or second lanes, junior positions, all the same thing, with those smaller amounts of money. And they're

Steve: still 8%?

Jay: No. 10%.

Steve: 10% for a second.

Jay: 10% on the seconds. But with these private lenders, I never pay points, never pay origination fees. And, you know, these private lenders are counting on us to take care of them. Mhmm. I mean, we've taught them what private money is.

Right. We've introduced them to what self directed IRAs are. So, like, when we're doing major rehabs, my rule of thumb is not to borrow more than 75 percent of the after repaired value. I didn't say a purchase of after repaired value. And so I might get so let's say I got a $200,000 house after repaired value, 200,000.

Well, if it's in need of a major rehab, then I'm a buy that house maybe for a 100,000. Mhmm. 50% of the after repair value. Let's say there's a 30 or $35,000 rehab. Well, I can borrow in my program with my lenders.

I can borrow up to a $150,000. That still gives them a 25% equity cushion after the rehab. So I might have a 150,000 from one lender. Or back to your point, I might have a $100,000 note in first position Mhmm. From one private lender.

I might have a second one in $50,000 in second position. So now we're talking total loan to value is still 75%.

Steve: Right. Alright. Awesome. So we've got some questions here. Let's see.

Yeah. Got a lot of love here. We'll see how this goes. It's the first time we're doing this.

Jay: Uh-oh. First time. Yeah.

Steve: Alright. So we'll keep going. So you mentioned earlier that, we've got some friends from masterminds. How do we meet?

Jay: You and I met a collective genius.

Steve: Yeah. Yeah. So I think people might be getting kinda tired. Right? Because they're always talking about, you know, met this person and that person, collective genius.

But, obviously, that's how we connected.

Jay: Absolutely. And

Steve: so you wanna, you know, speak a little bit on on the benefits of masterminding.

Jay: Oh, my word. So I'm in three mastermind groups Mhmm. Myself. Right. But I pay to attend Mhmm.

And I run my own. Right. So we're pretty busy with the mastermind groups. So you know this this, concept of mastermind, to my knowledge, was first talked about in Think and Grow Rich. Mhmm.

Steve: That's where I read about it.

Jay: With, Napoleon Hill. And so the idea is you have this group of people come together with like minded core values, like minded goals, business interests. And it's the job of each person in that mastermind to support, encourage, give resources, give experience, give their heart to the other mastermind members to help them succeed. What are the other mastermind members having difficulty with challenges? What are the other mastermind members wins?

And there's the other side of the mastermind coin. Masterminding is just as much about giving as it is receiving. Right. And a mastermind is not going to be successful unless all those members play that out full and understand that this thing is just much about giving as it is receiving. And I believe Napoleon Hill talked about this term mastermind.

When all these minds, these people and hearts come together, the sum of the parts is like greater. Mhmm. Right? You actually end up with this big one mastermind that is just like serving everybody. And it's a beautiful thing.

I mean, you know, when you start to get really successful in business or you wanna be successful in business, when you start having wins, who wants to hear about it? Like, your friends back home and your family might not want to be hearing about how wonderfully you're doing.

Steve: Not the people you grew up with.

Jay: Right. But your mastermind members Mhmm. Want to hear about it, and they wanna learned, and they wanna hear what you do different the the next time. And it's just a wonderfully beautiful, mutually beneficial group relationships.

Steve: I mean, for me, I always come in and give as much as I can. Yeah. But I'm there for selfish reasons. I wanna learn. I wanna get better.

Sure. The competitive fire in me is like, okay. What's Jay up to? What's he doing? Alright.

What what of that can I take back to my team and start replicating?

Jay: Exactly.

Steve: And, I'm a I'm a very big fan of the copy and paste model.

Jay: Me too. Why reinvent the wheel when the wheel is already rolling along beautifully?

Steve: Yeah. Alright. So let's see if we can get the questions up this time. Incredible group of guys. They're doing some really neat stuff.

Alright. So Luis Garcia, what's your take with, the sales courses? So I'm guessing they're probably talking about my course. So I I guess I'll ask you. Have you had a chance to see some of this my stuff on the sales training?

Just at CG.

Jay: Okay. So what is that? I'm not behind the curtain. Right?

Steve: So what of of what you've seen, what is your opinion of it?

Jay: Of of your sales courses? Mhmm. Like, you're like the best there is. I mean, you're like I mean, there's all kinds of sales courses out there. Yeah.

How to close better, you know, how to get deals under contract. But in this business, it's so specialized Yeah. As far as who these people are, you know, how to really learn what's going on in the mind of the of of a seller of a property. And so your course is, like, specialized for what we do Mhmm. And just not like, some generic course in generic sales.

If somebody wants to really get good at negotiating, closing deals, getting deals under contract, then they need to, like, tie into you. And I'm not saying that just because I'm here on your show. Yeah. I'm saying that because you already know and your team already knows over the years, well, there's only so many motivations and and different causes of distress that are in these people's minds. And what's wonderful about your training, Steve, is that you're able to help people discover how what's going on with that seller and how to communicate with them to where it's really meaningful and understandable

Steve: Yeah.

Jay: To where they would want to do business with you. I mean, I mean, after all, we wouldn't be in business if people had problems.

Steve: Right.

Jay: So we're, you know, we're problem solvers. So, yeah, your your course is fantastic specifically for real estate investors.

Steve: Alright. Appreciate that. Pull up another question, fellas. Raylan, why why do you believe short sales are back? See, that's that might be another hour or so.

I know. So Let let's let's get that to five minutes.

Jay: So well, I'll do it I'll do it in five seconds. So due to the recent economic times Mhmm. With two big groups being in foreclosure or heading towards foreclosure, you've got all those people that were prior to COVID. Mhmm. They were going into foreclosure.

Then you got all these people that lost their jobs due to foreclosure. And so we've got two large categories of houses that I believe that are gonna be moving towards foreclosure, but the banks don't want foreclosures.

Steve: They don't?

Jay: No. They don't want foreclosures. So those banks are gonna start doing everything they can to stop another tidal wave.

Steve: No more tsunamis.

Jay: No more tsunamis of what was in 2008 and 2009. So when I said there's gonna be more short sales, it's for the same reason that you'll have a lot of houses going into foreclosure, and you're gonna have a lot of people that are upside down. Right?

Steve: But don't you think there's a lot of equity out there? I mean, I can't I can't speak it across the country, but in Phoenix, like, we've had about 30% year over year appreciation, which is astronomical. Yeah. Seems unfathomable. Here we are.

Jay: I know. I know. And it is that way in a lot of cities. I mean, like, where Carol Joy and I live in Eastern North Carolina, we're up about 20% Yeah. Over the past year.

Right? Which

Steve: is more than most people's down payments.

Jay: That's true. That's true. So it's just a matter I mean, it's really going to be interesting how this thing unfolds. It's gonna really be determined by how far people are behind on payments before the foreclosures and the short sales start.

Steve: Yeah. Awesome. Alright, guys. Another question. Tech wants to know how how do you find your buyers and what marketing sites are you using to find your least option buyers?

I think yeah. I think let's let's show up with the least option buyers. Sure. And, first, let's talk about that, and then a follow-up question to that would be, you know, why is your lease option different than everybody else's? So let's start with where are you finding your lease option buyers?

Jay: So there's all kinds of places you can find lease option buyers, but I'll tell you where we find all that we need and more than we can serve, and it's free. This marketing costs absolutely zero except for the person that's doing the post. That's Facebook Marketplace. Mhmm. Facebook Marketplace and, specifically, Facebook Marketplace groups.

Now I can't tell you why, but I can tell you that yard sale group people on Facebook marketplace love rent to own or lease purchase houses.

Steve: Gotcha.

Jay: I don't know why, but they do. So for example, Carol Joy and I had this home about three weeks ago on Panther Trail in Havelock, North Carolina. We bought this home subject to the existing note. I assume your audience, by and large, knows what subject to the existing note is. Whenever I buy and I still use private money with buying subject to.

I'll use private money in second position if payments need to be brought current Right. Or if some light renovation needs to be done. So when I buy subject to, I automatically think sell on rent to own.

Steve: Mhmm.

Jay: And that that's the trigger. I'm buying subject to. I mean, if it's got orange walls and purple walls, beautiful. We need

Steve: some colors. Those are great colors.

Jay: Yeah. And look, I we tell the people, why don't I wanna paint it when you're gonna paint it your color that you like. Right? So we sell it on rent to own, put it on Facebook Marketplace three weeks ago. Now we now we stage it.

I mean, we I mean, it's ready for Southern Living Magazine pictures. Pictures. We stage the mess out of it, and we do a professional music video using Matterport software.

Steve: Oh, wow.

Jay: And so for a whopping $175, About five days later, we've got a totally professional three d walk through of this home totally staged. We put it on Facebook Marketplace. And the next day, in our little teeny tiny area, we had 71 people raising their hand, asking all kinds of questions. How can I see it? How do you qualify?

You know, etcetera, etcetera, etcetera. Within three days, we had three people offering over $15,000 of down payment or non refundable option fee. So and answer the question, you don't need to spend any marketing money Yeah. To find rent to own buyers. I mean, even in a down market even in a down market to where banks are not loaning that well, for mortgages, over 80% of Americans cannot go to the local bank or more get a mortgage to get a home.

So all these people would love to buy, you know, on rent to own. So we put it on Facebook Marketplace, and, I mean, it's it's going like that. Plus, there's no inventory.

Steve: Right.

Jay: I mean, you couple now with I mean, rent to own has always been fantastic. But it's, like, more than fantastic now because not only that I don't have any homes to buy in the model listing service, but there's no rentals. Yeah. So so it's like you have all these people that are that are just clamoring for a place to live. So

Steve: I'm trying to imagine Jay Connor on his computer in Facebook Marketplace posting these.

Jay: Do I look like I know how to post

Steve: Like I said, I'm trying really hard to picture this.

Jay: Or you're not gonna see it. Because it's hey. Look. Years and years ago, when we first started marketing our home prior to Facebook, when we started marketing our homes on Craigslist,

Steve: Uh-huh.

Jay: I said, oh, I can do this. I can post our houses, our rent to owns on Craigslist. I didn't make it past the first day, right, on posting on Facebook.

Steve: You got fired.

Jay: Yeah. Yeah. I fired myself. So so we have a virtual assistant that is truly virtual, lives in the Northeast, and he is a Facebook, genius. Mhmm.

And that's all he does for us is he manages our Facebook accounts, buyers and sellers. And so when we've got the rent to own, we get of course, you can't see me doing a video either, right, of a house. No. So we pay a $175 to Lighthouse Video Productions. $175.

It's done. It's beautiful. Our interior designer, stages it beautifully. And then we have our VA. We, just email him the link he posts on Facebook.

And now see, it's all about automation. Right? So now they respond to the marketing. I mean, I'm not in I mean, I'm I created the process with Carol Joy, but I'm out of the way. So it's got the music video.

It goes on Facebook. Now people are replying. Well, guess what our VA guy is doing? When people, like, type to you on Facebook and send you a private message or do on what do they expect you to do? They expect you to type back.

Mhmm. So he's typing back, but the call to action is getting them on the phone with our lady Kim Mhmm. That talks to all these buyers. So Kim gets on the phone. Now she gets their initial information, you know, prequalifies them.

And then once all that information comes along, now it's sent over to me. Thankfully, we are totally paperless Mhmm. In this whole process. And now, I just go look in my CRM, and there's a task for Jay. I only have two kinds of task in my CRM that the whole team looks at.

I only have two tasks. One task is, Jay, there's the seller with all the information. What do you wanna do with this? Here's a rent to own buyer. There's the information on the rent to own buyer.

How do you now if they have no job and they have a credit score of 425, they're not being sent to me. Right? So the prequalification happens. Now I'm in the decision making mode.

Steve: So you're the underwriter on sellers and buyers.

Jay: That's right. I never thought of myself like that. Yeah. But you're right. I decide who gets approved.

Steve: I love it. I mean, it's simple, and that's what you love to do. And I think there's a there's something you said there, right, out of the way because that's something that I think a lot of people kind of forget or they kinda think like, I wanna do all this volume and units and this and that. And one thing they they don't, I think, put enough into consideration is how many deals can I do per month if I'm out of the way? More.

Does not depend on you, but there's some people some people in the early part of the career where they have a hard time letting go.

Jay: And I and I can relate to that. Yeah. I can relate to that.

Steve: So you said something a moment ago, which I think is really important. So one part of our business with the least option thing is a lot of investors are hoping that the buyer will fail. Right? Like, that's part of their business model. Like, man, if I can do lease option, I get the nonrefundable deposit, and I hope they fail so that I can make more money.

But you intentionally try to help the buyers

Jay: Yes. Buy it. Yeah.

Steve: Can you speak on that? Because that's not

Jay: a lot

Steve: of people have that Yeah. Model. It's different. So And I think it says a lot about you.

Jay: Yeah. The the reason that Carol Joy and I actually I mean, it's part of our paperwork created by our attorney that when you are buying one of our rent to own homes, you have to agree. You have to sign that you agree that you wanna enter the credit repair program with the company that we recommend that you do business with. And the reason we do that is for two reasons. The first reason would overshadow the second reason.

So I'll give you the first reason first. I just think it's the right thing to do. I mean, these people, and I'm not saying I'm better than anybody else. I'm just saying I believe it's the right thing to do. I believe it's the ethical thing to do.

Okay. So, Steve, I'm selling you a rent to own home, and you're writing me a 10 or $15,000 check. Doesn't really matter how big it is. But whatever you wrote me is a lot of money to you, and you want to own this house.

Steve: Right.

Jay: That's your intention, or you wouldn't write me thousands of dollars of nonrefundable money that if you move out, you're not getting that money back. So I view us as being on a team together. So I do not have a, traditional landlord tenant relationship with our rent to own buyers. The first thirty days, the first thirty days, all the repairs are on me. I want everything in this home to be working as it's intended.

Now you're not buying a new home, but I want everything to be working correctly. After thirty days, you're responsible for the repairs. In other words, we tell people before they agree to enter into our rent to own program, for all intents and purposes, this home is gonna be yours. Yeah. It's your home.

It's the mindset of a homeowner. We just haven't transferred the title of the deed into your name yet, and we are up with you. We're partnering up with you to help you get to where you want to be, and that is actually to have the title of this home in your name. Now we have over 80%, right at 80%, that actually do cash out, and we help them get ready for a mortgage. If they don't get ready for a mortgage, say, within the year or two years that we gave them to get ready, if they've kept their end of the bargain, if they've made their payments on time, if they've done the things that the credit repair program has instructed them to do, and for whatever reason, if they're still not quite there, then I'm gonna I'm gonna extend the the, lease.

I'm gonna extend I'm working with them to help help them to get ownership. So one, I think it's the thing to do. Two, when we help them get ready, you think they're gonna tell anybody else. Yeah. Right?

They're gonna tell somebody. If you don't help them get ready and they gotta move out and they don't get their $10 back, you think they're gonna tell somebody that story. Yeah. For sure. I mean, we're in a so that's the second reason.

Not only do I think it's the right thing to do, you know, everything that Carol, Joe, and I do in our business, it's we it's framed with having a servant's heart. Yeah. And, I mean, I mean, when we're lending I mean, borrowing money from private lenders, we're serving them. Where else are they gonna get these kind of returns? We're helping a seller.

Where else are they gonna get their problem fixed, etcetera? We're selling on rent to own. But, you know, secondly, as I said, we're in a small community, and and people are gonna talk. But, you know, you asked me a few minutes ago when we started out, why did why did we get into real estate?

Steve: Mhmm.

Jay: And I answered that question initially. And you know, I've learned over the years it's never really about the money.

Steve: No. It's not.

Jay: It I mean, it really isn't. Initially, somebody can think it is. But if that's the only true motivation, it's not gonna last. In fact, over the years, when I have gotten involved in activities for the sole purpose of money only, my interest didn't last. I had no passion in it.

And what I discovered over the years of being in this business is back to having the servant's heart thing. Well, the rent to own buyer. We made a impact right there on having them own a home. Talking with that distressed owner that is, like, in distress big time, I mean, it reminds me not long ago, this, seller of a house, his name is Larry, over in Beaufort, North Carolina, just adjacent to our Morehead City. And he responded to our marketing, and he was, like, six months or so behind on his payments.

Right? And he just well, he was done. He he he lost his job. He was having to move to Florida, so he contacts us. And so I was still talking with sellers in this stage of the stage of the game.

And so Larry comes to our office and I sit down with Larry. And I remember looking at him in the eye. And, you know, when people contact us, one of the first things we ask them is, do you want to keep your home? Do you want to keep your home? Mhmm.

These people are behind. Nobody else asked them that question.

Steve: No. Do

Jay: you want to keep your home? And if they want to keep their home and we tell them, we're not attorneys, we're not specially licensed, but through our experience, there's 10 different ways in the state of North Carolina that you might could keep your home. And we'll give them a copy of that. We'll review that with them, as in, you know, deferment programs, loan modifications, etcetera. And if we show them a way they can keep their home, that's fantastic.

Is there anything in that direct for us and my team? No. But Zig Ziglar told us, you help enough other people get what they want, you ain't gotta worry about you. So back to Larry. Larry did not he lost his job.

He didn't have any kind of income to keep his home. And so he just wanted to turn his house back in. His credit's already shot, and he just wanna be done. So he's offering to sell us his home Subject to the existing note, he agreed to that for what he owed. And did we buy it for what he owed?

No. So what do we do? We gave Larry a few thousand dollars. As I recall, it was like $2,500. Mhmm.

He didn't have no money to move to Florida. Well, why in the world can I not help that man and his family get back on their feet if I'm gonna make 40 or $50,000

Steve: Yeah? And

Jay: the bank's gonna give them nothing. So it's like, you know, you got in this world of real estate, you got an opportunity with these kind of profits to make an impact and make a difference in people's lives, then I think it's your responsibility to do the right thing.

Steve: Yeah.

Jay: So whether it's on rent to own and and helping people get ready for a mortgage and that's what they intended to do, then I wanna be on their team. I wanna help them. And or buying that house and the guy's behind on his payments, and you've got a 40 or so thousand dollar equity position coming your way, it's all about disturbing. Yeah.

Steve: And then we got another question here. This is from David. How do you give security to the lender who funds the repairs?

Jay: Yeah. So that's a great question. So everybody has got their own deed of trust and their own promissory note. So let's say that you've got, David. Let's say I've got Steve in first position.

And, David, let's say you're in second position. So, Steve, you would have your own promissory note. You would have your own, deed of trust. David would as well. Now the question comes up.

Well, you see, if I'm gonna get all that repair money, then and I get all that money up front. Private lenders gives that money up front. Well, in this world of private money and your warm market, there's a really big word that's five letters that starts with a t called trust.

Steve: Mhmm.

Jay: So, David, you're in second position. I taught you about private money. Right? I better look out for you. Number one, it's the right thing to do.

Number two, I want you to keep earning me money years down the road.

Steve: Yeah.

Jay: So I'm gonna use your money to rehab the house. I can't sell it unless I do. But in addition to that, David has still got his own promissory note from my LLC and his own deed of trust in addition to you having your own. Mhmm.

Steve: Gotcha. And the next question is, Justin Tumenowski wants to know, if you're a newer investor, choose who didn't want to use their own capital, what are some of the best action steps you would take in your own local market?

Jay: Yeah. So in your own local market, first of all, as I mentioned those categories. So we've got your current own center of influence, your own connections, expanded market. Right? Go to where the money so I I say get involved in the community.

But first start with your own so I got five steps to getting money, private money, the way I did it and the way I still do it. Number one is make your list. I say start with people you know that are retired. Because most retired people have got retirement funds. Most.

They're, you know, worked all their life. Well, where else they can they get, you know, a great fantastic return on their investment capital, their retirement funds safely and securely. So we're gonna make the list. Number two, now we're gonna have a casual conversation. We're gonna educate them.

And I have what I call the direct method and the indirect method. The direct method is telling people what you're doing. You now open up your business to people that you know and trust. You're positioning your company for upcoming foreclosures, and this program is only by referral only. And then you ask the direct question.

Do you have investment capital or retirement funds not giving you a high rate of return safely and securely? That's the direct method. I didn't start out with a direct method. I mean, you I mean, everyone that's hearing my voice, you probably know people right now that are loaded, that have investment capital, that have retirement funds. And you might be a little intimidated Mhmm.

To ask that direct question. So then I have what I have used for years, and I teach as well, the indirect method. So I'll make this really, really short. So I'm cut off from the banks back in 2009. I get my private lending program together, and it was on a Wednesday night at bible study.

Carol, Joe, and I were going, and I knew a fella that was loaded. He'd been in the community for years and years room and shut the door. And you know what I said to him? I said, you know everybody in this town. And he did.

Yeah. You know everybody in this town. You're well respected. You're an entrepreneur. You've been in business for yourself for years.

People look up to you. And as you know, I'm investing in real estate these days, and I now have a program that's paying insane rates of return to people. So when you run across and this was in 2009. And I said, when you run across somebody that's complaining about what the local twelve month certificate of deposit or what they're getting out of the stock market is doing for them and they're complaining about it, would you refer them to me, and I'll tell them about my program? Mhmm.

Well, what do you think he said? He said, well, Jay, what you got in mind? And I said, well, I'm paying really, really high rates of return. And, you know, it sort of depends on the deal what that is. And, I said, what?

Now this is before I put my program totally in place.

Steve: Mhmm.

Jay: He says, well, what what kind of rates you're looking at paying? I said, well, I don't know for sure what sounds high to you. And he says, well and this was back in 2009 where you could actually make 3% in the certificate of deposit. Right now, it's 0.17. He said, well, we're making like 3% of certificate of deposit.

He said, I guess maybe 6% sounds pretty good. And I said, well, I can't pay you six percent, but I can pay you 8%. And he looked at me and he said, put me down for $250,000. And Wow. I went to his house, two days later, sat down with his him and his wife.

I had my program put together by then forty eight hours later. And they became our next or our first $250,000 lender. And he did refer a lot of stuff, a lot of, you know, new private lenders to us. So it's making your list and putting on your teacher hat and indirect method asking people to spread the word. Now step number three out of my five steps is I recorded a sixteen minute audio called Stress Free Investing Mhmm.

And I handed that CD out back then like it was candy. Since that time, we've converted it into an m p three and and a YouTube link. But I just handed that out to everybody, and that sixteen minute audio, I titled it Stress Free Investing, How to Print Money Automatically, was the name of my recording. Since that time, I've I've recorded that over a thousand times for students. But nonetheless, that recording does not, it doesn't spill the beans.

It doesn't tell what the interest rate is that we're paying. It doesn't, you know, give the terms, but it raises these questions.

Steve: In curiosity.

Jay: So it just reduce I mean, it it introduced the idea of private money, which then leads to step number four. And that is now we have the one on one. So the one on one, I now share and teach my private lending program. What's the interest rate? How are you protected?

How can you get your money back in case of an emergency and all that? And then step number five, and I don't ask for money. They tell me how much they got. They tell me how much they visit retirement funds or whatever. When I get through explaining the private lending program, I look at them and shut up.

I'm done. Right? Well, now they wanna know, well, how do I get started? Because where else are they gonna get these kind of returns this safe and this secure? And so they give me a verbal pledge as to how much they gotta work with, and then I go find a deal for them just as soon as possible because private money is like bananas in the grocery store.

If you don't consume it rather quickly, it'll go rotten on you and disappear. Ask me how I know. So put the money to work as soon as you can.

Steve: Alright. So we got last question here from, synophonist. So does the private money lender pay capital gains or self employment tax from

Jay: lending that? So it depends. The private lender is gonna pay taxes based on where the money's coming from that they're lending. So if they are lending money from their retirement account, the IRS actually says we, as the borrower, don't even have to send them a ten ninety nine INT. It's it's coming from a retirement account.

It's coming from a self directed IRA. However, if they are loaning us us money from their investment capital and we're gonna write it off as an interest expense, which we are, now the IRS requires us or our CPA Mhmm. To mail them a ten ninety nine INT, and it's ordinary income tax Gotcha. That's interesting. Private lender.

Steve: As if it was a w two.

Jay: Exactly.

Steve: Yep. Alright. So then what is your biggest struggle right now?

Jay: Finding contractors.

Steve: Man, isn't that the truth?

Jay: Finding so I I I'm not having any struggle on any homes that I'm just selling on rent to own. But if I'm gonna rehab it and I'm gonna put it in MLS, now it's one of the most profitable times I know to do it ever. Carol Joy and I just bought this house just four months ago. A little over 800 square feet, two bed, one bath, one block off the historic district in Beaufort, North Carolina. By the way, how did I find this house?

Well, one of my bird dogs that sent us a picture of a FSBO sign. One moral of this story is have field agents, have FSBOs that are dedicated to do it, which we do. Anyway, so sent us a picture. They and here's another big lesson. They taught our acquisitionists, and the, acquisitionists they told the acquisitionists, Kim, they wouldn't take less 1p less than 300,000.

Big lesson. We offered $250,000 funded with private money and would close in one week. They took the offer $50,000 less than they said they would. Lesson learned. Sellers don't know what they'll take till you make the offer.

Mhmm. So we closed in seven days. Here's the point of the story on general contractors. So we closed on it. When we closed on it four months ago, our realtor told us the after repaired value would be $3.75 to $3.99.

Four months. And so I bought it for $2.50. We put 30,000 in it. It's absolutely drop dead gorgeous. I mean, it it looks like a historical home built in 1910.

But from four months ago to today, the after repair value is going from $3.75 $3.99 to $525,000. Comp just closed two weeks ago for $5.95. Mhmm. So anyway, back to the contractors. We do business with two different general contractors.

We do we have our own two separate crews, but everybody's just so backed up. They are backed up. So maybe we can have another conversation some other time on how to find general contractors and how to find the ones you wanna work with. But that's the biggest struggle right now. I have no struggle keeping my people busy.

But I hate paying private money interest, private lender interest on houses for two and three or four months in the wings waiting to being rehabbed.

Steve: Well, the great news is the longer you have the money parked, the more the house appreciates.

Jay: That's true. In this market. That's for sure.

Steve: That's true. In this market. So what is your superpower?

Jay: My superpower my superpower is getting money, getting funding for deals. I got really good at it in a short period of time, and I've I've, you know, helped a lot of other real estate investors get it. But there's but there's really there's really two things that go together with that. I think I've been given a god given ability to look at deals differently to where some real estate investors may not be looking at the big picture in multiple exit strategies. To so it comes down to structuring the deal as well.

So my superpower is really a combination of I've got the money. I know how to get the money. I know how to always have the money ready to go to fund my deals so I don't miss out on any deals. But then there's the structuring of the deal as well Yeah. On how to maximize the profits.

Steve: Now you came here bearing gifts.

Jay: I did.

Steve: So I have. I got a signed copy of a book.

Jay: Yes. You do.

Steve: Can you tell me more about

Jay: this book? Absolutely. So it was, took me three years to write it because I'd much rather sit here and talk to you, Steve, and your audience than to sit down and actually write out step by step what I do. But I've got this brand new book brand new book called Where to Get the Money Now. Subtitle, how and where to get money for your real estate deals without relying on traditional or institutional or hard money lenders, and how to be in control of having all the money that you want.

And so in this book, I go over step by step how to get money, from those three. But I we we haven't even had time on this show to talk about where do you find individuals that are already loaning money out? The book goes into that in detail. And, I'm excited about it, Steve. It hit number one on Amazon when it just came out a couple of months ago.

But, we can save your audience, $20. I'm glad to, ship this book out. They can have the book for free if your audience just doesn't mind covering delivery Mhmm. For a measly couple of bucks. But, yeah.

I got a special URL to give out and, glad to ship them the new book for free.

Steve: So what's the URL?

Jay: So the URL is www.jayconner. And for y'all that's been listening to my name, I'm not an o r, I'm an e r. So I'm w w w dot jay conner, jayconner,.com/book,book.

Steve: Simple enough. Jayconner.com/book. That's it. Alright. So, guys, couple of quick announcements.

If you can just leave the listeners just think about a thought you wanna leave the listeners with. Sure. If you guys get value today, I got tremendous value. And I know Jay Rayd, and I still got tremendous value. Please like, subscribe, share, comment.

It helps us reach more people. We do have our all day all day sales training coming up on July 16. If you guys haven't, signed up for yet, send me a DM. We can talk about it. Next week, we got Melissa Johnson flying in.

She's an incredible flipper, you know, and I think we don't have enough, female representatives in the industry. She's another female powerhouse. I'm really excited to have her come on. What are some last thoughts you wanna leave the listeners with?

Jay: Last thoughts. Well, you know, the re again, the reason I am so excited about being in real estate and being in this business is, first of all, if you, not Steve, but you, listeners, your audience, if you are a person that is truly interested in making a difference, if you've got a servant's heart, there's so many areas and facets to this business to where you can play that out, and you can make a difference. You can make a difference in that person's life that is needing to sell in distress. You can make a difference in a private lender's life of giving them more returns. You can make a difference in someone that wants to enjoy the American dream but doesn't have any other way of doing it except on your rent to own program.

And you can make a difference to your own family and your own, you know, friends. If you wanna make a difference in your church or whatever, the financial, you know, rewards that come with this business, you can be a difference maker if that's important to you. And my last thought is is, anybody that is committed is committed and is serious about being in this business, anybody can make it in this business if you have got the right education on construction deals, finding deals, etcetera. Don't do this business the way I started out. Do not.

I mean, you know, join the hips with Steve Trang who can hold your hand and, walk you through the business. But, yeah, if you're serious about this business and you wanna be a difference maker and you wanna make a lot of money while you're doing it in the meantime and freedom comes with it. My definition of freedom this day these days is this business will give us the freedom to do what you wanna do, when you wanna do it, with whom you wanna do it, and for how often you wanna do it. I don't know any other business that'll give you that.

Steve: Yeah. That was incredible. If someone wanted to get a hold of you, how would they do that?

Jay: Yeah. So we can actually we actually pick up our phone at the office.

Steve: I don't know how how well that's gonna work, but go ahead. We could try it. We could try it.

Jay: The easiest way, just go to jayconner.com. Yeah. Our contact information is there. J w w w dot jay conner, j a y c o n n e r dot com. Again, you want to get the book shipped to you, just put .com/book, and you can reach me.

Steve: Incredible. Thank you so much. I learned a lot.

Jay: Thank you so much for having, me on and allowing Carol Joy to also be here in the studio. She's down the hall in the control room. So, anyway, we've really enjoyed being here, and I just can't thank you enough for the opportunity to share what we do.

Steve: Pleasure is all mine. I promise you that. Thank you. Thank you.