Listen and enjoy:
- Learn about Jay Conner’s career
- Find out the essentials of private money
- Discover where you can acquire private money in order to find your next venture
- Learn how to approach people in order to secure funding
Mentioned in this episode
- Subscribe and rate our podcast at: http://www.Jackbosch.com/podcast
- Follow Jack Bosch on Facebook to get the latest updates: http://www.facebook.com/jack.bosch
- Learn how to flip land for pennies on the dollar: http://www.landprofitgenerator.com
- The IRA services mentioned in the episode are:
- Find out more about Jay Conner at: http://www.jayconner.com
- Sign up for Jay’s class at: http://www.jackbosch.com/jayconner
Announcer: Welcome to the “Forever Cash Life Real Estate Investing” Podcast with your host Jack and Michelle Bosch. Together let’s uncover the secrets to building true wealth through real estate and living a Purpose Driven-Life.
Jack: Okay, here we are. So, Jack Bosch, here and I am super excited to have our guest today, Mr. Jay Conner. Jay, how are you doing today?
Jay: I’m doing fantastic, Jack. How are you doing today?
Jack: I am doing wonderful. I’m loving it. I’m loving the spring in Arizona. It’s absolutely beautiful. And so I want to introduce you right now because we are both members of a High-Level Mastermind, and meets four times a year. And in the last meeting, we were trying to get a hold of each other and trying to chat and we just could not make it happen. So, I basically said, let’s do podcast interview so that not just we got to chat, but we actually get the world to listen in to our chat. And I’m super excited we could schedule that. That’s great. Now, here’s a few words for those who have never heard about Jay Conner before. Jay Conner, is the preeminent authority in Raising Private Money, right? So, basically, he knows where you get the money now from, right? You know, he is been real estate his entire life, right, but, and as a real estate investor in the single family of space and the private money space for about 15 years. And so his unique ability or his unique, what makes him unique is really that there are, that you’re here in this business, there are really netting, he mentioned that, and I hope I have the liberty to say that, netting $1 million a year, over $1 million a year in a market that’s only 40,000 people. So, we love guys that are doing stuff differently. We love methods that are different because obviously, land flipping is different. That’s what my method is, like the Land Profit Generator Method, but you are doing $1 million in a, plus, in a 40,000 people market. First of all, tell me a little about that.
Jay: Sure, Jack. Well, I appreciate you bringing me here on the show, and yeah, what I do is different. You know, as you said, I’m in a small market, been here for 15, but this is where I grew up in Eastern North Carolina, actually in a small town, Morehead City. Morehead City, North Carolina actually only has 8,000 people in Morehead City. So we invest in Morehead City and the surrounding towns. And so what makes my experience different is the first five years that we were investing in single-family houses and flipping, we do all kinds of deals, but, you know, we rehab quite a few. We do pretty houses as well. But the first five years that we were in the business, Jack, I was relying on the local bank, the mortgage companies and, etc. And then 2009 came along, and I remember like it was yesterday. I called up my banker, who his name was Steve. The operative word in that sentence is, was, my banker’s name was Steve. And I had this conversation many times with Steve, Jack. I called him up, I had two properties under contract. These two properties or houses were representing over $100,000 in equity and profit.
And I told my banker, you, when the closing date was and how much was required for the funding. And Steve went quiet on me on the other end of the phone, which is never a good sign. So, Steve cleared his throat, and he says, “Jay, I’m sorry, but your line of credit here at the bank has collapsed and is no more. Now, bear in mind I had a perfect credit score, never been late on payments. Steve and I had a fantastic relationship and here I am cutoff with no notice. Well, Jack, you probably remember what was going on in 2009. I mean, it’s like this global financial crisis going on. Well, my definition of coincidence is God’s way of staying anonymous. And in less than two weeks of that conversation, I was introduced to this wonderful world of private money. I had never heard of private money. I’d never heard of private lending. And so it led from finding out about private money. I put a program together, put it on steroids, and I was able to raise $2,150,000 in less than 90 days. And since that time I haven’t missed out on a deal because I did not have the money.
Jack: That’s awesome. That’s fantastic. So, the private money guy. So, let’s dive into that a little bit more. And first of all, how did you do that? I mean, I have raised… Lets talk about the subject of private money is actually dear to my heart, because in the land space we never needed private money because we bought our first property for $400 sold it for $4,000, then the next one for $900, or $500, sold it for $9,500, or made a 90 in $500 profit and so on. But today there’s a lot of students that are selling their properties for seller financing in our world, and they’re buying a property for 20 grand and they only getting like a $5,000 down payment. And so there’s a lot of need. A lot of our students have the need to get private money these days because they’re tackling larger deals. And then we, of course, as part of the side thing that we’re doing is we’re buying apartment complexes and syndicating those with investors. And so in the last six months or nine months, I had to raise a total of $4.6 million from private investors and we got it done, right? We got it done. About 80% of that. I raised myself, 20% came from a partner from us, but I have 80% of that raised myself, and it threw me into this new world of private money that I had never been part of. And it’s fun, but it’s also different. So, tell us a little bit, how did you go about getting $2.1 million in 90 days from private individuals?
Jay: Exactly. So, first of all, before I give that, what I did and what I do now, is I want to make sure your audience, Jack, knows exactly what we’re talking about when we say private money and private lending. So, probably a good part of your audience has heard of hard money. So, if I could take just one minute…
Jack: Sure. Go right ahead. Go right ahead.
Jack: Ladies first.
Jay: And so what I want to do is differentiate what is the difference between hard money and private money. So, both hard money and private money are collateral loans. So, the primary driving force in both categories of getting funding is there is real estate that is collateralizing the note or the loan. But here’s the big difference. And of course, Jack, I’m not telling you anything you don’t know, but for the sake of your audience.
Jack: Oh, of course. We have lots of brand new people that are just now looking at real estate, they would be loving to know about this thing. So, go ahead. Yeah.
Jay: So first of all, hard money. Most of the time when we’re talking hard money or you hear about a hard money lender, what we’re talking about are brokers or brokers of money. And so what I do and what I teach students all across the nation is how to circumvent the middle person. So, a broker is a middle person. Here’s the big differences. First of all, is the interest rate. So, the average, and they’re all across the board from 12% to 25%, but the average hard money broker right now is going to be charging around that 14% rate across the nation, 14% or so. But private money, now, private money is when we’re doing business with individuals just like you, Jack, just like me, you know, we call them mom and pops. So, just, in fact, Jack, I’ve got private lenders that are minors that are not even 18-years old that have inherited money from grandparents passing away. But anyway, putting that aside, we’re talking about doing business with individuals. Now, a big part of this private money strategy is, like right now, Carol Joy, my wife and I, we have 48 private lenders, 48 individuals, and some of those are couples, all right, husbands and wives. We have 48 people or couples that are funding our deals right now or loaning us money. And so that’s about $8 million that we moved from house to house. So, we’re doing business with individuals. Well, over half of those 48 people or couples loan us money from their retirement accounts. Okay. So, a big, big piece of this and being successful in attracting and raising private money is being associated with what we call a self-directed IRA company, okay, because 100% of my private lenders from what I call my warm market, people that I had some kind of relationship with or some kind of association, none of them had ever heard of private money and none of them had ever heard of self-directed IRAs. Okay. And so having…
Jack: It’s really an educational effort then. You got to be first to educate them about this.
Jay: Absolutely. They don’t know. They don’t know. And like when I first started raising private money, it is 10 years ago now, when I first started raising private money and got over $2 million in less than 90 days, I put together 16-minute audio that I now email out people. I got a YouTube link, I text it to them. CDs are on the way out, but I still hand out CDs that gives an overview of what private money is. But anyway, back to what I was saying on hard money and private lenders. Interest rate is a big difference. Okay. Number two, origination fees. There are no origination fees in the world of private money. There are origination fees or points in the road of hard money. The terms, the length of the note, most hard money lenders are only six months to a year-long. In the world of private money, most of those are two years to five years. Extension fees. You know, if you haven’t cashed out with a hard money lender, they’ll probably extend your note. But what do they want? They want more money. They want another one or two points every 90 days or every six months. But Jack, in my experience, here’s my favorite reason for using private money, and that is, how much does the lender or will the lender advance us when we purchase a property? So, when I was borrowing money from the banks, or if you’re borrowing money from a hard money lender, most of the time they’re only going to advance you 65% to 80% of your purchase price.
Jay: In this world of private money, we’re getting 100% of our purchase price and when we’re rehabbing houses, we’re getting 100% of the rehab money upfront. So, it makes it so much easier to do business. I mean, in the world of private money, your credit’s got nothing to do with it. You borrow hard money, they’re going to pull your credit, they’re going to check your credit score, not only when you borrow the money, but they’re going to check it every six months to make sure that you’re still, you know, loanable if you will. But in this world of private money, your credit got nothing to do with it, your verification of income has got nothing to do with it, and so it’s just really, really easy to do business.
Jack: Wonderful. So, I agree with that. So, in our apartment complexes, again, we started, we still don’t do private money for our land deals, but at the apartment complex we have gotten a whole bunch of people invest from their IRAs and we also have had to go to the educational process of educating the other side of about how they could invest with their IRA money. Like, very good friend of ours, friend family friends of ours, he had a $165,000 in his IRA that was rolled over from a prior employer and he didn’t even know he could use that. He was just having or coming over for dinner, we told him about the last apartment complex and he’s like, “Oh, darn, I wish I could invest with that” But he is like, “Well, do you have an IRA?” And he’s like, “Yeah” He is like, “Well, I can’t, I mean, they don’t let me do that” And it’s like, “Well, have you heard about the self-directed IRA?” And they’re like, “Well, no” So, I explained it to them. I gave them three different companies that we refer people to so they can choose themselves. They got some of the educational pamphlets and his eyes were like this big, and then, sure enough, he invested the 100 in one deal, 65 in another deal, and he would want to invest much more because, but now he’s tapped out on that end. He can’t invest anymore because he’s just…He can’t unless he quits his job or retires, or so.
Jay: Yeah. Well, you know, I mean, I got a similar example that, Jack. Carol joy and I were out to dinner with some good friends night before last and they had invited us to this really, really nice fundraiser for our local community college, the culinary program. And said, “The students are putting on this really, really nice dinner.” So, we’re sitting next to our host and there was a table of 10 there. And so we start talking along. And so it’s hard for when I’m having a conversation for real estate investing in self-directed IRAs not to come up in conversation. That was just part of what I talk about. Ten out of the 10 people, excuse me. Carol Joy and I made 10. Eight out of the other eight people sitting at the table, zero of them had ever heard of self-directed IRAs and private money and they could not believe there was a way that they could use their retirement funds, any kind, pension, 401k, Roth IRA, doesn’t matter. They did not know there was a way they could use their retirement funds to actually invest or loan out and get unlimited returns tax free and penalty-free. And when I said tax-free and penalty-free, all eight of them their eyes got that big.
Jack: Right. Absolutely. So, let’s jump into that. Why don’t you tell us a little bit how that works?
Jay: Sure. So, again, as I say, when you’re doing business with private lenders, you want to know and have a relationship with a representative at a self-directed IRA company. So, here’s the way it works. If an individual…
Jack: We can put a few links over to the ones that we recommend. We don’t get a kickback or anything from them. They’re highly regulated, everything. We just know there’s a ton of them out there. It’d be better to view and we’ve just put two or three links on there in the show notes or below. If you’re watching this in YouTube, we put it below here.
Jay: Exactly. So, the way it works is when an individual has retirement funds of any kind, again, pensions, 401k, doesn’t matter. You got retirement funds. So, the IRS has approved self-directed IRAs, and they’re called third-party custodians is what they’re called. So, a self-directed IRA company cannot give any kind of advice as far as where to invest your money or where to loan you money, etc. There’s a very, very short list of items that the IRS does not allow an individual to invest in, for example, you can’t invest in oriental rugs, you can’t invest in liquor and alcohol. Okay. But it’s a short… But I mean, you can invest in racing horses if you want to, you know, the list. And in fact in the self-directed IRAs you move your money over from where your funds are now and typically it takes about, depending on where a person’s retirement funds are, whether they’re like in a major stock brokerage or if they’re with a plan administrator from a previous employer, it’s gonna take typically about two weeks to four weeks depending on where it’s coming from to get transferred over and have their self directed IRA account funded, opened and funded. So again, that transfer, it’s called a rollover typically, but moving that money over, no penalty, no taxes, moving it over to your self-directed IRA. Now, once it’s there, here’s what’s really cool. If someone wants to be a real estate investor, they can take their funds in that self-directed IRA and actually invest in real estate. And here’s what’s really cool. All the profit that you make comes back into your self-directed IRA account tax-free. You see, this has got nothing to do with contributions. There’s a limit per year as to the amount of contributions that an individual can contribute to their retirement account.
Jack: Yeah. I always compare it like a, imagine somebody says, “I have my money with Charles Schwab,” right? And let’s say they are allowed to invest in a dividend stock. So, usually they’re not, anyway. Their employer restricts them to only like, “Here’s your five options or 10 options.” That’s 22, 10 different mutual funds you choose from. Let’s assume you’re allowed to invest in the dividend stock. So, your IRA buys the dividend stock and when the dividend comes out, the dividend goes back into your IRA. And now the IRA is, whatever your IRAs is classified that money applies to that too. So, if you’re in the tax-deferred IRA, the profits are tax-deferred. If you’re in a Roth IRA, the profits are tax-free and so on. So, it’s the same thing. So, basically, the only reason why Charles Schwab or Vanguard or what’s there, all their names is don’t accept, don’t accept your, you, don’t allow you to invest in real estate with that money is because they won’t make any ongoing commissions by doing that, right? What is it…?
Jay: They have no incentive.
Jack:If you wanted to take money and buy a house with it or finance a house with it, where are they going to get their broker’s commission on it? They’re not. So, therefore, if they’re not getting paid, they’re not allowing it, right? It’s as simple as that. They’re not allowing it. And that is the standard out there. That’s what 98% of people use. They get in a job, they put their 5%, 10% perhaps some of it is matched, which is awesome, and put it in there. But they don’t understand that there are ways to limit, that the ways that they can use that money is absolutely limited by what the custodian allows them to do. And here’s the worst thing that can happen is then they call, then they hear about this, what we were just talking about. So, be really aware of this, when you do this. Call your custodian and tell them that you want to move money over to a self-directed IRA. They’re going to tell you, “But we have self-directed IRAs.” So, they’re gonna try to dissuade you from moving your money over by telling you that they have self-directed IRAs. But what is a self-directed IRA with the Charles Schwab, with Vanguard, with all these different companies? It only is an account where you now can choose in the stock market whatever you want to invest, but they still don’t allow you to invest outside of the stock market.
So, it’s like it’s still, they’re trying to still screw you. They’re still trying to not allow you to use your money when you want, so you got to fight them. When you understand what Jay just talked about, that you can take, you can ope… So you don’t close your IRA, you open a second IRA. Well, it also means that if you have a contribution, make maximum of let’s say $5,500 a year, you cannot now contribute $5,500 you contribute zero here at $5,500 or $2,750 each or $3,022 or $2,500, whichever it is. But the total contribution limit is still $5,500 now spread over those two. But whatever you have over here now, you can now invest in racehorses, not that you want to, of course, that’s highly speculative, but you can invest in real estate, to either own real estate, invest in apartment complexes, like people do with us or lend money to guys like Jay for their rehab project so that they can take a $200,000 house that they buy for $80,000 and they put in $40,000 in it. You lend them $120,000 which is a safe provision because once he’s done with the deal and the house is worth $200,000, and if he doesn’t pay you, you end up getting a $200,000 house. So, you’re in a good position, right? So you get $120,000, give it to Jay, you get a first lead, your IRA gets a first lead position on the house and then you go and he goes, gets to has all the money to fix the property, creates a beautiful $200,000 house out of it, sells it and you get your money back plus interest, back into your IRA tax-deferred or tax free. Sorry, I might have added too much of it, but I actually thought about the stuff because we…
Jay: No, actually you said it as good as I could.
Jack: No, you said that, you’re awesome.
Jay: But what I was going to say, Jack, you alluded to, and that is, you know, there’s a lot of people out there with retirement accounts that they would love the being involved in real estate, but they don’t want the find the deals, they don’t want to oversee any rehab projects, they don’t want to sell the deals, you know, they don’t want to deal with the utility companies and the contractors and all this and that. They just want to sit back, do nothing, and collect 100% passive checks going into their IRA account. And that’s why we have 48 private lenders. They love us because they don’t have to do anything. In fact, the way I do it, the way I teach my students, we want our private lenders to have to do nothing, keep it totally simple. And the simple means, all they do is sign a document, and it’s DocuSign now, you know. You sign DocuSign on your telephone now. You sign DocuSign, which is the direction of investment and, you know, boom. It’s done.
Jack: Yeah, absolutely. So, now walk me. So, this is really exciting, and I’ll probably do another episode myself also with just talk about the self-directed IRAs a little bit more. But now talk me that the hurdle that a lot of particularly beginning investors might have if they want to raise private money is how do they start a conversation with somebody about that?
Jay: Excellent. So, there’s three primary markets or categories of where to find private money or potential private lenders. And here’s the three categories. First of all, is people that you have some kind of relationship with, you know. If they’re in your cell phone, you probably got some kind of relationship with them. Your email list, your Facebook friends. And I don’t mean your fake Facebook friends, I mean your real Facebook friends.
Jack: You mean, not my 4,995 best friends?
Jay: Exactly. Not those. So, you know, if you’re over 50 years old and you were born in America, you probably still got a Christmas card list that you mail Christmas cards to, right? So, anyway, and your social network. Do you go to church? Do you go to the races? Do you play cards? I mean, do you play golf? I mean, what is your so… So, that’s one category, who you got association with. The second category are what I call your new warm markets, people that you will have an association with that you don’t know yet. So, I teach my students how, you know, some of us students, Jack will tell me, “Jay, my warm market is broke. I don’t know anybody with money.” Well, first of all, I don’t believe that. But secondly, some people say, “I don’t want to do business with people I got some of kind of association with.” Well, that’s your choice. But I will tell you my private lenders, the only complaint I’ve ever received is, “Jay, why didn’t you tell me about this earlier?” You know? They think about what they missed out on. So, you’ve got your current warm market, your new warm market. But what would that be? Well, I teach my students to get involved in the local Rotary Club, get involved in the local chamber, any of these types of networks. The third category of private lenders are what I call the existing private lenders. So, those are individuals that are already loaning out money to real estate investors. And for the sake of this show, Jack, we don’t have time to get into how do you locate those very, very easily and quickly. In fact, if you let me, I’ll give out or you can put in your show notes a free online class I’ve got that we’re gonna be…
Jack: Absolutely. We’ll put that in the show note. There’s, I think you talked about it earlier, that you told me about that. It’s a video on how, where the money is now, right? How to get the money.
Jay: Yeah. Where to get the money now. So in the show notes [crosstalk 00:26:43]
Jack: [inaudible 00:26:44] too.
Jay: Yeah, they can learn about, you know, where to find existing private lenders. So, let’s come back over to your question. Your question was, “Well Jay, how do you start this conversation?” Well, I’ll tell you what. I’m going to tell you something Jack, and I think you’re going to get excited about it. I know your audience will. So, I’m going to share right now with you, Jack, and your audience, how I introduce myself to someone that I’ve never met before. Okay.
Jack: That’s awesome. Because a lot of people…That’s the thing. They’re like getting paralyzed at that moment they don’t know what to say.
Jay: Yeah. So, this is going to be fun. So, anybody, for the people in your audience that want to raise and attract a lot of funding for their deals, here it is. So, you know, Jack, let’s say you and I have met for the first time, right? And we’re in some kind of social setting. So, you know, you introduce yourself. You say, “Hey, Jack,” I mean, you say, “Hey Jay, I’m Jack Bosch, you know, etc.” And I’ll introduce myself. Well, you know, because people really don’t know what to say, most people, and, you know. What’s one of the first questions people ask you, besides, are you from here or where do you live? So, it’s your name, where do you live and what’s natural…
Jack: And what you do.
Jay: What’s the natural third question?
Jack: Yeah. What do you do?
Jay: What do you do? Everybody says, what do you do? So, when somebody now for the past 10 years looks at me and says, “Well, Jay, what do you do?” Here’s the answer to the question. Wouldn’t it be cool to answer the question, “What do you do,” with an answer that first of all would peak curiosity, number two, naturally engage conversation, and number three, possibly lead to being a benefit to the person that you’re answering the question for, and fourthly, lead to possibly getting a bunch of funding for your deals. Here’s the answer. So, Jack says to me, “Well Jay, what do you do?”.
Jack: What do you do?
Jay: Here’s my answer. Well, Jack, I teach private lenders how to make a lot of money. Now…
Jack: That is true. The moment you’re looking for a private lender, you are in an educational process. You’re teaching them, you’re telling them how this all works. So, this is a 100% true statement.
Jay: So, when I say, “What do I do?” Well, I teach private lenders how to make a lot of money. Now, what I do after that is I do something that’s pretty hard for me to do, right? Shut up. So, I say, “I teach private lenders how to make a lot of money.” Then I look them straight in the eye and I give a small grin or a small smile and I’ll look at them. Here’s what’s going on in their brain. The first thing that’s going on in their brain is they’re saying to themselves. I don’t have a clue what he just said. The second thing they’re thinking is they heard, make a lot of money.
Jack: A lot of money, yes.
Jay: They heard make a lot of money. And then they might’ve heard, I teach. So, I’m fronting myself as a teacher. I’m not selling, I’m not begging, I’m not chasing, I’m a teacher. The third thing they heard private money, they have no idea what that was on private money. So, you get all kinds of responses. Now, here’s the big, big challenge. Don’t finish the story for them. Shut up. Right. I teach private lenders on how to make a lot of money. Now, if they ask about that, they actually were listening to your answer. You’ll get like the deer in the headlights look or they’ll start going like this and you’ll hear stuff like, “Now what was that?” Or you’ll get, “What’d you say?” Or you’ll get, “Oh, well that’s interesting.” And then they’ll go on and they have, they have no interest in what you do. They were just, you know, flapping their lips or whatever. So, I don’t tell my story and explain what I just said unless they ask. It’s like when I go to a networking event, you know what just really gripes me, Jack, it just turns me off. I’m at a networking event and somebody comes up to me, introduce myself, and they hand me their business card. Listen, why are you handing me your business card and I didn’t ask you for my business card. I don’t want your business card. Why are you giving me your business card, right? I go to networking events to get business cards. I never give out my business card unless somebody asked me for their business card. Anyway. So I answer the question, and then when they generally are interested in about, “What did you say?” So, now that that opens up the door for me to have a conversation about what’s private money, what it is, how it works, etc. But listen, in the social setting, don’t go too deep because they’re not going to understand it.
Jack: Don’t close them in the first setting. It’s not, it’s a dating game. It’s like you… Yeah.
Jay: Yeah. So, in a social setting, all I’m doing is I’m throwing out the bait. I’m peaking their curiosity. I’ll say, “You know what? What’s amazing is that here’s a strategy to where people can actually use their retirement funds and get unlimited returns, tax-free and penalty-free in this world of private money.” NAnd then I shut up and let them ask about that. So anyway, that’s how the conversation starts.
Jack: I love that. If I want to add something to that, when I started raising money, I always, well,like before raising money, always, and I can relate, let me say it this way. I can relate to the people who are, who don’t want to do business with friends and so, because I was that person for a long time until I realized that I really doing these friends a disservice by not talking about it.
Jack: But then still, I don’t want, see people and my friends and family to feel like, “Oh there’s Jack coming. He’s going to pitch me something again.” Right? I don’t want that. So, your approach right now is absolutely perfect for that because it puts the ball in their park. You said like, “What do you do?” “But I teach people,”I wrote it down. “I teach private lenders on how to make a lot of money.”
Jay: And shut up.
Jack: All right, cool. Well, that’s nice. Well, I do this. Nice to meet you, blah, blah, blah. They’re not interested, you don’t pursue the thing. It’s not your guy. You don’t have to slam it into them and make them understand what you’re doing. Instead, you just go, okay, the next guy. “Well, I teach people, private lenders, how to make a lot of money.” “Well, that’s cool. I want to make a lot of money. What is this all about?”
Jack: Great. “Well, this is, you know what, the concept, they understand the concept of private money?” “Well, no.” “Well, let me explain.” And now you have a conversation with somebody who’s interested that wants to make a lot of money and you’re helping them in that case. You’re right. Loving it. Absolutely love it. And it allows you to be the guy that people, that there’s an expert, it’s a teacher, yet somebody doesn’t want to know about it, you just talk about football and soccer and duck hunting and whatever it is.
Jay: Yeah. And here’s the deal. Because I started with this approach 10 years ago, Jack, I have never, never to date, I have never asked anybody for money. Never. I don’t ask them for money. And so Jay, how on earth do you get millions of dollars without asking people for money? Here’s the deal. I make my program available. I’m a teacher. I explain the program, and if somebody, and then there’s many ways to do that. One-on-one, like, you know, I do private lender luncheons. All right. So we’ll invite people to come to a luncheon. And again, it’s educational, it’s educational. I give the presentation, it takes about 20 minutes, and I go over what my private lending program is, how much interest Ipay, where I invest, how they can get their money back in 90 days or less. I give the information. And if they’re interested, they’re interested. If they’re not interested, they’re not interested.
So, it’s like put the information out there and you know, and those that are interested are going to raise their hand. And here’s the deal. I can only think of one couple that I have explained my program to, and that’s an important part of this private money game. You gotta have your program down, how much you have to say. And here’s the deal. When I was borrowing money from banks, Jack, the banks made the rules. Okay. In this game, the private lenders don’t make the rules. I make the rules, I decide what interest rate I’m paying. I decide what the term is. I decide that stuff. They do get to choose the frequency of payments. I don’t care. They want monthly, they want quarterly, they will semi-annual, whatever they want is fine with me. But overall it’s, “Here’s the program and, you know, if you’re interested, you’re interested and if you’re not, you know.” But here’s what I was getting ready to say. In 10 years of visiting with people that say, they’re interested in the program, I can only think of one couple that did not move forward on doing business with me once I shared my program with them. And it was because it was back when the stock market, back in, right after 2009, their stocks had not recovered. They had lost 50% value in their stocks and they were looking for another way. But the only way they could do it is they didn’t want to sell their stocks at the time. And so they wanted to wait for the market to recover. And by the way, I now have a strategy that people can keep their stocks that they love and leverage those stocks and lend the money to me. Jack, I’m gonna tell you this. You might not know about it. Have you heard of portfolio loans?
Jack: On real estate I have. On the stocks, I have… But not in the stock market.
Jay: All my loans. All my loans. So, here is another way for people to be private lenders with real estate investors, with you, with other real estate investors. So, let’s say you’re talking with somebody and you say they got retirement funds. “No, I don’t have retirement funds,” or like, whatever, whatever, but they got it, but they got a lot of stocks. Okay. So they want to keep their stocks. They don’t want to sell their stocks. Beautiful. So, there’s this thing called arbitrage or leveraging a nonperforming asset. Here’s the way it works. There’s this thing called portfolio lines that you can’t use a portfolio loan with your retirement account. If someone wants to use their retirement account, they got to move it over to a self-directed IRA company and then invest it or lend it out from there. But if someone wants to keep their stocks and they love their stock, they love their stocks, beautiful. All the major houses, Morgan Stanley, Fidelity, Charles Schwab, all of them, they’ve got this thing called portfolio loans. So, a individual can borrow up to 50% now, this is not margin. This is not borrowing on margin. That’s different. They can establish a portfolio loan account with their stock brokerage and they can borrow up to 50% of the current face value of their stocks. Right now, average rates are about 3.25% they keep their stocks, it works like a home equity line. Okay? So, they don’t pull down the money until they got a deal to invest with you, with one of your apartment complex deals or whatever. So, they borrow it at 3.25%, you come along as the real estate investor and you pay them whatever, 8%, 10% whatever it is, you’re paying, 7%.
Jack: So they’re playing the spread.
Jay: And they pocket the spread. But guess what? You know what the rate of return is?
Jay: It’s infinite. You can’t measure it because they’re running out money that’s not their money, right? And they get to keep their stocks. It works the same way as a home equity line. I’ve got private lenders that have got equity lines of credit from their houses, the property they own, borrow money on a home equity, loan it to you, the real estate investor, they pocket the spread. So, all kinds of ways.
Jack: Absolutely. Wonderful. That is a fire hose. Drinking from the fire hose here, loving it, Jay. So again, Jay, we are going… Jay has gracefully made available a video where he talks about how to get the money today. We’re going to link the video into the show notes, probably put it on the screen too, and, or if you’re watching this on YouTube we’re going to put it into description below the video. So, with that said, we are running out of time now, so I wanna thank you very much for being on the call. It was a whole lot of information, loving it. I love the approach on how to start the conversation. That I think right there is like a killer piece that stops most people in their tracks. I love the creative ways of the portfolio loan. So, we covered some things. You want to know more information other than that where I can find people more and more talk about you. I know we gotta put the video out there, but just if they want to just read up yourself, where do they go? jayconner.com|?
Jay: You got it. Yeah. And I’m a different Conner. Most Conners end in an O-R but I’m an E-R. So, I’m at www.jayconner, J-A-Y-C-O-N-N-E-R, .com. And yeah, people who want to learn about private money, if I can help anybody in any kind of way, reach out to me. And you know what Jack? We actually answer the telephone, so…
Jay:…call me up.
Jack: That sounds great. Looking forward to that. So, I’m looking forward to people calling you and then, realizing that. I love hanging out with you again. We see each other a few times a year at that Mastermind, and it’s always a pleasure. I always love your creativity. So, with that guys, thank you very much. That concludes our podcast episode. And yeah. So, thank you, Jay.
Jay: Thank you, Jack, for having me and I look forward to seeing you at the next Mastermind meeting. I appreciate you brother.
Jack: All right. Appreciate you too. And with that, we are concluding our podcast. See you next time.
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