Mike Stohler: Hey everybody, welcome back to The Richer Geek Podcast.
Today, we have Jay Conner.
He began investing in real estate in 2003, and most of us, got into it,
he relied on his local banker and was able to put together a few deals.
However, that kind of went bust, because what happens, banks say, "You know what?
Go away. We're done lending you money."
He is been selling houses and buying houses since 2003
in a town of only 40,000.
We're gonna figure out how he does that.
He makes about $78,000 or more on average per deal.
He's rehabbed over 475 houses, been involved in over $118
million in transactions.
He's automated his annual seven-figure income business.
What we're going to talk about, ladies and gentlemen, is how did he do it?
How does he raising private money?
And we'll get into all those details.
How are you doing, Jay?
Jay Conner: Michael, thank you much for inviting me to talk
about what I'm passionate about.
Private money's had more of an impact on our business than any
other strategy that we've employed.
In fact, if it hadn't been for private money in January of 2009,
I would have been out of business.
I can't wait to talk with you and your audience about how to raise private
money without ever asking for money.
Mike Stohler: Let's get into it.
Before we do that, give us a little bit about a background about who Jay Conner
is and how'd you get to this point where the passionate about the real estate.
Jay Conner: Absolutely.
As you said there in the intro, my wife, Carol Joy and I, we've been investing in
single-family houses, primarily full-time since 2003 here in Eastern North Carolina.
I'll tell you, Michael, it's funny.
Now, as I look back, the first six years we were investing in a real
estate from 2003 to January of 2009, all I knew to do to fund my deals is
go to the local bank, get on my hands and knees, lift my skirt up the banker
could look at my personal assets.
Give me a colonoscopy, pull my credit score.
They want to see my financial statements, then loan me money.
That worked out okay, for the first six years.
I couldn't close quickly.
I always had to have appraisals and that kind of stuff.
I haven't had an appraisal pulled since 2009.
That worked okay.
I remember like it was yesterday.
You may find this interesting and curious, but here in Eastern North Carolina, we
still have handsets and cords attached to telephones, believe it or not.
I was sitting here at my desk, January 2009 . I had two houses under contract
to buy, and my banker's name was Steve.
I'd been going to Steve, my banker, for six years.
I called up Steve.
I told him about these two deals.
They represented over a hundred thousand dollars in profit on these two houses.
I learned on that phone call that the bank had closed my line of credit.
That's what Steve told me.
I said, "Steve, what in the world are you telling me?"
My line of credit is closed.
I got a great credit score for six years.
I've made all my payments on time.
You're telling me my line of credit is closed.
He said, "Jay, don't you know, there's a global financial crisis
going on right now?" I said, "No, Steve, I don't know nothing about no
global financial crisis, but you just gave me a global financial crisis.
I don't have a way to fund my two deals that I got under contract.
You didn't tell me about my line of credit being closed." I hung up the
phone, sat here for a moment, and I asked myself a question, the answer changed
my life, changed my business forever.
Here's the question I asked myself: The powers in questions.
I asked, "Jay, who do you know that can help you with your problem?"
And by the way, these people saying, "Oh, every problem is an
opportunity." I want to throw up.
I didn't have an opportunity.
I had a problem.
The problem became an opportunity.
If it hadn't been for that problem, you and I wouldn't even be
visiting today here on the podcast.
But anyway, I asked myself that question, and the answer will help fix any problem
you've got, whether it's financial, health, relationships, business, career.
It doesn't matter.
Who do I know that can help me with my problem?
I immediately thought of Jeff Blankenship, very good friend of mine and Carol Joy.
He was investing in single family houses at that time in
Greensboro, North Carolina.
I called up Jeff.
I told him what had just happened with being cut off at the bank.
And he said, "Jay, welcome to the club."
I said, "What club is that?"
He said, "The club of losing your line of credit at the bank."
He says, "My bank shut me down last week."
I said, "Jeff, how are you going to fund your real estate deals?"
He said, "Have you ever heard of private money?"
I said, "No.
What's that?
He said, "That's when an individual, a human being like you and me can loan
out money from their investment capital and or the retirement funds and loan
us real estate investors to fund our deals." I said, "I never heard of private
money." He said, "Have you ever heard of self-directed IRAs and how individuals
can transfer over retirement funds that they're not happy with wherever they are,
and truly self-direct those funds, be a private lender with retirement funds?
And earn unlimited money per year, either tax-deferred or tax-free."
I said, "Jeff, what in the world are you talking about? I've never heard of
this." I knew Jeff had told something.
I studied private money and put together a formula as to raise millions of dollars
and how I could get my deals funded without ever asking anybody for money.
I put that program together, and in less than 90 days, I was able to raise
$2,150,000 which on the big picture is not a lot of money, but it's a lot more
money than I had at the local bank.
As far as the line of credit goes.
And you know what's interesting, Michael?
That was in the beginning of 2009.
We know what was going on.
All the foreclosures were going on in 2007, 2008, and 2009, and
the banks weren't lending money.
You had all these foreclosures and you had to have all the cash
to buy the foreclosures and you couldn't bar it from the bank.
Did you know our business tripled in 2009 over 2008 because we had all this cash
and funding available and we were able to pick and choose all those foreclosures
we wanted to buy and fix up and flip.
Since that time, I've never missed a deal for not having the money.
I've got 47 private lenders today.
If you're listening to this show, you don't need 47 private lenders.
You need to start out with two or three, particularly if you're
in the single family house space.
Michael plays with the big boys in the hotel space.
If you're doing single-family houses, or fourplexes or whatever,
you don't need that much.
Never missed out on a deal.
Here's what's funny, of our 47 private lenders funding our deals today,
not one of them had ever heard of private money or private lending.
Not one of them ever heard of self-directed IRAs.
I know some of them are accredited investors, but I
don't think they know they are.
They don't even know what the phrase accredited investor means.
How did I do that?
there's two parts to it.
I'll share the first part and then I'm going to hand it back to you, Michael.
What did I do?
I put on my teacher hat, my private money teacher hat.
I started leading with value, leading with a servant's heart.
I started sharing with people that I had connections with, go to church with
them, go to the Rotary Club, et cetera.
I started sharing this program I've got.
How they can earn high rates of return safely and securely without
attaching a deal to it, there's the secret sauce right there.
Without attaching a deal to it, sharing this instead of asking for
a mortgage, offering an opportunity how people can earn high rates
of returns safely and securely.
Once they told me that, yeah, that sounds interesting.
I put on private lender luncheons.
I've raised $969,000 at one private lender luncheon to feed them lunch
and teach them what this is all about.
Then when I've got a deal for them, the fund, I call them
up in a week or two weeks.
Here's the other secret sauce on how I get my deals funded without asking for money.
I call them up and I give them the good news phone call.
I'm going to share the script right now and hand it over to you.
Michael, let's say you're one of my new private lenders and let's say
you got retirement funds over there in Charles Schwab or Morgan Stanley
Maybe it's in a previous 401(k) and you're not happy with that $150,000 of
what it's doing in your retirement fund.
I introduced you to a self-directed IRA company that I recommend and you transfer
your funds over, no tax penalty, no tax effect . You've transferred your money
over and now I call you up and say, "Michael, I've got great news for you!
I can now put your money to work.
I've got a house in Newport with an after-repaired value of $200,000 and the
funding required for the deal is $150,000.
I know that matches what you've got.
Closing is next Wednesday.
I need you to wire your funds to my real estate attorney's trust
account by next Tuesday, and I'm going to have my real estate attorney
email you the wiring instructions."
That's the end of the conversation.
I'm not asking if you want to fund the deal.
Of course, you want to fund the deal.
You've been waiting for me to put your money to work.
Because you're not making any money until I put your money to work as I taught you.
That's the secret sauce.
Desperation has got a smell to it.
Mike Stohler: Yeah.
Jay Conner: When we separate teaching the opportunity and then having a deal
for them to fund, they're waiting by the phone for the phone call because
I have managed their expectations and they know what to expect.
Anyway, back to you, Michael.
Mike Stohler: That's very fascinating because we talked about private
money and how you're doing that.
Should they be used?
"Is it, I can't do this. I can't do that." Or should you start,
don't even go to the banks?
Should they start asking, " How are you finding these people?" I
know you're talking about Rotary.
I'm a big Rotarian.
Jay Conner: Yeah.
My granddaddy and my dad were Rotarians as well.
Mike Stohler: There you go.
Jay Conner: Yeah.
I've got quite a few mastermind members.
I run a mastermind group.
I tell them, "I don't require you, but I require you to visit Rotary." I
require them to join networking groups.
I've raised millions of dollars by being in a business networking international
BNI (Business Network International).
Ivan Misner started that decades ago.
BNI is fantastic.
Sometimes new real estate investors will say, "My network just isn't
that big." I said, " Hey, no problem.
I got you fixed right there.
You're going to go to the local BNI chapter and join, or to visit
two or three of them, decide which one you want to join."
Your network will explode overnight just by getting involved in BNI.
Mike Stohler: Absolutely.
BNI, Rotary.
I met a lot of my investors playing golf, joining the golf game with the boys on
Saturday mornings or something like that.
It's just networking, right?
That's what it comes down to, just networking.
Jay Conner: That's exactly what it is.
Now, raising capital and networking must be intentional.
It must be intentional, but aside from putting on a private lender
event, a luncheon or whatever, you attract this money as you
just go about your life, right?
The more money you wallow in, the more money sticks to you.
You've got to be living life where there is money around you.
Mike Stohler: That's right.
That's what happens.
People ask me, it's like, "Oh Mike, you're a little too young to be retired. Why are
you golfing at 10 a.m. on a Tuesday?" Then it goes the whole pitch that you did.
And ladies and gentlemen, that's that easy.
What do you do for a living?
And you give them a little nugget here and there.
Jay Conner: I'm glad you asked that question.
Here's an example of living your life while simultaneously attracting
money and funding for deals.
Here's what I mean by that.
When you meet somebody new, what do they ask you?
Why do you ask them?
It's the only thing we know to ask.
" What do you do?" The traditional answer to that is, " I'm a CPA, I'm an attorney,
I'm a plumber, I'm an electrician, I'm an essential oil lady." And then with
us, the traditional way to answer, we just say, "I'm a real estate investor."
Don't answer that question that as you are a real estate investor,
here's how I answer the question.
This is part of networking.
When somebody asked me, "What do you do Jay?"
There's a number of ways I answer it, but one way I'll say, " I teach
ordinary people like you and me how to make really high rates of
return safely and securely by being passive investors in real estate."
They're like, "That sounds interesting." Doesn't it make sense to answer the
question, what do you do, with an answer that creates curiosity and moves the
conversation forward to where mebody wants to learn more about what you do.
Here's another way I answer the question to what do you do.
I said, "I put together lucrative real estate investment deals and
I pay my private investors really insane high rates of return."
Mike Stohler: And then,
Jay Conner: Then shut up.
You're right.
Mike Stohler: Shut up.
Jay Conner: Shut up.
That's one mistake, Michael, I observe new real estate
investors or new capital raisers.
The mistake they make is they talk too much.
Mike Stohler: They do.
Jay Conner: They talk too much.
Because listen, we're not selling, begging, persuading, chasing.
We're attracting.
How do you attract?
You attract by asking really good questions and listening intently.
And meeting those other people where they are, have child-like
curiosity about the other person.
Don't be interesting, be interested in the other person because when
you are, you just set yourself apart from everybody else.
Here you come along, truly interested and curious what that other person's
got going on and where they're coming from, you just set yourself apart.
Mike Stohler: Yeah.
It's very interesting because I've done the same thing golfing with a stranger.
I just say, "I help people diversify their portfolios and high rate of
returns in private investing in real estate." Then just shut up
until they ask you something else.
It could be three holes, four holes later.
They're like, " What exactly?" And then they started out and they
just give nuggets, little nuggets. "I tell you what, why don't we
sit down at the end of the round?
I'll buy you a beer and talk about it."
Jay Conner: Exactly.
When someone asks more details of what you do, what you said,
Michael, triggers me to say this.
Don't do what most other people do, throw up all over them.
They don't want you to throw up all over them.
They just want a little nugget here, a little nugget there, a little
appetizer to chew on until you can sit down and have a focused conversation.
At the end of the 18th hole, or perhaps it takes place at the 19th hole.
I'm not sure.
Mike Stohler: Yeah, 19th holes for me, that's the requirements.
Let's talk about, so you're buying these houses.
What's your exit strategy?
What do you do?
Let's say, I'm interested in investing with you, private money or whatever.
You buy some houses.
How long do you keep them?
What do you do?
What happens after you buy?
Jay Conner: The average turn right now is nine months from the time
we purchase until we cash out.
Why does it take nine months?
Here's my rule of thumb.
When I pay with all cash, private money, all cash in, I'm on a cash-out.
I don't want my private lender money buried in a property
for a long period of time.
Years ago, when the market was slow, I would take private money, buy a
house and sell it on lease purchase.
As long as I could have a positive, at least $300 a month cashflow between
what I'm bringing in per month and what my underlying interest-only monthly
payment is to the private lender.
Then I'd force them in credit repair and help them cash out.
But that's when the market was slow.
The reason it's taking nine months to get in and get out is most of the
all-cash purposes I do are major rehabs.
They're $50,000 or more.
That's why I buy them as such steep discounts.
My average profits now are $82,000.
I don't say that to brag at all.
I say that to make a point.
My total market's only $40,000 people that I invest in.
There's a case to be made to dominate and own a smaller market
where you're not competing with all the other real estate investors.
The reason it takes 9 months is we have many projects going on right now.
I got 10 houses right now in some stage of renovation,
rehabbing to get it ready to sell.
The house could sit there easily for three months before one of my
general contractors or crews gets to it to start the renovation.
There's three months sitting there.
Of course there's holding costs, but that's okay.
When you buy right, you can afford the holding cost.
They start the renovation, but the average renovation is three
months, maybe four months, depending on the extent of the renovation.
Three months plus three or four, there's six to seven months right there.
Then you put it on the market and then they go into contract very quickly.
We're still in a very hot market.
We have very little inventory.
In the multiple listing service, I just put a house on the market at
3009 Market Street, Newport, North Carolina, bought it for $55,000.
I put a little bit over a hundred thousand in renovation in it.
I got about $160K in it.
I just put it on the market for $295K this past week.
Just went under contract with multiple offers for $285K.
That house sat there for a little bit of time before we started the renovation.
You put it in the MLS and then you have multiple offers and
they're cash-out within 45 days.
That's why it's nine months from end to out.
Your private lenders want to keep their money working.
They're not making any money.
When I pay them off on a deal.
That's why it's important to have a strong seller lead flow coming
into your marketing all the time.
I use multiple Google vendors for pay per lead.
I don't do pay per click.
I do pay per lead.
I'm paying on average between $150 and $250 for one Google pay per lead
that comes in, but they're highly qualified because they searched in
Google, sell my house fast, whatever.
There's 75 key phrases that we track.
Having consistent seller leads coming in is very important.
Mike Stohler: Ladies and gentlemen, you got to start somewhere.
Jay's been doing this for a long time, and he has these keywords,
websites, he has all this stuff.
Speaking of the website, it's JayConner.Com, very easy to remember,
because his name is Jay Conner.
What happens?
Jay Conner: I'm glad you asked that because we get a number of organic leads.
We have a website, I've had the same website for 18 years, for gathering
seller lead information, right?
Just them searching on Google, they will organically find us.
Then find the website.
They can fill out the form about the property they have to sell,
or call the phone number on there.
We have a 24-hour answering service that takes the information on their property.
As soon as that lead comes in, we have proprietary software, I
got the same acquisitionist for 18 years, Kim, she's been talking
to all my sellers for 18 years.
When that lead comes in, the software automatically notifies
Kim and myself of, "Hey, we got a new seller lead that just came in."
She follows up with the seller, gets the information, and we
negotiate the deal from there.
Mike Stohler: Are you looking for more private lenders?
Let's say that, "Hey, I've got $150,000 out there. I want to invest with you."
Are you looking for people like that?
Are you looking mainly for homes to sell or buy?
What are you looking for?
Jay Conner: I'm looking for other real estate investors that I can share
with them how I raise private money.
I would love to invite your audience, real estate investors that are
looking to raise private money.
I just launched my brand new Private Money Challenge, a
7-day private money challenge.
It's a series of seven videos, Michael, only 15 to 20 minutes long.
It's very easy to digest.
When they enroll in a privatemoneychallenge.com,
they'll immediately receive the first video training.
This is all step-by-step how to go about raising private money, how to find these
lenders, how to start conversations.
I teach my private lending program that I offer my private lenders.
For your audience that would love to eroll in my Private Money Challenge, just
go to www.privatemoneychallenge.com.
That's privatemoneychallenge.
com.
You'll get your first video immediately.
The next six days at 9 a.m. Eastern time, you'll get the six subsequent videos.
You'll learn how to raise private money for your real estate deals.
I guarantee you, we'll have a lot of fun.
I'll be on the videos with you engaging back and forth.
Mike Stohler: Ladies and gentlemen, you can only do much with your own money.
If you want to grow, if you think that real estate investing is where you want
to be, it's my livelihood, it's the safest way to raise money and diversify my funds.
If you want to learn, because that is the secret, is using other people's
money and learning how to do it.
You can't just knock on the doors and ask your friends, "Hey, give me me
money and we'll figure it out along the way." You have to have that teaching.
Jay, thank you very much that you're allowing that to
happen with our listeners.
Is there anything else you'd like to tell our subscribers
before we end the conversation?
Jay Conner: Somebody asked me a few weeks ago, "Jay, if you could give
advice to your younger self, what would that be?" My answer was, start taking
action and trying new things sooner.
Don't wait to try new things.
If you're thinking about trying or getting into real estate investing, don't wait.
And for goodness sakes, if you're starting out, don't start out by yourself.
Get yourself a mentor like Michael that knows what they're doing.
Don't do what I did, which was stupid.
I started out in this business in 2003 reading books.
Not getting a mentor or coach, I can't tell you the hundreds of thousands
of dollars that I wasted and lost.
You're going to pay for your education one way or the other.
Get yourself a great mentor like Michael and hold his hand.
You can learn from his mistakes and you don't have to learn from your mistakes.
Mike Stohler: You don't want to learn from my mistakes.
I'll tell you about them.
I'll own up to them.
Along with Jay and myself and that's the best advice that I could ever
give: there's no excuse nowadays.
There are business coaches.
Real estate coaches.
It's the mindset coaches.
Much available out there to allow you to have success.
You just got to jump in and do it.
Jay, thank you for coming on The Richard Geek Podcast.
I hope you have a wonderful day.
Jay Conner: Thank you so much,Michael.
Thank you for having me.
God bless.