Jay Conner 0:00
You know, the traditional way of borrowing money is you go to the banker and you get on your hands and knees and you put your hand underneath your chin. And you go, Mr. Banker, Mr. Banker, please give me a mortgage, please loan me money, please fund my deal. And in this world, it’s the opposite. You see, we don’t ask anybody for money. I’ve never asked anybody for money. I got 44 private lenders funding our deals right now. I’ve never asked him for money. I’ve never pitched a deal. And they say, Jay, how did you do that? Well, I put on my teacher hat. And I teach individuals. We’re not talking about institutional money here. I teach individuals, human beings just like you and me, what private money is how they can get involved, how they can get high rates of return safely and securely, all backed by real estate. And when they learn our program, they’re chasing us. You know, I’ve got more private money chasing me now than ever before on this side of COVID.
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J Darrin Gross 1:17
Welcome to Commercial Real Estate Pro Networks, CRE PN Radio. Thanks for joining us. My name is J. Darrin Gross. This is the podcast focused on commercial real estate investment and risk management strategies. Weekly we have conversations with commercial real estate investors and professionals who provide their experience and insight to help you grow your real estate portfolio.
Today’s interview is sponsored by Building Insurance and Risk. When you invest in real estate. It pays to work with a real estate investor protection specialist to protect yourself and your investment from catastrophic loss. The experts had Building Insurance and Risk focus on real estate investor protection. They provide you with multiple insurance coverage offers and a side by side coverage comparison. To learn more go to Building Insurance Risk.com.
Today, my guest is Jay Conner. Jay is a proven real estate investment leader and is known as the “Private Money Authority”, without using his own money or credit, Jay maximizes private money to buy and sell properties, with profits averaging $71,000 per deal. And in just a minute, we’re gonna speak with Jay about how to find and access private money to grow your real estate portfolio.
But first, a quick reminder, if you like our show, CRE PN Radio, there are a couple things you can do to help us out. You can like share and subscribe. And as always, we encourage you to leave a comment. We’d love to hear from our listeners. Also, if you want to see how handsome Our guests are, be sure to check out our YouTube channel. You can find us on YouTube at commercial real estate pro network. And while you’re there, please subscribe. With that, I want to welcome my guest. Jay Conner, Welcome back to CRE PN Radio.
Jay Conner 3:10
Yes, Darrin, it’s great to be back. I tell you, I must have done an okay job the first time you had me on you wouldn’t have me back. But it’s so good to be here with you. And while I’m so glad you’re having me here to talk about my favorite subject private money in this very interesting market that we’re in.
J Darrin Gross 3:30
Yeah, I’m looking forward to it in a big way. As we, as you alluded there, the market has changed. And private money is definitely more of an option now than then, you know, in the recent past where the banks are given free money. But hey, before we get started, if you could take just a minute and share with listeners a little bit about your background.
Jay Conner 3:52
Sure. Well, my wife, Carol Joy and I we live here in Eastern North Carolina, in a relatively small town called Morehead City, North Carolina population 8000 people, our total target market is only 40,000 people. And we do two to three single family houses a month. But our average profits now are actually not 71,000. They’re 78,000. Now as of the last 12 months, so we’re not in a big market. But the point is, if you can do two to three deals a month and average a profit of $78,000 and work in the business less than 10 hours a week, then, you know, that’s those numbers, you know, seem to work out okay. Anyway, I’ve been full time in real estate investing since 2003. We’ve rehabbed over 450 houses in the local area. And Darren I know your audience is primarily interested in commercial deals. I’m so glad you had me on here because private money it’s all the same money whether you’re doing a commercial project or you’re doing single family houses. It’s all The same private money. Of course, the deals are just structured a little bit differently. Well, as I said, I’m in full time since 2003. From 2003 to 2009, I relied on local banks, institutional money mortgage companies to fund our real estate deals the first six years. And then in January of 2009, I had two houses under contract to purchase. And I called him a banker. I’d been doing business with my banker for six years. And I learned very quickly that my line of credit had been closed, I had no way to fund my deals. And that was with no notice. And I had an 800 credit score. But of course, you know, Darrin, and your audience, you recall what was going on in 2007 2008, and 2009. And you know, for many, many different reasons, we’re sort of back into that place, again, where money is tightening, tightening up. So anyway, didn’t have a way to fund those deals. Well, my definition of coincidence is God’s way of staying anonymous. And less than two weeks, I learned about this world of private money and private lending. And I tell you, it was the biggest blessing in disguise that I’ve ever had in our business, and that is being cut off from the banks. You see, if I hadn’t lost my line of credit at the bank, you and I wouldn’t even be visiting today, I wouldn’t be here on your show. Because it was because of that necessity, that I had to find another way to fund my real estate deals. And so I learned about private money private lending. And you know, this way of doing business and borrowing is 180 degrees different the opposite direction than the traditional way of borrowing money. You know, the traditional way of borrowing money is you go to the banker, and you get on your hands and knees and you put your hand underneath your chin. And you go Mr. Banker, Miss banker, please give me a mortgage, please loan me money, please fund my deal. And in this world, it’s the opposite. You see, don’t ask anybody for money. I’ve never asked anybody for money. I got 44 private lenders funding our deals right now. I’ve never asked him for money. I’ve never pitched a deal. And they say, Jay, how did you do that? Well, I put on my teacher hat. And I teach individuals, we’re not talking about institutional money here. I teach individuals for human beings just like you and me, what private money is how they can get involved, how they can get high rates of return safely and securely, all backed by real estate. And when they learn our program, they’re chasing us, you know, I’ve got more private money chasing me now than ever before on this side of COVID. So back to the background, I learned about private money, you know, since 2009, I’ve never missed out on a deal for not having the funding. In fact, I’ve got a problem. My problem is I got more money than I know what to do with, right, people don’t know what to do with their investment capital or their retirement funds, which they can use one or both to invest in real estate as a private lender, and they don’t know what to do with it. You know, as of right now, the average interest rate at a local certificate of deposit for 12 months is still 0.97%. A year ago, it was 0.17%. So it’s almost 1% national average. But you know, I come along and pay so much more than that, and give them high rates of return safely and securely. You know, this world of private money puts you in the driver’s seat, because you make the rules as the borrower, and it fixes your cash flow. I never take any money to the closing table, always bring money home. I mean, you can tell in this market. I’m really excited about private money.
J Darrin Gross 8:49
No, I love it. Excuse me, this. So let me let me ask this because I think, you know, your little timeline there. Of when you got started in Oh 3209. Most people remember that was when the kind of the world stopped when, you know, the big the big banks failed. And then, you know, Congress and tarp and all the all these other things that happened in in basically the, the, you know, the Great Recession occurred. If you if you look at those times when when you prior to that money was available, traditionally to where money wasn’t available, and, you know, caused you to have to kind of turn Do you find that the private money is doesn’t have a season? Is there? Is there a time when it’s more in demand? Is it more of a need? Or is it more of a matter of it’s always there, it’s a matter of understanding how to find it, how to recognize it, how To access it.
Jay Conner 10:03
Yes, it’s always there. It’s always there. Here’s what’s interesting. The people that have it, most of them don’t even know that this opportunity exists for them to be a lender. He see, again, we’re not talking about institutional money, we’re talking about doing what I call business with relationship money, right? Doing business with individuals, you know, if you’re doing a commercial deal, you may do syndication, you may, you may create a fund, and you have individuals invest in that fund, to fund your project or your deal. If you’re into single family houses, then we do funding what we call one offs. So a one off is you have a private lender, or a couple of private lenders that are funding a single family house or, you know, can be a duplex or whatever. So you may have just one or two private lenders that are funding that. But the money is always there. When people are the time when potential private lenders, individuals really get excited about the opportunity is when the stock market is so volatile. The stock market’s always volatile, but particularly when they’re starting to see values come down in the stock market, what you see in the stock market, it is a security. But what is your security, a piece of paper, called a stock certificate. When a private lender is funding, real estate, if they’re funding single, a single family house, then they’re actually getting a mortgage or deed of trust, like the bank does to protect their interest. So they’re just not loaning money out unsecured. They’re loaning money out as a private lender, getting the promissory note getting the mortgage or the deed of trust that collateralize is the promissory note. They’re being named on the insurance policy as the mortgagee just like a bank would be they’re named on the title policy, just as an additional insured, just like the bank would be. So the money is always available for us real estate investors. And it’s you and the people that like all 34 of my private lenders, they never heard of private money. They never heard of private lending. They never heard of self directed IRAs, until I taught them about it. So is the money always available? Yes. Are we as real estate investors always interested in that private money? Whether the answer’s yes, because it puts you and keeps you in control of your business. So it’s always there. We as real estate investors, if you really want to be in control in the driver’s seat, you want to have a private lending program, ready to teach other people how they can get involved safely and securely earning high rates of return, and have your private money program ready to teach other potential private lenders how that works.
J Darrin Gross 13:29
So I get that it’s always available. And you mentioned, you know, having some sort of a program where you can teach, you know, investors are not certainly investors, but but potential lenders, you know, the opportunities, what are some reasons that that a, an individual would be interested in, in lending money to you or I or, or any other real estate investor?
Jay Conner 14:00
There’s really three big reasons, three big reasons why a potential private lender or individual would be interested in learning about this and doing business with us. First of all, they gonna make a lot of money in comparison to what they can make elsewhere. So, you know, where can an individual investor money well, there’s lots of places you can invest, but most people are either gonna have their money sitting around, you know, and money market account earning zero, or they’re gonna have it on a certificate of deposit at the bank, earning, you know, maybe 1%, or they’re gonna have it invested in the stock market because they don’t know any better, and then and only different. So when we come along, when you come along, and offer an opportunity to first by the way, by the way, I want to make a really, really important point before I finish answering the question on why would they be interested in doing business This, first of all, unless you are unless you have created a fund and you’re doing syndication and you’re raising money for a project, okay, that’s great. But if you are a full time real estate, maybe in single family, maybe in commercial, you know, the best time to raise private money is when you don’t need it. The best time to raise private money is when you don’t need it. So I’m all the time teaching people, you know, giving them my 60 minute audio, teaching them about private money, so they’re gonna make a lot of money. Now, what’s the definition of a lot of money? Well, first of all, right now I’m paying 8%. So if I’m on pay a lender 8% Well, that’s, you know, eight times more than they can get at the local bank right now. And so, you know, particularly these private lenders, the older they get, the more important it is for them to be investing in something that’s not volatile. Right. So number one, they’re gonna make, they’re gonna make good returns. Number two, the second reason they want to do business with us is that their investment with us, their, their loan to us, it’s safe, and it’s secure. And here’s how, number one it is safe. And here’s how it’s safe. We do not borrow more than 75% of the after repaired value of a property, I did not say 75% of the purchase price. I said 75% of the after repaired value. So they’ve got a they got a 25% equity cushion between what the property is going to be worth when we finish, you know, getting it all ready for market and what we’re borrowing against it. So it’s conservative. Secondly, I said it’s safe and secure. It is secure, because we’re not borrowing unsecured funds. Now, can I borrow unsecured funds? Sure, it’s legal to borrow unsecured funds, I can just give somebody a promissory note, and they loaned me money, or, you know, they loaned me money from their retirement account if they have moved those funds over to a self directed IRA. But that’s the second reason safe and secure, right, backed by the real estate that we’re borrowing against. And the third reason I alluded to their investment, and the value of their investment is not volatile, in contrast to the stock market. You know, when someone invests in the stock market, they already lost money, there’s fees, there’s commissions, etc. Well, in this program of private money, there are no fees or no commissions. And here is a writer downer, the principal loan amount that we borrow remains the same until cash out, meaning I’m not paying principal and interest payments, neither letting the interest accrue, and I’m making any payments until the property cashes out in sales. And then I pay back the private lender, all their principal investment amount along with a crude interest. You think that’ll help you cash flow rate as the borrower or I might be making their payments? And that’s fine. I mean, I’m happy the way I let the private lender decide what’s their objective, you know, I’ve got some elderly private lenders that are relying on the monthly income on their investment with us. And that’s okay. So I’ll leave that up to the private lender as to how often they want to get payments, or if they will allow me to just let the interest accrue on the project until we cash out if they’re not relying on that income. So the third reason that they want to do business with us is that the investment and value is not volatile, in contrast to the stock market, so in the stock market, as I said, there’s always fees and commissions, and the value of that investment can be last the principal value of it can be worth less tomorrow than it is today. Well, you see in this program, nothing comes out of their principal loan amount their investment with us, and they know exactly what the returns are going to be. So just in recapping, they go make a lot of money. Number two, safe and secure. Number three, the investment value is not volatile.
J Darrin Gross 19:38
Excuse me. All of that is is and I like the way you make it. It’s the simple 123 it makes a lot of sense and it’s easy to remember and definitely all pertinent. I’m curious, two things, one on the number two the 75% Have the repaired value. So there’s that that’s kind of a flip kind of a flipper kind of a jargon that I’m familiar with. How in that situation with market doing what it’s doing, are you gauging what that future market value is, given the the change in the marketplace with, with, you know, interest rates from from institutions, and that.
Jay Conner 20:33
That’s why we don’t borrow more than 75% of the after repaired value. So most of the deals that we’re doing are not buying hold. In fact, today, none of them are, none of them are buying hold, as far as the single family houses go. Because the market is changing. Now, here in eastern North Carolina, I’ve had, I’ve had no reduction in values. Now, that’s not the case. That is not the case. In some other areas of the country. Other areas of the country, as of today are experiencing some pullback, in values. But that’s why we don’t borrow more than 75% of the after repaired value, typically, on the single family houses that we’re going to be involved with, we’re going to be in those deals somewhere between I mean, depending on how big the rehab is the renovation, I mean, our average renovations now are around $40,000. But you know, I’m doing another one on Pearson circle in Newport, that renovations 175,000. But that’s way out of the ordinary, right. So we’re going to be in and out of those deals, typically within nine months. You said, What, Jay, if the market still hot in your area? Why would you take nine months? Well, I’ve got so many projects going on, I might have a property sitting there for three months before we actually start, you know, the renovation. So with that said, since we’re typically going to be in and out within the nine month period, well, when we borrow no more than 75% of the after repaired value, the odds and the chances of values coming down 25%, when that within a six or nine month period, is pretty slim to none. So that’s why I defined this program as a conservative loan to value since we’re only borrowing 75% of the after repaired value.
J Darrin Gross 22:34
Got it? You mentioned kind of the source of capital that your your lenders have available. Obviously, if somebody has it in a savings account or or in, you know in cash, that’s one option. But you mentioned the I can’t remember this now it’s the IRA is that the seller make the direct directed Yeah. Talk a little bit about that, if you would, and I guess, you know, how one goes from a traditional 401k into to a self directed? And then also, are there any kind of limitations for that vehicle for the for the lender? Or were in certain routes? Or were any kind of things that they should be aware of?
Jay Conner 23:31
Well, this question you’ve asked me Darrin is like really, really important. And here’s why. Over half over 50% of my 44 private lenders are using their retirement funds to invest with us. And so why that’s so important is, if I didn’t know about self directed IRAs and how that works, by the way, none of my private lenders that are using their retirement funds to invest with us had ever heard of self directed IRAs, until I’ve taught them about self directed IRAs and introduce them to the company that we actually endorse. So if I didn’t know about self directed IRAs, I would be missing out on over half of the funding that I’m using for our deals. So what in the world is a self directed IRA? Well, a self directed IRA is an IRS approved company. It’s also known as a third party custodian that the IRS has approved to where someone can take current now that’s an important word right there current retirement funds. Now, what’s the definition of a current retirement fund? They can be a 401k. It can be a pension. It can be from a previous employer that you still have invested, you know, in their funds, you know, wherever they have their funds invested. You could have pulled those retirements, retirement funds out And you can have those invested in the stock market, you know right now, but they are dedicated retirement funds that that, you know, the IRS has approved and that you are not paying taxes on that, you know, those retirement funds, the lender is either got deferred taxes are tax free, etc. So their current retirement funds now these retirement funds could also possibly be where an individual is currently working. You know, a lot of people think that if you are with a current employer, and you’ve got retirement funds and the 401k, you can’t touch that. Well, that’s not necessarily true. Case in point. I have a private lender. His first name is Bruce. And Bruce worked for Fannie Mae for 30 years. This is really funny. I got a private lender that worked for Fannie Mae. That’s funny. Anyway, so Bruce, he and I were eating barbecued our fried chicken and pork BBQ here in Morehead City for lunch a few years ago. And I was telling about my private lending program and about self directed IRAs. He says, Well, I’m working with Fannie Mae, and I can’t touch my retirement funds to do business with you and invest with you until I retire. So I can’t do that for three years. Well, I’ll tell you, I said if I tell you what, Bruce, here’s what I recommend, contact your plan administrator at your company, for your retirement funds, and ask them if you have the option of moving a percentage of your retirement funds because you’ve been with him for 27 years. Guess why they allowed him to move up to 50% of his retirement funds out of the plan with the current employer, Fannie Mae, and go investors retirement funds anywhere else. So anyway, these retirement funds, whether you’re currently employed or previously, boy, the IRS allows you to move those funds over to an IRS approved, self directed IRA company. And it normally takes two to four weeks to move it. And guess what, where you’re going to move it to that self directed IRA company actually will do the moving for you. There is no tax effect, there’s no penalty effect. You’re just moving it to another custodian. Once the account is established, and you’ve moved those, the private lender has moved those retirement funds over, then guess what? Now they can they can use those retirement funds to invest in real estate. They can go buy real estate, renovate it, sell it, and there is no limit to the profit that that individual can make either tax deferred or tax free. Now most people don’t want to mess with what we do. They don’t want to market for deals, find deals, negotiate deals, renovate deals, whether it’s single family or commercial, or whatever it is. They most people just want to sit back and be passive. Here’s an interesting statistic, Darren 71% of people that have retirement funds, that they’re moving over to a they’ve already moved over to a self directed IRA company, want to loan those retirement funds out on real estate secured by real estate over 70%. They want to be passive investors sitting back doing nothing, but getting nice returns safely and securely. So these retirement funds that these people use, it’s a great way for them to get involved in real estate without having to be, you know, doing the work that we do of finding deals negotiating and rehabbing. So here’s the actionable item. I said all that to say one thing, I said all that to say one thing, as a real estate investor, if you want to not miss out on over half of the funding, and here’s what’s interesting. Before COVID There was 18 trillion. That’s what the tea before COVID, there was $18 trillion, sitting in cash in cash in people’s retirement accounts here in the US, on this side of COVID $31 trillion are sitting in cash in people’s retirement accounts because they are scared to death of putting those retirement funds in the stock market. Because it’s so volatile. When you come along, and you offer a way and a pathway for them to invest those retirement funds safely and securely. And you know, any of those funds that are Roth IRAs, they can earn unlimited money in returns tax free. I’ve got one private lender in just one year because of using their retirement funds investing with us or $65,000 in one year tax free. So yeah, here’s the actual item, if you don’t want to, if you want to get more funding for your real estate deals, whether it’s commercial, single family stablish, here’s the writer, downer stablish a relationship with a self directed IRA company, to where you can refer and introduce new potential private lenders to that self directed IRA company, to where your new lender can transfer and move their retirement funds over to them tax free penalty free no penalty, and start doing business with you and funding your deals.
J Darrin Gross 30:48
Excuse me, that’s, that’s great. I think the Helen mechanic she went through there about, you know, you have this for one candidate, most people probably led to believe that they can’t touch it until they retire. But the fact is that they hidden in most cases, I think the employer gets to dictate, you know, when
Jay Conner 31:11
You sign Some plans may not may not allow you to pull out any, until you leave the company or until you retire. That’s why they just got to ask, they just got to contact the plan administrator and ask Does the plan allow me to pull any or percentage out prior to retiring or leaving the company?
J Darrin Gross 31:32
Right. And then the the other thing, and not that this applies in this example is that but I think that sometimes people they get, Oh, my God, I can I can move this money over there. And then I can do this. And I can do that. I believe there are some some arm’s length transaction requirements, so that you avoid any kind of potential, you know, penalties, meaning you can’t lend to your children, you can’t lend to your parents or something like that. But, but investors, like yourself, or anybody, it’s unrelated. Investing in one of their deals for lending money, in one of their deals, is a totally allowable opportunity and a great opportunity. I mean, when you when you talk about the differences between 1% versus 8%, he talks about the difference of the security of the principle. And, and, you know, suddenly you’re you’re doing an interest only loan, which is typical for a lot of the, like hard money or short term loans kind of thing. The fact that the the investor or the lender, in this case, is going to receive all their principal back and they’re going to receive the interest back, they’re probably going to say, Hey, Jay, wins the next deal.
Jay Conner 32:53
They never want it back. Yeah, they don’t want it, they never want it back. They want they want to keep the money working. So and you know, and that’s an important thing, you know, these lenders are relying on you, as the professional to keep their funds at work. You know, when I teach someone about how they can move their retirement funds, to a self directed IRA, and they move those funds over there, they’re not earning any money until you put their money to work. So you know, I don’t want I don’t want to teach anybody about moving their money over to a seminar I, you know, company, unless I know I’m on be able to find a deal for them to invest, and just not let their money sit over there. And you know, or nothing. Right? Right. But but But you bring up a good point there. And who can you borrow money from? And who can you not borrow money from? Well, here’s really, it’s really easy. It’s vertical versus parallel. Vertical versus parallel. Vertical means any vertical relationship you have, you cannot borrow it from those people. What do I mean by that? Parents, grandparents, children, grandchildren, you can’t borrow it from those people. As far as retirement funds. Now, liquid capital you can borrow from anybody you want to. I’m just talking retirement funds now. Parallel, you can borrow from anybody. You can borrow from brothers, sisters, cousins, uncles, aunts, nephews, I’m talking in retirement funds again, if they’re just investing with you and lending you money from investment capital, you know, it doesn’t matter that so we’re just talking about that, that nuance of self directed IRAs.
J Darrin Gross 34:39
Right, right. Right, right. Nine angels. I just know that that’s that is a something to, to be aware of. Because if you only heard part of this, and you thought like, Oh, this is great, I’ll put the money in the self directed IRA and then I can lend it to my son or, you know, somebody that is vertical.
Jay Conner 34:57
Yeah. Hey, and you cannot loan it to yourself. Right, right, right. You can’t lend it to yourself. However, why would you loan it to yourself? If you’re going to invest in real estate, take the retirement funds and buy the real estate with your retirement account? And all the profits come back into your retirement account? Again, either tax deferred or tax free.
J Darrin Gross 35:21
Right. Right. As long I think the only situation there is if as long as you’re not borrowing money that I think there’s there’s potentially issues there. But but if you’re if you’re buying it in full lease, my understanding is is that, you know, the profits would roll back into your account and No, no issues here. So. So, So, Jay. You know, I think historically, before we would have had this conversation, I think most people would think, well, you know, I don’t have any rich uncle’s or I don’t have anybody of that has just a mattress full of cash or, you know, something that where I could go borrow the money. What I’m what I’m hearing you saying, I think this is probably the aha for most people in you, you’ve kind of set it as much is that anybody with a retirement account? is a potential lender, if they understand and are looking for a better rate of return, and a secure investment, like real estate?
Jay Conner 36:21
Absolutely. As you know, people ask me when they’re starting out to attract and raise private money. So Jay, where do I start? Well, you just said it there and start making your list of people. I mean, they’re in your cell phone, they’re on your email, list, your social media, who do you go to church with? Who do you go to the Rotary Club with? You know, who do you play poker with on Thursday night, I don’t know. But you know, you know, make your list and start with people that are retired people that are retired, there’s a pretty good chance, they got retirement funds, and they’re always looking for something safe and secure, that gives a high rate of return.
J Darrin Gross 37:00
Right? That’s great. Hey Jay, if we could, I’d like to shift gears here for a second. By day, I’m an insurance broker. And I work with my clients to assess risk and determine what to do with the risk. And as such, there’s three strategies we typically consider, first, look to see if there’s a way we can avoid the risk, when that’s not an option, and we look to see if there’s a way we can minimize the risk. And when we cannot avoid nor minimize a risk, we look to see if there’s a way we can transfer the risk. And that’s what an insurance policy is. It’s a risk transfer vehicle. And as such, I like to ask my guests, if they can look at their own situation. It could be their clients, investors, tenants, that interest rates, political, whatever it is that you identify where you consider to be the biggest risk. And again, for clarification, while I am an insurance broker, I’m not necessarily looking for an insurance related answer. And so if you’re willing, I’d like to ask you, Jay Conner, what is the biggest risk?
Jay Conner 38:08
So let me get a little clarification on that there. And so are you asking what’s the biggest risk from the standpoint of the borrower or real estate investor? Or what’s the biggest risk from the standpoint and perspective of the lender, the private lender?
J Darrin Gross 38:25
There’s no no framing of this. It’s how you choose to frame it.
Jay Conner 38:30
Well, so I’ll quickly I’ll quickly answer both. All right. So what’s the biggest risk for you, the real estate investor, that you’re borrowing money? Well, one big risk is you better know what the real value of that property is? How are you determining what the value of the property is? Well, in my case, I’ve been doing business with the same realtor since 2004. My realtor tells me the after repaired value of my property, so you’ve got to have a firm grip, and and credible way of establishing wants to value the property number two, what’s the risk? You need to know? What’s the maximum that you should pay for a property all cash? What’s the maximum you should pay? I mean, what is your formula? Right? You know, so you need to know. And of course, I got the formula. What is the maximum you should pay for a property? What’s the third risk? Who’s on your team? Who is on your team? Like, I still don’t do this business by myself? My team. I mean, I’m like the orchestra director. Right. So who’s on my team? Well, I can’t do this business without my realtor and a relationship there. I for sure can’t do this business without my real estate attorney. I mean, my business is that big risk, if I don’t have a good real estate attorney, I’ve been doing business with the same real estate attorney firm since 2003. I get my title searches in less than 24 business hours, you know, speed, you can’t make money in this business and you know, in slow motion, right? So I gotta get my inform, I gotta get my title searches quickly. Thirdly, if I’m in doing rehabs, who’s who’s on my team, as far as my general contractors, who’s getting the job done. So my biggest risk, your biggest risk is number one, who’s on your team number, and the team member is gonna give you the value. And number two, you got to have the knowledge on what’s the maximum that you should be offering on a property, those are the risks for you, the real estate investor and borrower. Now let’s talk about the risk for the private lenders, right? Number one, the private lender, better know what kind of loan to value they’re loaning on that property. Right? You got a property that’s worth $300,000. But they better not be loaning $300,000 on that after repaired value. That’s why we give them we’re only borrowing 75% of the after repaired value. Number two, what kind of security and again, are they really getting a deed of trust or mortgage, it’s recorded on public record. I mean, I’m a private lender, I don’t care who my relationship is, whether I’m not borrowing unsecured funds, I want my funds secured by the mortgage or the deed of trust. Thirdly, as the borrower I want and I require to be put on the insurance policy as the mortgagee. And guess what, as the as the as the lender loaning money out. If there’s a claim against a house, I want my name on that insurance check. Along with the owner of that property, as the mortgagee, I want them to have the right to sign off on that check. Before who I loaned the money to get set check, I want to be named as the lender on the title policy, I want to be protected. And here is my final word on that. And that is depending on my relationship with the borrower, I may require as the lender a personal guarantee. Okay, so you know, when I loan money out, depending on my relationship with the borrower, I may or may not require them to sign a personal guarantee. Again, that’s going to come down to how well you know that person and you know, in this world of private money, I don’t care how many safe safeguards you got in place. There’s this thing called trust, tr ust between the borrower and between the lender and so that level of trust is going to determine as to whether I require a personal guarantee on that note or not.
J Darrin Gross 43:10
Now definitely a well thought out you know, risk avoidance program there I appreciate that. A jig where can listeners go if they would like to learn more connect with you?
Jay Conner 43:23
Absolutely there and thank you for allowing me to share I tell you, I am so excited about the recent private money guide, the private money guide that I have written and you can download it for free. The name of the private money guide is seven reasons why private money will skyrocket your real estate business and help you build incredible wealth. The private money guide is absolutely free. download it at www.JayConner.com/moneyguide.. Again, I’m an ER not an O R. So that’s WWW.jayconner.com/moneyguide to get on the fast track to getting all the private money you need for your real estate deals.
J Darrin Gross 44:20
Awesome. Jay, I cannot say thanks enough for taking the time to talk today. I’ve enjoyed it. Learned a lot and I look forward to doing it again soon.
Jay Conner 44:31
Thank you so much, Darrin. God bless you.
J Darrin Gross 44:34
All right. For our listeners. If you liked this episode, don’t forget to like, share and subscribe. Remember, the more you know, the more you grow? That’s all we’ve got this week. Till next time. Thanks for listening to Commercial Real Estate Pro Networks. CRE PN Radio.
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