What’s happening in Jay Conner’s real estate investing world?
What is the measurement of success for a real estate investor?
During these pandemic times where and how can you find leads?
And the most important question of all, where can you find money to fund your deals?
Watch this video now to discover all the answers!
Timestamp:
0:01 – Teaser: “ Get Ready To Be Plug-In To The Money”
0:25 – Introduction
0:48 – Jay’s New Book: “Where To Get The Money Now” – www.JayConner.com/Book
4:23 – What’s Happening In Jay’s Real Estate Investing World
5:59 – Leads on Off-Market Houses (For Sale By Owner)
6:48 – Probate
7:29 – Best Sources for Leads
11:28 – Jay’s Maximum Allowable Offer Formula
14:50 – Where does Jay find money to fund his deals? (Private Money)
18:43 – What happens when your Private Money funds collapse?
24:30 – Have A Servant’s Heart
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Jay Conner (00:04):
If you're looking for unlimited money to fund your real estate investing deals, don't go anywhere because I'm getting ready to plug you into the money, right now.
Jay Conner (00:27):
Well, hello there. I'm Jay Conner, The Private Money Authority. And I want to welcome you to another episode of Real Estate Investing With Jay Conner. You may be watching on YouTube, or you may be listening on iTunes or Google play. So, no matter where you are tuning in from, we are glad you're here. And I have got a free gift for you right here today, simply by listening or watching. And that is, I've just released my brand new book titled, Where To Get The Money Now, subtitle, How and Where to Get Money for Your Real Estate Deals Without Relying on Traditional (or Hard Money) Lenders. So this just hit bestseller status, and I will give it to you free. All I ask is just cover a couple of bucks for shipping and handling, but the book is free and it's going to show you exactly step-by-step how to never miss out on a deal for not having the funding.
Jay Conner (01:24):
You see I started investing in real estate, single family houses here in Eastern North Carolina, back in 2003. The first six years I relied on institutional money, but then I lost my lines of credit overnight. Like everybody else did back in 2008, 2009. And so I discovered the key to getting funding for your deals and it is, Private Money. And so I was able to raise $2,150,000 in Private Money in less than 90 days. And since that time in January, 2009, I've never missed out on a deal for not having the funding. And now you can enjoy the same success. We've rehabbed a little over 420 houses here in Eastern North Carolina. We do two to three deals a month average profit for $67,000. And so, this year Private Money is the key.
Jay Conner (02:18):
So, simply go to www.JayConner.com/Book. And we'll get the book shipped right out to you again, that's www.JayConner.com/Book And I think you're going to really, really love the book as it plugs you into the funding. Of course, we really appreciate you subscribing and reviewing and rating, like, share, subscribe. If you're watching on YouTube, be sure and subscribe and tap that little bell. So you don't miss out on any of the episodes. We are fast tracking through 300,000 downloads and listens very soon, and we're glad you're a part of it. Well on today's show, I thought we might do something different. You know, I have amazing guest here on the show all the time.
Jay Conner (03:11):
And you know that particularly if you've been tuning in, since we launched back in June, three years ago. But I thought we did something different today. So instead of me asking the questions, I thought I would bring The Executive Director of my podcast or producer, Executive Producer of my podcast here on the show to ask me questions and turn the coin upside down. So, Scott Paton, join me here and glad to see you. Of course, Scott's here on all the shows. He's just in the background and you can't see him or hear him, but today you all get to see and hear from Scott. So Hey Scott, how's it going?
Scott Paton (03:50):
Good, Jay, how are you doing today?
Jay Conner (03:52):
I'm doing great. Well, thanks for being available to pitch me some unprepped questions and sort of hit me from, and you can come out of a left field for me.
Scott Paton (04:05):
All right. It's fun to be here and it's fun to be on this side of the camera. One of the things that I wanted to start off asking you, Jay, was, you know, today is sort of like a typical day in your life, except for the this is the one day that you go live. And, aside from that, so what are some of the things that are happening in your world? Like as far as the business goes, because not every day is going to be, you know, a hundred thousand dollar profitable deal closing. And sometimes I think people need to understand, you've got to get up to the plate and take the swings and see what happens. So what's going on?
Jay Conner (04:42):
Well, one thing that's going on today that goes on every day and it needs to go on every day in a successful real estate investors world. And that is having consistent leads from sellers of properties that are wanting to sell their houses or sell their property. And the reason I say that is because, unless a real estate investor has daily, every day leads coming in prospective sellers, interested in selling their houses and properties, then you're really not in business. So what's going on today? Well, we've got leads coming in yesterday. We had leads coming in now, in today's environment and economy, we are not relying on subtle leads coming to us from the Multiple Listing Service. The reason for that is because not only here in Eastern North Carolina, but all across the nation inventory is very, very low. It's a very, very hot market.
Jay Conner (05:43):
It is a sellers market. And so, you know, if a house is listed in the Multiple Listing Service with a realtor, then everybody knows about it. I mean, that's goes to the same as for even bank owned properties or REO's. So since that's the case, we are focusing big time these days on locating, and we do it in various ways on locating potential sellers from what we call, Off-Market Houses. What Off-Market House is, it's a house that is not listed with the realtor community. It's not in the Multiple Listing Service, but this is what we would call a, For Sale By Owner or a FSBO. However, most of the leads that we get, the people don't even have a for sale by owner sign in their front yard. So, how do we find these? Well, you know, there's, you know, since it's low inventory, like if someone sells our house and they're going to stay in the same area, or where are they going to move to? There's nowhere to move to, because there's no inventory.
Jay Conner (06:46):
So, our several leads that are coming in these days are primarily coming from, it could be an estate, it could be probate. So, the owner of the property passed away. And so now there's heirs to the property and the heirs don't have a need for the house. So that's a consistent source that we have of leads these days. In addition to that, it could be someone that's moving out of the area. A house that we just closed on last week, that was their motivating factor. They're moving down to Georgia. The house needs some repairs. They didn't want to put any money in the house. So they responded to one of our Facebook ads. So Facebook ads is a consistent source of having leads coming in. We're also running Google ad campaigns. Those are the best leads because those people are actually searching for us.
Jay Conner (07:41):
They're typing in Google you know, need to sell my house fast or something like that. So, in addition to having consistent seller leads coming in and Scott, when you ask what's going on in my world today? Well, you know, as you said, not every day is a hundred thousand dollars day. I mean this morning my team is my realtor and my contractor went and looked at a house on a very, very nice neighborhood here in Morehead City. And I just got a call on the way back you know, getting back here to the office from my contractor, he says, Jay, this house, it looks good. It's very, not much rehab to it. But in that case, I'm still waiting on the numbers. The realtor went to get his final opinion on the after repaired value.
Jay Conner (08:31):
So I'll be hearing from my realtor, probably later today. I'll be hearing from a general contractor with all the budget and then I'll be figuring out, well, what's the person, what's their asking price. We've already got that information. So maybe that'll be a deal. Maybe it won't. We looked at another house over in Havelock yesterday on Kenneth Boulevard. And I wish the seller had told us that's a tear down. And I mean, can't even be rehabbed it's in such bad shape. So, I mean, there's like no offer going to be on that house.
Scott Paton (09:03):
So, Jay, in a case like that, what will happen with that house? Well, the guy, the owner, just keep it until it falls apart or,
Jay Conner (09:15):
That's a good question. I don't know what's going to happen to it. It's already vacant. The owner is no longer in it. And so I think what's eventually going to happen is, I mean, somebody is going to buy it just for the land. I mean, I could buy it for the land, but that's not my cup of tea. I want to rehab a house. So,
Scott Paton (09:38):
So that's an important lesson. What you just said there. There is a shiny object, right? Which is a piece of land that the person was probably motivated to get rid of, but it's not, you know, when you focus on something, you get really, really good at that. If you focus on a hundred things, you never get really good at anything. So you, you've got a very clear set of parameters of what is a deal and what is not a deal for you, for someone else it's going to be different. And I think, I know me for a fact and many other people, it's kind of like, Oh, look at this, Oh, look at that. Oh, look at this. And then you spend all this time on something that if you had a very clear, yes, no list, right? This is my checklist. If it has to be destroyed and started from scratch, I don't want to touch it. And then that's a five-second decision. Whereas a lot of people will look at it. They'll hammer in the hall. Maybe they'll buy it. Maybe they'll start. And then they've got this mess.
Jay Conner (10:38):
Yeah. And another lesson that comes out of what I just said is this principle. And that is, the more I get out of my own way. The more money I make, what I mean by that is, you know, I didn't go look at that house this morning, that I'm waiting on the numbers to come back. I didn't go look at the house yesterday afternoon. Sometimes I do. But if I'm working on some other projects, then you know, I've got a team in place that I trust and I rely on their report because at the end of the day, it's the math that makes the decision as to what my offer's going to be. Or if there's going to be an offer and the emotions do not need to be in that formula. It's simply the math. So Scott, since we're talking math, I guess I should share with everybody what my math, what my formula is, on what's the most that I can pay for a house. And we call that the MAO Formula, which stands for Maximum Allowable Offer. Now we only use the MAO Formula when we're paying all cash and how do we pay all cash? Well, we pay all cash by using Private Money from our private lenders. So, you know, we can buy on terms. We can buy creatively and oops! Scott, I didn't tell you how to spell MAO. So, mayo is short for Mayonnaise, but MAO for Maximum Allowable Offer is MAO.
Scott Paton (12:15):
There you go. So, and where my mind went was where what's the Y stand for, but I didn't want to ask
Jay Conner (12:26):
It stands for Mayonnaise. So again, we're only going to use the Maximum Allowable Offer formula or the MAO formula when we're paying all cash for a property. And in the real world out there, most of the sellers are going to require all the cash. Now, if we can negotiate the purchase a house on terms, which means they're either going to sell to us with owner financing or seller financing, and they're going to carry the note or we're going to buy, for example, the house subject to the existing note, where the seller agrees to sell us their house, keep the mortgage in their name. And we agree to make their payments until we find an end buyer to cash a sale. But the MAO Formula when paying all cash is simply ARV which stands for After Repaired Value. And the definition of After Repaired Value is a house that you've completely fixed up.
Jay Conner (13:20):
And it's absolutely beautiful. So, the Maximum Allowable formula is After Repaired Value times 70% less repairs equals the Maximum Allowable Offer. So again, the MAO formula is After Repaired Value or ARV, which means the house is totally fixed up in beautiful condition. Times 70%, less repairs equals Maximum Allowable Offer. Now we typically, I don't offer the Maximum Allowable Offer number. I typically will throw in an extra $10,000 less than the offer for the unexpected. You know, we got this guy named Murphy that shows up and you know, he's named Murphy because you all know the old rule. If anything can go wrong, it will. It's Murphy's Law. So there's always the unexpected, no repairs always cost more than they are estimated to be. So really what my true maximum offer is going to be is ARV times, 70%, less repairs, less an additional $10,000. That's really going to be the maximum that I'm going to pay. But anyway, Scott, I'm not sure how we got off on all that, but I did want to talk a little bit about the Private Money and what happens when you're paying all cash,
Scott Paton (14:47):
Right. And so you brought up Private Money and of course, you'd never go to the bank for financing. So let's suppose for example, that the house that is falling down was actually in really good shape. I mean, good enough shape that it would take a little bit of paint here and a little bit of sprucing and cleaning there, and it would be good. And the amount the person wanted was in a reasonable level, where are you going to get the money? Because, you know, you just looked at the house now. You, hopefully he can close in seven or 14 days. That's awful short period of time to get the money. The bank's not going to give it to you. And of course you don't want to go to the bank. How does that work?
Jay Conner (15:33):
Yeah, so in doing business with our private lenders, and so my wife, Carol Joy and I, we've got about 45 individuals. I mean, just to be clear with everybody, what is Private Money? Private Money, I call it relationship money. You're actually borrowing money from an individual. So we're not talking banks, hard money, lenders, institutions of any kind. And we're doing this as an individuals. And so a private lender is an individual that loans money to the real estate investor, either from their investment capital or from their retirement funds. A big part of the success of Private Money is having a relationship with what's called a Self-Directed IRA Company. And I recommend Quest out of Houston, Texas. And so what people can do, what individuals can do is they can transfer a rollover penalty-free, tax-free their existing retirement funds or a portion of them over to a Self-Directed IRA Company like Quest, no tax effect, no penalties, and they can loan out money to us real estate investors and get their returns, either tax deferred or tax free.
Jay Conner (16:51):
So, to answer your question, Scott, so you know, making a cash offer, where's the money coming from? Well, I've already got what we call, Money Sitting on The Shelf. And what Money's Sitting on The Shelf is, it's Private Money from private lenders that I already have a relationship with, either they're new and they haven't done their first deal with me, or it's a current private lender. That's doing more business. They tell me just verbally how much funds, how much money they have available to loan out on deals. We keep that on an Excel spreadsheet. And so, a new private lender coming in is at the top of the list and then other private lenders, as we're cashing out deals, they go in what we call the Queue and they just move up the queue until we're going to use their money next. So again, and answer your question, where's the money coming from?
Jay Conner (17:48):
It's already been verbally pledged by our private lenders. And so now, like, you know, right now I have over a million dollars sitting on the shelf, just waiting there to be used. I got three houses cashing out this week and next week. And so there's going to be a bunch more private money coming available. So, you know, ever since I started using Private Money back in 2009, it's sort of been a balancing act of keeping the private lenders happy, keeping their funds invested on our deals and having Private Money available at the same time for any offers that, you know, we'll be making on properties.
Scott Paton (18:31):
So one of the alternatives to the stock, you know, cause what do people do in their retirement funds? They usually buy mutual funds or they buy some stock that they like. And from time to time, the stock market is kind of collapsed and the funds don't look that good. So how often does the, you know, your private money funds collapse? You know, the house didn't work, you lost your shirt. You know, it went from whatever to what, you know, it's like a 20% drop in the stock market. I'm sure something like that must happen in the housing market.
Jay Conner (19:06):
So, the last time we had a major correction in real estate values of houses across the nation was back in 2008 and 2009. Now here locally, we had a price drop over that period of time of about 20%, but here's the thing with real estate. It doesn't happen overnight. Typically there is a, a timeframe of a decreasing in values. So it's for that reason that I practice and I also coach and train my real estate investing students all across the nation that we don't want to, when paying all cash with private money, we don't want to borrow more than 75% of the After Repaired Value. The reason for that is what I just said. And that is, if there is a downturn in the market and prices are coming down, well, I'm going to be able to liquidate that property long before there would be a reduction in value of 25% of the of the value of the house, but where I get the 25% from is the 75% maximum of the after repaired value that I'm borrowing. So it keeps the private lenders money conservative, it's a conservative investment and it keeps everybody protected.
Scott Paton (20:32):
So, you've never had a private money lender that's lost their investment.
Jay Conner (20:38):
Correct. In fact, since we've been doing private money, borrowing Private money from individuals since 2009, every private lender has been paid exactly what they were promised, nothing less and nobody's lost money. In fact, they got everything they had coming to them. And the reason that's the case is because of the formula that we just went over. The formula is, I'm not going to borrow more than 75% of the After Repaired Value. Now in this world of Private Money we always bring home a big check when we buy a house and that's because we borrow more than we need to purchase it. But remember, I'm not saying borrow a maximum of 75% of the purchase price. I'm saying borrowing maximum 75% of the After Repaired Value. So for this formula to work, we're buying houses that are deeply discounted, but the reason they are deeply discounted is because either the seller has got a problem and is highly motivated to sell, or there's a big problem with the house and they don't have the funds to fix it up or whatever, or the problem could be twofold. They could have a personal problem such as losing a job or someone passed away or getting a divorce, et cetera and a problem with the property. So we come along with a solution to their problem. And Scott, as you've heard me say, hundreds of times, I'm only interested in doing a deal. Only when every all parties come out winning and they're getting what they want.
Scott Paton (22:15):
Yeah. And you, I want to share a story from one of your live events that I attended to, and you had a number of private investors at the event. And then afterwards, we all had sat and had dinner and I'm sitting beside this little old lady, she must've been 90. And cause a lot of what you've been talking about is great for the investor. It's great for you, it's great for the person that's selling the house. But one of the things that you never talk about, and I think we should talk about more is it's also great for the community and what this lady said really stuck with me. She said, you know, I was watching Jay for years and years and years before I actually gave him my money. And, she said, and what I was watching was what he was doing.
Scott Paton (23:02):
And he would go into a neighborhood that was little bit rough and he would fix up this house and it would be beautiful. And then he got people into the house who, you know, lovely little family, you know, family of four family of three. And they would look after that house and they kept it beautiful. And I saw him improve neighborhoods over and over and over again. And I thought, wow! He's really, you know, giving the community a good service. And I think I'm going to give him my money and she, I'm sure she was 10, 20 years giving you her money, but I'd really, that story really stuck with me. Right. It was like, it's, cause we just talk about rehabbing houses and like, what does that mean? And the houses that I've seen, that you rehab, they're beautiful homes. And sometimes they're in really nice neighborhoods. Sometimes they're in a little rougher neighborhoods, but how do you improve a neighborhood? It's like one house at a time and you're going in and you're doing that. And I think you're making a big difference in your community. And that's the other really strong benefit of the work that you do in my opinion.
Jay Conner (24:05):
Yeah. Well, and what you just said that reminds me of this and that is, you know, a lot of times what we do real estate investors get a bad rap, get a bad name, you know out there to take advantage of people, et cetera. And as I say all the time, I mean mine and Carol Joy's frame of mind and all of my students, you know, I tell my students, I say, look, particularly if they're brand new, I'll say, look if you don't have a servant's heart and you're not here to actually make a difference and improve people's lives, then I don't recommend you get in this business. I mean, there's so many people that actually come out winning when you do this business right. You know, like if I'm buying a house with Private Money, first of all, the Private Money Lender, the individual wins because they're not going to get these types of returns that we pay through any other type of, you know, investment return.
Jay Conner (25:05):
The person that we're buying the property from they win, they have a problem, we're the solution to their problem. By being able to buy the property without them having to do anything to it, a lot of homes we sell on rent-to-own or lease purchase, you know, right now, 82% of the population can't even go to the local bank or a mortgage company and get a mortgage. Well, we saw a lot of homes on rent-to-own where we actually helped the people in credit repair while they're living in the home, get ready for a mortgage. So they win. We'd given them a path to home ownership that they couldn't enjoy any other way. And then we, as the real estate investor, we win by being like the orchestra director that makes all this happen.
Scott Paton (25:54):
And your community wins because they have a nice home where it was a piece of junk before.
Jay Conner (25:58):
Exactly.
Scott Paton (26:01):
Well, Jay, it's been 26 minutes of I think one question and we were wondering how we were going to fill this out. We had eight questions set up. So I think we're going to have to save the other seven.
Jay Conner (26:14):
Well, that works. Scott. I enjoyed this for lack of a better phrase, fireside chat.
Scott Paton (26:22):
That's a great term. That's what we're going to call these from now on fireside chat.
Jay Conner (26:26):
Fireside chats. Even in the summertime, let's start one more time. Just in case people were tuning in later free book folks, my book just came out Where To Get The Money Now. So this is going to show you step-by-step exactly how I get Private Money to fund my deals and how you can too. You can go play your free copy at www.JayConner.com/Book Well, Scott, thank you so much. Had a great time. And again, folks, we appreciate you subscribing liking and sharing, giving us reviews and five stars and all that kind of good stuff. And if you're watching on YouTube, be sure to subscribe and tap that little bell. So you don't miss out on any of the upcoming future episodes. Well, there you have it folks. I'm Jay Conner, The Private Money Authority wishing you all the best and here is to taking your business to the next level. We'll see you on the next show of Real Estate Investing With Jay Conner.
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