This question that I asked myself will help you fix any problem you've got in your business, your financial affairs, your personal relationships, your health. I don't care what it is. What's up everybody? Welcome to Gathering the King's podcast. I am your host, Chaz Wolf. I'm a serial entrepreneur across franchising, construction, real estate, and online education.
And my mission And this show is to transfer courage to you, our listeners, by sharing the real and raw stories of success from 78 and even 9 bigger business owners. Today, we are joined by Jay Connor, an expert in private lending and creative financing. Jay has been in real estate for over 20 years rehabbed over 500 homes and completed $52,000,000 in transactions.
So how has Jay managed to navigate the volatile real estate market and secure consistent success using private money, especially with all the turbulence in the market today, We're about to find out. In this episode, you'll learn 3 things. How to get private money without ever asking for it. I was able to raise 2,100 and $1000 in new funding from our real estate deals without asking anybody for money.
Jay's top 3 tips for using private money in real estate you make the rules, they're not making the rules, and Jay's formula to mitigate risk using private money. How you mitigate the Rios is the reason 100% of my private lenders have always been paid exactly what they were expecting according to the promissory note. If you wanna learn how to secure unlimited funding for your real estate deals and leverage private money to achieve financial freedom. You're in the right place. Stick around.
This is one episode you won't wanna miss. Enjoy the show. Jay, my man. Welcome to the King stage. How you doing today? Oh my lands, Chaz. How in the world am I doing today? Let me tell you how I'm doing. I'm so excited to be here. That's that's fantastic. You've been doing this for a long, long time. And you've got not only just, some great information, but some real strategies that work. You've been doing real estate for over 20 years. How did you get started into real estate?
I was actually born into real estate. I grew up with my dad in the real estate business He was the largest at one time. He was the largest retailer. His company was the largest retailer of mobile homes manufacturer housing in the nation. Wow. And so I grew up around my dad and his company helping people own a home in the affordable housing industry.
And so in the early 2000, the financing for that product, unfortunately went away, fell out of favor with Wall Street, but I knew if I ever got out of mobile homes in manufactured housing, people used to call them wobbly boxes. If I ever got out of that business, I wanted to get into single family houses. And here's why. And this was way before the HGTV days. Right?
And all the, you know, sexy shows of flipping houses, I wanted to get into the single family houses because way back in the 19 nineties, I was selling single wide mobile homes trying to make a $3000 profit, and good friends of mine and Carol Joy, she's my wife, 37 years. Good friends of ours in Newbern, North Carolina, flipped a house and made $30,000 in less than 90 days back in night 1993. And I said, wait a minute. 30,000 versus 3000. I like 30,000 better than 3000.
If I ever get out of Moa Homes, I'm getting into single family is just what I did. So in 2003, my wife, Carol, Joy and I embarked on this very exciting journey. We bought our very first house by using an unsecured, unsecured line of credit at the local bank you could get that back in 2003 if you had a decent credit score. So we had a $250,000 unsecured line of credit and, burning a hole in my pocket. And so the one mistake I made in this business is I didn't get the right training or education.
I just relied on my experience from the mobile home days, which was not a very, very smart decision. Nonetheless, I read in one of those books on how to flip houses back then, that look for the nastiest smelling house you can in in the multiple listing service. I found it here in Moorehead City, It had been on the market for, 9 months over 60 showings. No offers. I said that sounds like my house.
So I took that $250,000 unsecured line of credit, and I bought it for $50,000 I put $50,000 worth of rehab in it, so I had a $100,000 in it. Well, it was so bad when I bought my wife, Carol Joy, wouldn't even get out of the car and look at it. My dad did get out of the car and look at it. He told me I had lost my mind So anyway, I rehabbed it. Well, what are you supposed to do when you're selling a house? You list it with your realtor. Right? That's what I did in January of 2004.
I listed it from my my realtor, 1499. It sat on the market chest for 45 days with 0 showings I said, well, baloney on that, I'll sell this thing myself. So I put a ad in the local paper. This is used to when you actually had classified ads Chaz, I know you don't remember that either. That was before the internet. So, anyway, I put a ad in the classified section with owner financing for this house. Well, my phone blew up. I had to cancel the ad after 2 issues.
One of the first guys I talked to on the phone, his name is Lynn Wood, Earl Linwood, He met me at the gas station. He followed me in. We pulled into the driveway. I had it beautifully staged, absolutely gorgeous, He walked in. He came back. He said, Jay, I'll give you an $18,000 nonrefundable lease option deposit right now. My problem was I didn't know what a lease option deposit was, but my daddy told me if somebody offers you money, you take it and you'll figure it out.
So I said, Lynn, would you write me that $18,000 check? We'll put this deal together. Well, luckily, I was still an active mortgage broker back in those days And if you had a mid score credit score of 580, I could get you done and cook you into oven and get you a mortgage. And so he had a 583 credit score So I cashed him out on that first house, really not knowing what I was doing and profited $40,000 less realtor fees. I said, well, this is better than 3000. So I like this business.
So that's how I got in the business, and that's how I did the business the 1st 6 years from 2003 to 2009, I relied on the local bank. That's all I needed to do to fund my deals But then something happened in January 2009 that changed everything. Yeah. It was, just just a little blip in the real estate map, right? The mechanics of what you were just saying are are are known. Right? Like, there's I've I've interviewed 100 of flippers, and and that's cool. Like, you did a great job. Good for you.
But in 2009, this this this sticky Got you thinking different. Tell us. Yeah. I remember it like it was yesterday, Chaz. January 2009 I had 2 houses under contract. Bear in mind, I have been using the same bank and the same banker for 6 years. Funding all my deals. Fantastic relationship. I called him up. His name was Steve, I called up Steve, and I told him about these two houses that I had under contract.
I told him where they were located, the funding required same song and dance, that Steve and I had had many, many times for 6 years. Steve cleared his throat and says, Jay, I'm sorry to tell you but the bank has closed your line of credit. And I don't know if you ever heard somebody say something to you, and you didn't quite understand that they said it. And secondly, you wish you hadn't heard what they had said. I said, Steve, what do you mean the bank has shut down my line of credit?
He said, Jay, don't you know there's a global financial crisis going on right now? I said, no. But now you have just given me a global financial crisis because I can't fund my 2 deals. So I hung up the phone. Chaz, I asked myself a question that I'm gonna share with your audience right now. This question that I asked myself will help you fix any problem you've got in your business your financial affairs, your personal relationships, your health. I don't care what it is.
And here's the question I asked myself, after hanging up the phone with my banker. I said, Jay, who do you know that can help you with your problem? Who do you know that can help you with your problem? And by the way, Chaz, these people going around saying every problem's an opportunity, I wanna throw up. I didn't have no opportunity. I had a problem. I got these deals under contract, and I can't fund them. Let's face reality. This is a problem. Well, You know, it's not it's not how it's who.
It's not how it's who. So immediately, I thought of my good friend, Jeff Blankenship, who lived in Greensboro, North Carolina, at the time. And he was he was investing. He was flipping houses in Greensboro, North Carolina. I called him up, and I told him what had just happened with my conversation with Steve. He said, well, Jay, welcome to the club. I said, what club? He said the club of losing your line of credit at the bank, they just cut me off last week.
I said, well, Jeff, how are you gonna fund your deals with no bank, with no line of credit? He says, well, have you ever heard of private money? I said no. He said, have you ever heard of self directed IRAs and how individuals can use their retirement accounts to loan that money out to real estate investors and earn unlimited money per year, either tax deferred or tax free. I said, no. He said, well, let me tell you about it, and you need to learn about it quick. So I did.
I studied private money, what it is, how you can get fast, how you can raise it without ever asking for money. Did you know Chaz ever since January 2009? I've never asked anybody for money or to fund my deals, how in the world have I got 8 and a half $1,000,000 in private money available and I get all my deals funded without ever pitching a deal. I'll answer that in just a second. So I studied private money. You know what I did, Chaz? Here's what I did. I put on my teacher hat.
I put on my teacher hat, my private money teacher hat, And I started teaching people, leading with education, teaching people in my own local market here, my own network, people that I go to church with, people that's in my cell phone, people that I love to go boating with. I just started sharing with people how they can earn high rates of returns safely and securely without mentioning any deals. I'm just talking the program.
I'm talking the opportunity how they can learn, earn high rates of return, safely and securely, with very, very minimal risk, And so in less than 90 days with me just leading with education, I've been I put on a private lender luncheon. I invited twenty people to the luncheon friends of ours, and I raised $969,000 just at that 1 90 minute luncheon by just sharing how they can earn high rates of return, save it, and securely.
So I was able to raise $2,150,000 in new funding from our real estate deals Without asking anybody for money, you know, the traditional way to raise money is you go to your local banker, you get on your hands and knees, you raise your skirt up for them to look at your personal assets and your financial statement and show all of the, you know, your personal stuff you got going on. And then you're saying, please fund my deal. You know, please fund my deal. But you know what?
That's the traditional way. There's applications. There's w twos. There's credit scores. None of that applies in this world in this world of private money because you see we're not asking for mortgages, we're offering a mortgage to people that have never seen this kind of opportunity. You know, this side of COVID, I've had more money chasing me. I've never had to chase the money. So that's what you do. You lead with education, you show them how it works, and now the money is chasing you.
Love it. And the the opportunity here I I love how you kinda separated the 2 here. It was I'm not asking. I'm I'm educating, and I'm letting people know this is what's possible. Because you're right, most people think when you think of even even today, I think experienced real estate folks. Think of raising money. It's just calling mom and dad or friends and family and saying, what cash do you have? And I didn't even hear you say that.
I heard you say reaching into a a little bit more of a specific bank, if you will, with these self directed IRAs. I I know that's part of your your solution here. Do you wanna give a little bit more on the detail? And and gonna get you wrote a book on this and, you know, you got all kinds of, you know, tactics. Sure. Well, you know, one popular question that I get is well, Jay, I still don't understand how you get the money without asking for it. So here's the magic sauce.
We separate the conversations between teaching the program and then having a deal for your private lender or your private lenders to fund. You see, desperation has got a smell to it. That's right. Even if you're not trying to say on a look desperate, desperations got a smell. So let me let me explain here in a few seconds how you, as a real estate investor, wanting to borrow money, raise money for your deals, how you smell desperate without even attend intending to smell desperate.
If you are sharing your program, here's the interest rate I paid to my private lenders, here's how they can get their money back in case of an emergency, Here's the maximum loan to value, etcetera. And in that same conversation, you talk about a deal that you're looking for funding, you're desperate. Without you even saying a word, you're saying, hey, Here's my program. Please fund my deal. It's really what you're saying. So what do we do?
We teach the program to a potential private lender or lenders I don't even have to ask them if they're interested. It only takes 20 minutes, 15 minutes to walk through, you know, how the program works, how they can get high rates of return safely and securely. And then I shut up. Well, they're gonna tell me how much they've got if they've got investment capital, 150,005,001,000, whatever.
Or if they've got retirement funds and they're not happy with if they're in volatile and then maybe it's in the stock market or whatever, Well, then I'll introduce them to the self directed IRA company that I recommend because they've got fantastic customer service So let's say they moved their money or part of their retirement funds over to the self directed IRA company. So they'd moved it over there. Well, guess what? They're not making any money until you put their money to work.
They've moved it over to recommendation. So how do I get all my deals funded with never pitching a deal? There's a good question. How do I get all these deals funded and never pitch a deal? Well, here's the answer. The answer is I call them up with the good news phone call. Well, here's the good news phone call. Chaz, let's say you're one of my private lenders, or maybe you're one of my new private lenders, and let's say you've you wanna start with a 150,000.
By the way, new private lenders always have more money than they tell you. So let's say you wanna start with a 150,000. So I say, Chaz, I'm gonna put your money to work for you just as soon as possible. You'll probably hear from me within the next couple of weeks or so. So I call you up. You and I have a little chit chat. I say chaz, and here's the script, folks. Here's the script as to how to get your deal funded without pitching the deal. You see, Chaz already knows the program.
He already knows what interest rate I'm gonna pay. He already knows my max from loan to value. Which by the way is 75% of the after repaired value, not 75% of purchase price. Very big difference. Anyway, He knows the program. He knows I'm not gonna call him up with a deal that doesn't match the criteria of the program that I've already taught him. So I called up Chaz. We have a little chit chat. Here's the script. Chaz, I've got great news for you. I can now put your money to work.
I've got a house under contract in Newport with an after repaired value of $200,000. Now, the funding required is a 150 1000 for the deal. Closing is gonna be next Friday. So, Charles, you'll need to wire your funds to my real estate attorneys trust account by next Thursday, and I'm gonna have my real estate attorney email you the wiring instructions. End of conversation, First of all, if I'd ask Chaz, does he want to fund the deal? That's the most stupid question in the world I could ask him.
Of course Chaz wants to fund the deal, particularly if he's moved his money over to the self directed IRA company, he's waiting for me. I'm ethically bound to put Chaz's money to work because he's moved the money over into in anticipation of me putting his money to work. So I need to perform. Right? I need to have Chaz fund a deal. So again, the magic is educate and teach They give a verbal pledge. Here's how much they got to work with. Now I call them with a good news phone call and done deal.
I I love the simplicity, and I I've taught sales for for so long now, and it never goes as a point that can never be or that it's overstated. I'll I'll say it again and again and again, which is what you just did is that you used words in a particular way to make it make sense. You didn't over complicate. I say things all the time, like, a confused mind can't buy. Like, the listener right now is, like, following this makes sense, of course.
But I don't wanna move on too fast because 1000 of sales reps. I'm sure you've seen thousands of real estate, professionals who over complicate the process or the deal. And that that's actually when most things kinda spiral down. Is that everything in in the process is going well and then you complicate it and a confused mind doesn't buy, or there can be no agreement where there's disagreement. And so if if if you can just keep it simple, not not onto the onto the way of of keeping information.
I think that's probably where a lot of people in their integrity feel like, well, no, I have to explain everything. It's like, well, actually the investor is, like you said, relying on you to be the expert or, you know, in the case of a sales process, you know, the prospect is relying on you to be the expert. And so Now they don't actually have to know every single nuance of the deal or the product. They need to know the important things that are that are for them.
And and then we gotta get their money to work. That's that's the main point. We gotta gotta make them some money. Gotta perform. That's it. You know what you just said reminds me of this. Sometimes people will say, well, well, Jay will when someone is starting out raising private money, what's a common mistake they make? I can tell you what the common mistake is. They talk too much. They talk too much. They yeah. I love you're not selling anybody on anything. You're not trying to persuade them.
You're not trying to talk them in anything. You're just you're just sharing information that you have that they do not have. Right? Most people walking around, even financial advisors, walking around never heard of us of a true self directed IRA. What in the world is that? What in the world is a 3rd party custodian approved by the IRS that allows people to invest their retirement funds truly self directed. So you've got information that other people don't have.
Keep it simple in terms that they can understand and using terms that they do understand. Yeah. Yeah. I think that that all of that is super good. Get let's let's just roll in. I mean, you're you're giving us so much already. I mean, the book that you wrote around this is called where to get the money now. You've got you've got a lot of success around that book. Congratulations on that. But inside of that, you give all kinds of tips, but I want your top 3. Top 3 tips for using private money.
You kinda give the script on how to get it, but how do we use it? Top 3 tips. Top 3 tips on using private money. So first of all, Number 1 tip. Number 1. It's gonna be very hard for you to own real estate using private money until you own the real estate between your ears. Now what in the world do I mean by that? Because this is a 90% head head game. This is a 90% I mean, I guess that's true in pretty much any kind of business that you're in. But I agree.
You got you gotta be confident If you don't believe in yourself, nobody else is going to. Who's gonna loan you money if you're not confident about what you're offering people? Who's going on you money about you being confident as to the offers that you're making on deals? If you're not confident, then how do we get that fixed? When you join hips with somebody that knows what they're talking about and has been through the minds. Well, that's somebody locally or or whatever.
Your mindset is that when you're talking with someone about private money, how they can make high rates of return safely and securely, about this opportunity, I want you to picture in your mind. You got one foot out the back door getting ready to leave. Because whenever you feel like you're selling, stop. Stop. Stop. Feeder in. Stop. In other words, when you feel like you're pushing or you're really trying to convince somebody of something, Wrong approach. Wrong approach. You are confident.
You are offering something that's gonna be for the betterment of them gonna be a win win win scenario. And here's another part of your mindset. Realize that they need you more than you need them. And here's why. That's not an arrogant statement. It's a fact. Here's why. There's more money available than there are deals. How do I know that? Prior to COVID, there was $18,000,000,000,000 in cash.
Prior to COVID, in cash, sitting on the sidelines here in the US of people not knowing what to do with their money. Today, 31 $1,000,000,000,000 in cash sitting on the sidelines, either in cash, cash, or And when I say cash, cash, I mean, I don't mean cash. I mean, investment capital sitting in a checkbook or retirement funds just sitting there. They don't know what they don't know what to do with it. Right? The the the stock market is so volatile. So there's just so much of it all around you.
What's another part of your mindset? Abundance, not scarcity. If you have a mindset of there's not enough to go around, We gotta get that fixed. There's more than enough to go around, so the abundant mindset There's plenty to go around. There's more money than you can ever use. You're serving.
You're leading with a servant's heart Hey, Carol Joy and I have received so many handwritten notes and in person thank yous from our private lenders over the years saying We have changed their retirement years. I've we got one cup. But, by the way, these private lenders are everywhere. I mean, we got one couple that are both retired teachers from the public school system. And guess what? We have helped them grow their investment capital to over $1,000,000.
They have over a $1,000,000 that they now are using to loan back to us and fund their deals. And they're saying, you know, without your program, we wouldn't have been able to enjoy our retirement years the way we have. So that's number one tip. We wanna get the mindset right that we are out here serving people. Oh, you've got 2 more, but give me give me just a couple of attaboys towards you on this because, I mean, it's so cliche. Right? Business mindset.
Take care of the real estate between your ears, but I just wanna, like, echo for the listener. Just like, hey. Wait a second. Don't move too fast. Listener, Jay's giving you the map, like, literally the map. Now and we're not talking about private money right now. We're talking about your and abundance and you knowing or believing that that things can be a different way than they are currently right now for you.
And so I just wanna not only encourage a listener, but to to thank you for being so real with tip number 1. I know you're gonna come hot and heavy with tip of 23 here, but But tip number 1, if that was all that you gave. They're ready to roll. I'm ready to roll. I'm inspired. Alright. Give us 2. So tip number 2 and this is a distant cousin to tip number 1, but it's a specific Tip number 2, you are not applying for a mortgage. You're not applying for a mortgage.
In words, this is 100 I mean, the strategies, the steps are 180 degrees opposite direction of borrowing money traditionally. You borrow money traditionally they make the rules. The lender's making the rules.
And you see, this is this is a challenge for some new real estate investors or people that are first gonna be attracting private money is to get out of your mind that you are asking, that you are applying, that you are having to think through this traditional way of borrowing money, and this could be no more opposite than traditional. You're not applying You're not playing by their rules. You know, you grew up thinking, well, whoever the lender is makes the rules.
They said the the lender sets the interest rate. The lender sets the frequency of payments. The lender sets the length of the note, etcetera. Not the case here. The lender is not making the rules. So number one tip, we wanna get the mindset right. Number 2, distant cousin to that. Is you're not applying. You make the rules. They're not making the rules. And number three tip is understand why you need private money.
Some people going around is going and say, well, why why do I why do I need private money? Well, let me tell you why you want private money if you don't know you want it yet. Let me give you a few reasons why you want private money. Number 1, there's no limit to the amount of private money you can have available to you. You can scale your business to anywhere you want to go. When I was borrowing money from the banks, I had a limit. I had a $1,000,000 line of credit. That was it.
When I used that line of credit, I had to pass on bills. Unless I was buying on terms, subject to the existing note of whatever, I had to pass up on those deals. Well, guess what? No limit. I got $8,500,000 now and just moving from project to project, so there's no limit the amount of money you can get as opposed to traditional. Number 2, big tip. Why do you want private money? There's no limit to the number of private lenders you can do business with. Why is that?
Because we're not regulated by the commissioner of banks. We can do business. We say, and we're individuals. We're doing business individually to individual. So no limit. Number 3, no credit score, no credit check. Your credit's got absolutely nothing to do with how much private money you can get, and that's because all the notes are collateral based, so the private lenders are loaning you money, not based on your credit, but based on the collateral that's back in that note.
I mean, and the list just goes on and on. There's no appraisals. You know, my lands, how often have you been shackled by an appraiser as far as, you know, what's going to happen Well and delays. So there's no appraisals. We simply use comparative market analysis, and there's another reason you want private money. All my offers on deals that I offer to buy on property, I offer to close in 7 days. And as a result, I get more offers at accepted because I can close quickly.
You can't close in 7 days if you're using commercial money, they're gonna order an appraisal. I mean, maybe if you got a good relationship, maybe. Maybe. You could close in 3 weeks. Maybe with the Hart Money lender. And another thing you wanna understand is this world has got nothing to do with hard money. This is not hard money.
Hard money is typically a broker of private money that has raised private money for their fund, and now they're gonna loan it out to you at a higher interest rate with points, etcetera. There's another reason you want private money. There's no origination fees. There's no points. Just skip over the middle man. You know, I mean, it's just a straight I've been paying the same interest rate since 2009 when I started And that's 8%. It doesn't matter what the market does. The market can go up.
I'm talking about interest rates. The market can go down. And so, you know, I one question I get recently in this market, Chaz, I say, Jay, how do you still paying your private lenders? The same thing you were paying them prior to COVID. I said, well, there's 2 big reasons. Number 1, I make the rules. Number 2, 8% is still a whole lot more than 4% or 4 a half percent that you can get in a 12 month CD and is backed by real estate. I'm telling you. I'm telling you. If I'm lying, I'm dying.
Private money will skyrocket your real estate investing business because at the end of the day, you heard the 2 what are the two questions all of us have? How do you find the deals? And where do I get the money? I got the money I got the money answer for you. There are 3 categories as to where you find private lenders. You might wanna write these down if you're not driving. The 1st category finding private lenders is your own warm market and connections?
The 2nd category is what I call your expanded warm market. I say the more money you waddle in, the more money sticks to you. And some people say, well, my network is broke. I don't have a very good network. Well, you need to fix that. Because there's a direct correlation, as we all know, between your network and your net worth, of course, So expand your network. Well, how do you expand your network?
I can tell you how to expand your network overnight at a place that I've gotten 1,000,000 of dollars in private money. You wanna know where that is? Here it is. Www.bni.combusinessnetworkinginternational. Business Networking International is an organization if you're not familiar with it, to where you join and, you know, morehead city where I live has only got 8000 people. Who even we have a BNI. Right? So the purpose of BNI is not social. It's not civic group and fundraising.
You are in business networking international for the purpose of giving each other leads in your group. So If there's twenty people in your group, like here in Mohhead City, then I've got 19 other people that are endorsing me and promoting me and referring people to me that want a high rate of return safely and securely. Well, in that group, there's one realtor. There's one real estate attorney There's one general contractor. There's one plumber. There's 1 HVAC.
And so we are endorsing each other. So just through the endorsement of business networking international, I've had 1,000,000 of dollars referred to me, just from BNI. That's a quick way right there to grow your network very, very quickly. And the 3rd category of private lenders are existing private lenders. These are individuals that already know the game. They are already lending money out 2 other real estate 2 real estate investors. Where do you find those people?
Well, self directed IRA companies, 3rd party custodians, Did you know over 70 percent of account holders at self directed IRA companies want to loan money out secured by real estate? They want to be a passive investor and just get the returns. So, Ashley, self driving companies have regular networking events on zoom, and you can go there in network and you don't even have to have an account, you can network with existing private lenders. But here's the catch.
When you're networking with an existing private lender. You're not putting on your teacher hat. They already know what private money is because they're already loaning it out. So now you don't get to make the rules Now it's a negotiation conversation, and I'd rather not negotiate, I'd rather make the rules. But that's where you can get private money. Hey, Kings and Queens. Chaz Wolf. I wanna talk to you about something that's super important to me. We put a lot of time and effort.
We, meaning myself and my team, into this podcast into the content that goes out every single day. And if you have been getting any sort of value or insight from this, We wanted to be able to reach other business owners too. So we would love if you would like, comment, share, leave a review, host, share again, all of the things on social media, on all the different platforms, or even on the podcast mediums of Apple and Spotify.
We would love to be able to get our content into more hands, more entrepreneurs so they can grow their business as quick as possible. Together, we are building a community of like minded entrepreneurs who are committed to growing their businesses to new heights. So let's do this. Let's help each other grow. What happens though? When a deal's gone wrong? What's the sticky? What's the black eye? What's the oh, the I wish this had never happened, but it did. What what was that moment?
Well, let me share a revelation. Every deal goes wrong. Every deal goes wrong. Every deal goes wrong. What do I mean by every deal goes wrong? Well, when you're rehabbing and renovating, have you ever had a rehab or renovation budget come in on budget? Of course, you have. I've rehabbed over 500 houses, over 500 houses, and our little teeny tiny area here of only forty thousand people I've never had one come on budget. So what how do you mitigate that risk? How do you mitigate the risk?
Here's how you mitigate the risk And by the way, what I'm getting ready to tell you on how you mitigate the risks is the reason 100% of my private lenders have always been paid exactly what they were expecting according to the promissory note. So how did that happen whenever I have a had a deal coming on budget, here's the answer. The answer and the mitigation of risk is not in estimating repairs exactly perfectly. The mitigation of risk is in your offer.
The mitigation of risk is in your make is they pay too much. You're paying too much for the property. You're emotionally involved, particularly in that first deal. You're dying to get that first field deal. And you pay too much. And I'll tell you what, HGTV has ruined a lot of people when it comes to real estate investing, because first of all, by the way, I love watching HGTV, nothing against them. I love the shows, but the only thing about reality TV is there's nothing real about reality TV.
Right? It's a show. And so, like, you know, so when they're showing like the profits, let me tell you the profit on a deal is not what you sell it for minus repairs minus what you paid for it. That is not the profit on the deal. There's this thing called realtor fees and carrying costs and private lender fees and closing costs and insurance and taxes and utilities and cutting the grass and on and on and on. So what I'm saying is is how do you mitigate the risk? Well, let me give you the formula.
Let's just don't talk seminar jargon. Let me give you the formula. Here's my formula for when I pay what I pay for cash on a house when I'm using private money, I take the after repaired value, so my realtor gives me all these values, He knows that I'm gonna turn this home into a home that's ready for Southern living magazine pictures when I finished the rehab on it. So he knows what the R is. He's gonna use comparable sales at other homes in the area that have been renovated to the hilt.
So we take the ARR if the after repaired value is over $300,000 on multiplied times 80%, If you're in California, you're gonna be multiplying everything times 80% because you can't even get a outhouse for 200,000. So, anyway, when the after repair value is over 300,000, I multiply times 80%. If the after repair value is less than 300,000, I multiply times 70% I then take that figure. I subtract the estimated repairs on the property.
That going to give me a figure known as maximum allowable offer, but don't offer that all cash. You gotta give yourself some headroom So if it's less than $300,000 on the after repaired value, I then subtract another $10,000 for the unexpected now that's the maximum I'm gonna pay, if it's over $300,000 after fair value, I'm a subtract an extra $20,000 for what I will is the maximum that I'm gonna pay.
One way I get a lot of offers accepted besides saying I can close in 7 days, which I can with private money, But a lot of times people don't have anywhere to go. They wanna sell, but they don't have anywhere to go. And they said, well, we're not ready to sell yet. Well, here's another rider down time kills deals. Time kills deal. The more time that goes by, the less likely you're gonna do a deal. I want to close now. I wanna close right now.
So I say, look, we can close next week and and the problems will be mine. The taxes are gone. The insurance gone. You got no more mortgage payment if you had a mortgage. And I will let you live in the home 4 free, rent free, for whatever time we we both agree is reasonable. I get a ton of my offers accepted because, oh, They don't get all the cash, by the way. They get half of their cash at closing, and they get the other half of their cash when they've moved out.
But close that baby now because time kills deals. That mantra so long ago in sales, is what led to what you talked about earlier having a stench or our commission breath is what we call it in sales, but it's this desperation. And and so I wanna close now, which makes me like like hurry up, hurry up, hurry up, hurry up, and it automatically puts us into desperation where it's like, well, I actually know that foot out the door of philosophy that you talked about is, hey, look.
I'll offer you an amazing deal so much so to where I wanna close right now. Otherwise, I'm gonna go to your neighbor or or whatever the scenario is, you know. Exactly. Make the offer something that they can't say no to. And so, okay. So so you're you're building in into a formula to make sure that when things go wrong, which is I love how you said every single deal. It's it I think it I don't know how many deals I got in.
Before the frustration of what you just described became just like, oh, this is just how it goes. Got it. I'm kind of an exact guy. Like, you know, before we hit the record button, you were you were commenting on our process here. And and, you know, even the thing that we mailed you as a podcast guest, and I like details. I like I like I like knowing exactly. And It's just it's just rounded in real estate. And and and I love how your philosophy isn't just you as the investor are winning.
The person that you're buying from is winning because of the cool things that you'll be able to do close fast and get in a lot of them stay in the house. The investor is is winning because they're probably not making the same amount of return as they would with your deal. And, of course, you get to get in and get out and do the thing and and make your money as well. So This is a true win win win, like you said. My dad Wallace Commerce that I told you about when we started out.
He told me years ago. He says, Jay, If everybody isn't winning and everybody's got at least a little bit of meat left on the bone, don't do the deal. Everybody's gotta win. Yeah. I think that that that that that goes into life in so many different ways. Right? Like, I mean, I was just in a a coaching session, one of our one of our benefits of being part of the Gathering of the King's community, but we we we say we're winning in all areas. And so we talk about business.
We talk about investing course, all those things, but we have a monthly marriage call where entrepreneurs and their spouse come to the call. We bring in marriage coaches, and we get to all work on our marriages together. And inside of that environment, we were talking about creating win win wins. And and even between the husband and wife, it's like, man, how many times have I unknowingly proposition something, whether it be for my family or for my wife.
And she says, yes, knowing that, like, she was trying to, like, honor me or do it for me, but it's not a win win. And so it doesn't work long term. Right? Well, let's say that I just love it and that you just shared in your mastermind or your mastermind calls or whatever it is, that you those marriage calls because the reason that impresses me so much is that business is not a one dimensional or two dimensional aspect of our lives. Right. Our business effect everything else in our lives.
Our personal life affects is our business. Our spiritual life, whether you view yourself as a spiritual person or not, affects your life. It's all intertwined. And if one part of your lie your help your health is all intertwined here. Your sleep, all that. And if it's and if there is a if there's a spoke in that wheel, that's not performing the way it is intended. It's going to affect everything else.
So if your marriage is screwed up, Don't you think that might have an effect on your business as well? So that I love that, Chaz. I love that that you've got that as a component for your mastermind members. Yeah. I appreciate that, Jay, because you're right. It does matter, and and all of the elements. It's kinda funny. It's almost you were you had my website up and you were going through what we call the 5 dimensions of kingship because all of what you just said is is basically there.
And you're right. We even use a wheel type tool for our members to be able to grade themselves. And so inside of that mindset, it's the mastermind principle. And so I'm I'm kinda leading this to one of my next questions for you here, but The mastermind principle defined by Napoleon Hill And Thinking Growrich, chapter 10, is 2 or more minds working together in harmony, unto achieving something definite. And so for us and the group, that's living the exceptional life.
And so in order to live the exceptional life, you gotta win in all areas, and so we help each other do that via a lot of the things that you just mentioned, which is which is great, but inside of private money, inside of real estate, inside of your marriage, how have you used the mastermind principle to be successful and be where you are today. The mastermind principle has been such an integral part of mine and Carol Joy's success. On multiple fronts.
First of all, the very first mastermind group that Carol Jo and I joined was all the way back in 2011, 2011. I'd never really heard of mastermind Group prior to 2011, but of course, Napoleon Hill had been talking about them since the early 1900. And what I learned about becoming a member in a match mind group of working with like minded people, there's so many benefits.
One huge benefit in addition to getting the results for the reason we joined, and that is to help us grow our business, is I've forged and we and Carol Joy and I, we have got relationships with people that we did not know prior to mastermind, and we're still best of friends for those people. I tell you another big benefit of being in in masterminds is we have this thing that we really enjoy that we call safe space.
And in this safe space, we're able to share with each other, confidential information were all under non disclosure, and we're able to, share information with each other that we don't even tell our own blood relatives about ourselves. I mean, the question is, where can you go? Where can you go? And You know, we all walk around with filters on our face. All of us walk around with filters. Where can you go and totally take your filter off? And really share what's going on inside your heart.
Because you fellow Mastermind members, you know, Master Mining is just as much about giving as it is receiving. And in my opinion, it's a whole lot more about sowing than it is about reaping. It's all about sowing. It's not about reefing because, you know, I can't reap anything really until I plant something first. Give value first. Share with my fellow mastermind members.
And and in addition to that, I love being in my masterminds and the mastermind that I run and etcetera, What wonderful way to hold each other accountable, and you can count on your fellow mastermind members by telling you the truth There's not many people walking around out there that's gonna tell you exactly what the truth is. And, yeah, we know who said the truth will set you free, and it does. Yeah. I agree.
I was it's making me laugh because I had a conversation with a guy just yesterday, actually, and it was around just some busyness that he's got and you know, he was making some excuses, really, what is what it was. And I just let him know that he was making excuses.
Yeah. And I just appreciated him for his willingness and his his desire to share and his, you know, his really what he underneath the excuses, it's he wanted to win, but he was he the way that he was going about it wasn't working for him. And so what was coming out was excuses.
And and what I have found even in my own journey, very much similar to what you just said is if if we don't have other people around us, even on a call like this where I'm being provoked to different thought, like, from you. If we don't have those different, you know, ways of of changing our perception, then then we're always gonna do the same thing. And if if the same thing isn't working, then guess what? You're just gonna always make excuses and always have the same results.
And so sometimes you're right. It is just a little bit of truth to change your perspective or your perception so that you can see it differently and then make the adjustments. Right? Absolutely. Unfortunately, a lot of people are walking around, and they live in a world that I call blame shame and justification. Blame, shame, and justification. And that's sort of the cycle that a lot of people go through. Whatever's going on in their life is never their fault, not their fault.
Therefore, it's not my fault. It's somebody's else's fault, so I have to blame And then after I do the blaming, but I'm still stuck with how I suck. I'm still stuck with how I suck. And so now I feel shameful because I still suck even though it's somebody else's fault. And so now I gotta justify why I suck. And so now I'm justifying, and now I've got this suck going around to blame shame and justification.
I tell you one of my favorite books, Chaz, is, written by Jack Canfield, co author of chicken soup for the Soul series, It's called the success principles, and his very and there's 69 of them, and his very first success principle says the 100% responsible for everything that happens in your life. And I love his formula as to how you can be responsible. And I love it. It's e plus r equals o. Well, what's e plus r equals o?
That stands for the event that happened in your life Whether you caused it or you didn't, plus r is your response to that event equals your outcome, e plus r equals o. Unfortunately, the people that are living in blame, shame, and justification are living in a world of a different formula called e equals o. They're living in a world of event, whatever happened in my life, whether I caused it or not. Of course, they never think they caused anything.
The event that happened in my life equals the outcome, and I can't do anything about it. Guess what? You can be and you are 100% responsible for the response to what happens in your life, and therefore, you get to change the outcome. That's what happened to me with the story I shared about being cut off from the bank. When Steve tells me I'm cut off from the bank, I had a choice. I could live in e equals o. Oh, I'm cut off from the bank. I have no funding.
I'll put my tail in between my legs I'll go home, and I'll be in blame and shame and justification, and, you know, just cry in a corner. Or Be responsible. I can respond 100% response. I can respond to the event of being cut off from the bank. How did I respond? I ask, who do I know that can help me? And now I'm looking for a better and quicker way to fund my deals than being having my destiny determined by an event. Your destiny is determined by your response to the events, not by the event.
Yeah. It's so good. People people mix up, you know, having that to that fault or the the reason the event happened, right, the fault or the blame of it and they mix that up with the responsiveness. And so if you break down responsibility, it's the response to your ability. Right, or your ability even to respond, you can kinda take it a couple different ways. And so I love everything that you just said there. I think that the listener just got a a nice little nugget there. At the end.
If they're paying close attention, that nugget right there will change their life. And I'm not kidding on that one. The the rest of the show has been incredible. Jay, you are incredible, but that last little piece, if if they actually grab onto that, their their whole life will be different. I got I got one last question. I wanna make it clear how these folks can connect with you, you've been sensational. Like I just said, you just kinda halfway muddered that you've got a mastermind group.
I know that you coach entrepreneurs and investors I know you've got a book. You gave us a little website earlier of your of your deal room. Someone's just like, man, I gotta get more Jay in my life. How can I find you? Yeah. Well, the great thing about the challenge that I just launched is you actually get to interact with me. Right? And my book where to get the money now is you know, it's been a best seller. You can pick it up for free. Just cover shipping at Jay Connor.
And by the way, folks, I'm a ER, not a OR. Most Conners are ORs. I'm a e r. So jay, you can get it at www.jayc0nner.comforward/book autograph it, ship it to you. You really wanna interact and really dive deep. Come join me in my world in the 7 day challenge at www.privatemoneychallenge.com. And then, of course, we have my podcast that, we have over 700 episodes right now. Believe it or not, the name of my podcast is raising private money. With Jay Connor raising private money.
It's like you're still educating people on it. And so, yeah, you can find me on any of your favorite podcast plat forms, raising private money with Jay Connor. I and what do I do on the show? I interviews amazing guests and all of them have raised private money. So I interview them on how they have gone about raising private money for their real estate deals.
Back away, back of the way Chaz answers If you're listening to this episode and you're finding it enlightening, inspiring, and you're learning some stuff, and you really wanna learn about private money. I got a brand new private money challenge, 7 day challenge I want to invite you to where we dig deep, I go I go about 15 to 20 minutes per day. So it's digestible, and come come into my world and and and get in the private money challenge, you can join me at www.privatemoneychallenge.com.
That's privatemoneychallenge.com Come on into my world, and let's have fun. Chaz, what a honor and a fun time of being here on your show. Thank you so much. Yeah. No. The the the honor is mine. Thank you for being here. The hour that you've spent with us can be compounded into decades of experience. And so I appreciate you sharing all of that. The listener would be silly not to reach back out to you and connect with you, grab your podcast, grab your book, all of the things you just mentioned.
All of that will be in the show notes as well. Jay. Blessings to you and your family. Thank you for being here. Good, sir. Chaz, thank you, and god bless you. Thank you for listening to Gathering the Kings today. I hope that you were able to pull out a few nuggets to go apply into your business right away. More importantly, though, I hope that you're realizing that it takes more to be successful than just being by yourself doing it all on your own, carrying the weight all by yourself.
What I have realized, not only in my own journey from multiple businesses and multiple different industries, and now interviewing the over 2 or 300 Other very successful 7, 8, and 9 figure business owners is that it's tough to do it alone. And so gathering the Kings exist to bring together successful entrepreneurs. In fact, we are putting together 1000 kings, specifically who are grateful but not done.
We're intentionally assembling kings who fight tooth and nail for their business, family, and communities, and here's what we believe. That in the pursuit of excellence in those areas, that it ignites within us the responsibility to govern power and forge a lasting legacy. So if that relates and resonates with you and you know that you need people around you, sharp qualified other very successful business owners. I want you to go to gathering the king's dot com.
I want you to take a look at what we're doing and see if it makes sense for you to be part of our pursuit to 1000 kings. Talk soon.