Wednesday Apr 17, 2024

E41: Learn the best way to fund real estate deals - Private Money vs. Investor Capital

This episode of Cashflow Fight Club features two great models for building a successful real estate empire: private lending with Jay Conner and syndication with Jen and Stacy Konkey. 

Jay shares how he financed over 500 single family rehab deals by educating private lenders on the benefits of backing his projects, providing passive investors high returns. Meanwhile, Jen and Stacy talk about how they have acquired and operated over 2,500 multifamily units by strategically raising capital from accredited investors through various structures like joint ventures and 506C funds. 

Both models showcase effective ways to leverage other people's money and acquire assets at scale, proving the adage that OPM is the true superpower of real estate.

Here are some power takeaways from today’s conversation:


01:14 - Two great models to build your real estate empire

02:25 - About Jay Conner and Jen & Stacy Conkey

14:49 - Jay’s approach of raising private money through teaching investors

20:12 - Jen and Stacy’s approach to raising capital and scaling

28:12 - Eyeing new opportunities based on strategy and the economy

36:57 - Setting return expectations 

43:08 - How Jay controls the terms for private lenders


Episode Highlights:

[01:14] Two Great Models to Build Your Real Estate Empire

  1. Using passive investors' capital - Investors' money can be pooled together via a syndication to make down payments on assets by taking a limited partnership stake. The remainder comes from bank loans. This model leverages the power of syndication to purchase and operate assets like apartment buildings and mobile home parks.
  2. 100% funding using private money - One or a few individuals provide the full capital to purchase assets outright, requiring no bank or financing. This direct private funding model is often used for house flipping, where a property is purchased, renovated, and quickly resold for profit.

[14:49] How Jay Raised $2.15 Million in Private Money by Teaching Investors

After losing bank financing in 2009, Jay Connor knew he needed to change his funding strategy. Rather than desperately pitching deals to investors, he chose to educate his network on private lending. This approach allowed investors to understand the opportunity and proactively commit funds. Within 90 days, Jay’s new "teacher hat" mindset successfully attracted $2.15 million from individuals simply by leading with knowledge, not salesmanship.

[20:12] A Mindset Shift in Raising Capital

Jen and Stacy discussed their evolution in raising capital over the years. Starting from her initial struggles securing funds for small deals, Stacy shared how her mindset shifted from feeling like she was asking for money to recognizing many people have capital sitting idle and desire real estate exposure. This helped Stacy view capital raising as providing an opportunity for passive investors rather than needing funds herself. The pair has since helped many new investors overcome similar hurdles by reframing the ask as giving others a chance to put their money to work.

[36:57] Setting Return Expectations

Jen discussed the typical returns investors can expect when investing in deals with her and Stacy. While stabilized assets alone offer lower cash-on-cash returns around 5-8%, they target properties that also have value-add potential to increase cash flow and property value. This allows them to provide average annual returns on investment of 11.5-13.5% including eventual sale proceeds. 

Resources Mentioned:

Jay Conner

Jen & Stacy Conkey

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