OPM Real Estate Deals – How to Invest Using Other People’s Money
Real estate investing requires knowledge, experience and money. However, the right investing strategies offer a great way to build wealth when you create a business plan with an assortment of investing and financing methods. One way to realize returns for your real estate investing business is with OPM real estate deals.
What are OPM Real Estate Deals?
OPM real estate deals are real estate investments using other people’s money. OPM deals use creative financing techniques outside of traditional financing methods, like bank mortgages, to fund all or the majority of a deal.
Instead of relying on your money or credit to fund real estate investments, you work with a variety of strategies and contacts to secure the money you need. This creates the bandwidth to invest in more properties than you could using only your money or credit.
How to Make OPM Real Estate Investing Work
OPM real estate investing may sound intimidating. After all, why would other people risk their money on your real estate deals? However, when done well, other people benefit by working with you to finance real estate investments. In fact, after a few successful deals, you may find people coming to you to seek out investment opportunities.
Types of Financing with OPM
What types of deals work with other people’s money? The possibilities are endless. You have the option to create partnerships or OPM for any type of deal from flipping a house to purchasing a rental property. A few common tactics with OPM real estate deals are below.
- Owner Financing – Owner financing is when the property owner or seller finances the deal. This means the buyer makes payments to the seller according to the terms of the promissory note. This allows the buyer to purchase the property without going through traditional financing. Both the seller and the buyer benefit by avoiding bank fees to close the transaction.
- Land Contract – Land contract deals may also use seller financing to allow a buyer to purchase a specific tract of land. The seller holds the title until the conditions of the buyer’s contract are fulfilled.
- Subject To – With subject to deals the seller’s existing mortgage remains in place and the buyer pays the mortgage as agreed to in the contract. The title is transferred to the buyer.
- Joint Ventures – With joint ventures, the investor locates equity partners to invest in the deal. Often, these deals work with one partner investing the money while the other partner handles the leg work and details for the deal, like locating a buyer and seller.
- Private Money – Private money is usually what people think of when OPM real estate deals are mentioned. These are funds from individuals or investors located through a variety of sources for many different types of deals, including real estate syndication, self-directed IRA’s, insurance funds and more.
- Bartering – Just like it sounds, bartering works to find money for real estate deals through trade. Bartering may include traded services, products or properties.
- Lease Option to Buy – With lease option to buy deals the buyer takes possession of the property as a renter or tenant. The timeframe to exercise the option to buy and the purchase price are defined in the contract.
- Wholesaling – Wholesale real estate deals are a great way to make money quickly without taking possession of the property. The buyer enters a contract with the seller, then looks for a buyer to take over the contract. The buyer receives a predetermined commission for locating the buyer.
Ways to Make OPM Real Estate Deals Attractive
- Provide a Real Estate Portfolio – As you enter investment opportunities, seek to create a variety of types of real estate investments to demonstrate your understanding of the industry and your successes.
- Build Your Knowledge – Today, many resources are available to help you learn about effective real estate investing. Seek out blog articles, eBooks, webinars, videos, seminars, podcast, networking events and more educational opportunities to build your industry knowledge.
- Invest in Relationships – It is much easier to ask another person to invest with you if they’ve done so successfully in the past. As you look for other people’s money, consider the long-term benefits, including a lasting and trusted relationship.
- Define the Details of the Deal – Always define the details for each party involved in the deal. Include the amount or percentage each person is entitled to at the end of the deal. This helps to keep everyone on the same page. Work with a real estate attorney to develop solid contracts.
- Be Respectful and Maintain Your Reputation – Your reputation matters! If you are truly building a real estate investing business, then you must think bigger than the deal in front of you. A quality reputation for respect, honesty, organization and results will make it easier to secure other people’s money in the future.
Develop A Solid Strategy for OPM Real Estate Deals
After you’ve successfully navigated a few OPM real estate deals, create your own Private Bank or Real Estate Syndication to use as a tool for future investments. The key to capitalizing on great investment opportunities is to be able to move quickly to find the money needed to close the deal. The Private Bank concept appeals to investors in both hands-on and hands-off real estate investment opportunities.
As we mentioned, when you demonstrate success with real estate investing, people may start coming to you to look for investment opportunities. The way to make this happen is to find great deals that are attractive and drive profits. If you implement a variety of investment types with an attractive business that is ran effectively and creates relationships, your growth and ability to make money can be limitless. Start today to build your knowledge of OPM real estate deals and get investing.