The Truth Behind OPM Real Estate Deals (Other People’s Money)
When I started investing in real estate back in the 1980’s, I heard many times over that the key to success was OPM real estate deals. Sure, using the strategy of Other People’s Money can be a big deal for an investor – especially in a field where everyone relies on mortgages, seller financing or equity partners. That said, there are some things you should know before going down that path.
What’s YOUR Plan for doing OPM Real Estate Deals?
As a real estate investor, you should ask yourself:
- Do I have the discipline to save and live below my means, in order to safely increase my real estate investing efforts?
- Will I be able to rely solely on creative financing techniques, without using conventional financing?
- Do I need to limit my own exposure and risk on real estate deals?
Examples of Financing using OPM Real Estate Deals
Owner Financing – First or Second Mortgage (Title passes to Buyer)
Land Contract – Seller holds title until conditions of the contract are fulfilled
Subject To – Existing mortgage stays in place, but title is transferred to the new buyer
Equity Partners – Joint Ventures (JVs)
Private Money – Including: real estate syndication, self-directed IRAs, insurance funds, local investors
Bartering – Such as services, products, properties
Real Estate Commission – Borrow or reduce transaction commission
Create Paper – One party carries note to facilitate the closing of a transaction
Lease or Option Contracts – Lease Option to Buy, Master Lease and regular Option Agreements
My TIPS for Implementing OPM Real Estate Deals
- If you plan on using OPM to raise funds for your real estate investment strategy, I recommend (after a few successful experiences that give you a good track record) that you look into creating your own “Private Bank” or “Real Estate Syndication.”
- The Private Bank concept is appealing to both hands-on real estate investors (looking to purchase real estate for rehabbing, flipping or buy and hold) and the investor who prefers hands-off transactions (who prefers being a silent investor just collecting a return on their money.
- Really, the only limitation to the amount of money you want or need to make is your expertise in finding properties (since the funding will be readily available).
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To your best success!