What is OPM?
Most people don’t have the personal capital to buy and renovate houses to put on the retail market for profit. Yet so many self-made millionaires make their money with real estate. So how do you bridge the gap between not having enough money for your first project and having an abundance of capital to fund larger deals, more deals, and other people’s deals (making passive income on the interest)?
How do you go from no-capital to plenty of it?
OPM (or “other people’s money”) is a great tool. Nix that, for many of you, it isn’t a tool at all; it’s a necessity to get started and/or keep going in your business.
When I was just starting out, I knew I needed OPM to do the things I visualized. I was working at a grocery store as a bag boy. I didn’t have the capital to start a project and to be honest, I didn’t have much of an idea how to get it. But I knew what I needed to get started.
I learned the hard way.
Let me help you avoid the hard way.
Don’t let the preconceived notion that no one wants to lend to you cloud your vision and your dampen your goals. People want to lend money to you, but you need to find the right people and come to them with the right deal.
Why Other People Like Lending their Money?
This one is simple. Not everyone has the time to find good deals. If you invest the time to find the good deals that others can invest in, they will flock to you. FLOCK. Remember what I always say? Money isn’t attracted to you; money is attracted to a good deal. Get a good deal under contract and finding the money to fund it is the easy part.
When You Can Safely and Efficiently Use Other People’s Money
Just like any debt, a loan from anyone should be used to produce income with. We’re obviously not talking about taking out a loan to fund your vacation; that’s . No matter who you borrow from, make sure you’re both clear on the terms, the numbers, the expected communication, and the time frame of the loan. Err on the side of over-responsible, especially if you want to borrow money again in the future.
The Worst Ways to Find OPM
When you need something, your knee-jerk reaction could be to call up those closest to you. It’s what I did, but I don’t advise you to follow in the footsteps of my frustration. Why? Because even if your family and friends have money to lend you–because you wouldn’t ask them if they didn’t–they aren’t likely to see the investment opportunity, they see you. YOU.
My friends and family saw me as a punk kid with a wild dream. They told me to stay in school and keep my job at the grocery store so I could one day be an assistant manager if I tried hard enough. And, looking back, I don’t blame them. But, once I proved myself as a viable investment by putting deals together that created consistent income, their wallets wiggled open. For me, this took years of turmoil. I got on the phone and raised capital through hours of networking, I trail-and-errored my way up until I found mentors to teach me what not to do.
Now, I send a single email, and I’m flooded with positive responses. I’ve done deals with my friends and family during my career, and I’ve been able to show them the higher return on their money real estate can bring. I spent time proving that I have a business model that makes sound financial sense, and you should, too.
Get a few deals under your belt, show your family before and after photos and copies of your profit checks.
But how do you find money in the meantime?
The Best Ways to Find OPM
– Networking with Strangers. This method is great because it forces you out into the world of your “competitors.” Most people are afraid to rub elbows with their competitors, but I’ve never understood that. You shouldn’t view other people in this business as opponents; you should consider them as potential capital partners. You should be building relationships with fellow investors through your networking events if you’re following my Rule of 56. I don’t ask you to meet new people just to expand your circle of friends. We’re networking for potential partnerships, among other things, so take advantage. Real estate investment seminars are a great place to network with strangers, as are foreclosure auctions.
If you haven’t attended one of our events, I encourage you to make it a priority in 2018. We put great people together in our event rooms, so you have the opportunity to network together. When you find a great deal, you can call up one of these peers.
– LinkedIn can be a great way to network and find equity partners and private investors. I never advice spending too much time on social media–as it can be one of the worst time-sucking holes we fall into–but when you know how to use LinkedIn, Facebook, and other social media platforms to meet fellow investors, you have the potential of building valuable, wealth-building partnerships.
– Private Money Lenders like Cogo Capital. One of the reasons we see new investors visiting our website daily is that we have something valuable to offer: a safe and secure investment. Our investors deploy money for short periods of time and get a check every month from the borrower. Everything is underwritten, in order, and the title work is done for them. With a turnkey package ready to go, our lenders love this! And in turn, our borrowers find the capital they need to do the work that will make them wealthy. Remember that when you’re out there finding great deals, you are bringing significant value to anyone who has more money than time. (Sounds a lot better than getting on the phone with all your friends to round up some money, doesn’t it?)
What We Do with OPM
There are two things you can bring to a partnership: Money or Time. If you have both, you don’t need a partner. If you don’t have the money, guess what your end of the bargain is? Time. You need to put in the time to research, pull lists, write letters, make calls, meet with sellers, write contracts, and put the deal together.
Once you have a deal all wrapped in a bow (the bow is entirely optional), you have something tangible to offer a lender. When you bring a deal to the table, a lender looks at the DEAL that you have under contract and not at YOU (with whatever past you have tucked in your back pocket). In fact, private money lenders like Cogo Capital don’t pre-qualify you based on YOU. We are an asset-based lender who has lent millions and has more money to deploy than you’ll ever need, and we deploy that money based on the opportunity you bring us.
When you take yourself out of the equation and get really good at getting great deals under contract, finding OPM isn’t going to be a problem. Prove yourself first if you eventually want to use money from your friends and family. Or, better yet, get to a place where you don’t ever need money from your friends and family and lend to them instead.
If you believe you have a great deal, visit us at https://cogocapital.com to fill out a brief questionnaire. You’ll receive a quote via email, or call us at (800) 747-1104. We’re here to lend you OPM. It’s what we excel at.
Yours In Success;
Lee A. Arnold
The Lee Arnold System of Real Estate Investing
For our latest success stories, click HERE to read how others are finding, funding, and making money on their deals.