Starting off using OPM

[caden04]

I have read several posting stongly encouraging the usage of OPM and when you are a newbie try to always do so. Now I know that OPM stands for other peoples money, But what does this technique mean? The second and even more important question, What are the correct steps to follow to acquire OPM. Yes I know these are probably rookie questions, but the only way to go from rookie to vet is to ask the right question. :SM030:

[brianb_cobbres]

I went through the trouble of incorporating and applying for unsecured business credit cards. Ended up with 30k in credit cards that we will use for random expenses, initial rehab expenses and interest payments. We have enough cards that we can juggle payments from one to another to avoid interest payments.

For the actual purchase and rehab, we will be using a rehab package (semi-hard money) that is only 7% and 2 points. Total out of pocket for a project will be zero. Now I just need to find a deal.

There are lots of ways to play with OPM, I just chose a more traditional path. I am sure others will give you more creative solutions.

Brian

[Jim FL]

Caden04?,
Other people's money......sounds good right?
To most, when beginning, they think this means, you find a house, someone loans you the money to buy, and you pay them back upon exit.
That is one way to do it, and certainly a good way.

Other simple ways to use OPM, would be bank financing, this is the banks money, not yours..OPM.
Buying with an agreement for deed, or installment sale type arrangement where the sellers agree to take their payment for the home, from you, over time, with a fee for the use of their equity of course.....interest........opm all the way.

Buying a house subject to the existing financing, meaning, taking ownership of a property with a loan secured by it, signed for by the sellers........and leaving it in place.......OPM there as well.

Lease option, sign an agreement with a seller to lease their home, at predetermined terms, with the option to purchase the same home, at predetermined terms, for a set length of time.......giving you the right to purchase that property at those terms, but not the obligation.....leaving the sellers financing if it exists, or equity if not, in place...........using OPM.

You find a house someone will sell for 50% of value, and they owe 20% in a mortgage, you take that over, and are left to pay the sellers the other 30% in cash.......another private party agrees to lend you that money to purchase the house, and charges you a fee (interest etc) for the use of the money, until the home is sold, or a predetermined length of time.......OPM.

You find a house you can buy for 50-60% of value, sign a contract to do just that with the sellers........then find another buyer willing to pay 80% of value, cash, and double close, assign the original agreement, or single close paid to release your original contract as your profit......using OPM.

Plenty of ways to do that, and frankly other than dumping your savings of hard earned cash to buy a property, most ways to buy, creative or conventional involve using Other People's Money, one way or another.

Stick around, read all you can here, and ask questions.
We can help you as you move along, and when a certain technique or method for buying property piques your interest more than others, ask away, on that, and perhaps look into a course or book that covers the method in detail to fine tune it.......then apply.

good luck, and HTH,
Jim FL

[Jim Johnson]

Here is a fun way to acquire rental property using OPM. Place a property under contract at a number below 75% LTV. The LTV here is important so follow it.

Home is worth $100,000
LTV $100,000
Your contract $75,000

Day 1- Close with hard money for $75,000
Day 2- Refi for $75,000 + hard money closing costs

No money down, no closing costs. It is easy to refi a non-owner property at 80% or less LTV. The catch, you must have a appraisal for the $100,000. Though this is not my preferred method of acquiring rentals I know another investor that has bought over 40 homes in the last 12 months using this method. The last time I spoke with him he paid closing costs on only one of the houses.

I have read several posting stongly encouraging the usage of OPM and when you are a newbie try to always do so. Now I know that OPM stands for other peoples money, But what does this technique mean? The second and even more important question, What are the correct steps to follow to acquire OPM. Yes I know these are probably rookie questions, but the only way to go from rookie to vet is to ask the right question. :SM030:

[Just Information]

caden04

You just got some of the best advise you can get using "OPM" from Jim FL & Jim Johnson

Not much, I can add! "Just Joken" I can always come up with my two cents.

I will say you can develop your own sources of money but you will need to establish credibility & trustworthiness and above all you will need to express knowledge so that your backer knows you will be making wise decisions with their money.

I deal with "OPM" all the time, but I have also got to the point to know when not to do business with an investor.

Give you an example of a case that I decided not to follow through with an investor.

Investors expressed the "BTO" attitude, done deals, knows the business and the list goes on. During a 2-day conversation, this same investor lost 3 transactions due to procrastination so we get to the 4th deal.

Investor ROI would have been well over 100% in 6 months or less but for me the deal buster was the simple fact that the investors could not understand why I wanted to know the expenses on his end on this investment such as money wire fees, postage and so on.

This let me know that he did not have the experience as expressed and new little about checks and balances along with his procrastination told me this one is going to be a real pain in the but and take up a lot of time in coddling so I had to cut him.

In just two days this guy lost over $50,000 in profit because of his inability to make a decision even after having all that facts and this in the game of real estate investing is a death sentence.

I have some simple rules when dealing with money investors.


Interview them to make sure they seem ready
Get a few deals to them
If they delay cut them and go to the next one
You only want to deal with players in this game - A player understands risks and A player understands profit.

Treat this like a big time football game - deal only with the players in the filed and not the stands - You will only find a few in the field but 1,000's in the stands.

I just do not have time to deal with speculation and spectators in the game of real estate investing for the simple fact while others are on the side lines of the game of real estate investing I'm in the game playing, taking the risks, taking the hit's and running the plays all equals profit.

[XSInvestor]

Originally Posted by BrianB_Cereniti
I went through the trouble of incorporating and applying for unsecured business credit cards. Ended up with 30k in credit cards that we will use for random expenses, initial rehab expenses and interest payments. We have enough cards that we can juggle payments from one to another to avoid interest payments

BrianB,

I am in the process of applying for unsecured business credit cards and credit line. I'm finding that most of them are not unsecured.

Do you mind sharing the names of the companies that you applied for the credit cards??

Thanks,
RAZ

[brianb_cobbres]

Citibank, Chase, Wells Fargo, and US Bank all approved unsecured credit cards. They still use the corporate officers credit rating as part of the approval but the cards are in the corporate name meaning it will improved the corps credit rating as well.

[XSInvestor]

Hey, thanks for the quick reply.

I have received cards from Wells Fargo and Capital One. They also used the my credit rating under the LLC name. What concerns me is if I use them, will theCC companies report under both my credit and the LLC's or just on the LLC?

I have a very good credit score and would not want to blemish it with too much debt.

RAZ