Reasons to Use Other People's Money (OPM)

Reason #1. Save Your Own Capital
The main reason is that using your own money ties up current capital and prevents you from running and expanding your business. Other people's money can allow you to keep your business liquid, while allowing you to grow your business. OPM may come in the form of Hard Money Loans, Private Money Loans, or Traditional Bank Loans. 

Reason #2. Leverage
As an investor, you absolutely need to understand the principle of leverage. Using OPM, allows you to use financial leverage to your advantage. OPM allows you to use only a small percentage of your own funds, to do larger, costlier deals.  

• In the case of an investor that is a rehabber, once the project is finished and resold, will be able to pay back the loan from the proceeds of the sale while also still making a profit for themselves.
• In the case of an investor that buys and holds property long term, the rent from the tenants will pay down the loan while also putting monthly cash flow in their bank account.

Reason #3. Professional
Another way investors often fund their deals is through private lenders and investors that they know. Private lenders have money to invest, but may or may not be active investors. Private lenders are everywhere if you know how to network and ask the right questions. Who know you may even have family members that would gladly loan you money for a state return, backed by real estate. Hard money lenders are professionals who put their money to work and expect a return. They require paperwork and due diligence but they won’t be like those friend-and-family investors who fret night and day about their money.

Reason #4. Speed
Some investors just try to do it alone using their own capital. When a repair comes up, they save up their money and when they have money they make the repair. This can take a long time. It doesn’t make sense to delay generating a return on your deal; instead, borrow the money, make your repairs and generate a return on your deal sooner.

Please let us know if you are in need of additional funding for your projects. We have a network of lenders that may your needs.