OPM

"The great enemy of the truth is very often not the lie - deliberate, contrived and dishonest - but the myth - persistent, persuasive and unrealistic."


John F. Kennedy

Myth: OPM (Other Peoples' Money) is Best Avoided for Foreclosure Investing

Fact: Using OPM is the preferred method of investing in real estate and locating a solid source of investment funds is easy once you understand how to properly negotiate the terms.

Why Use OPM?

The use of OPM not only provides the greatest return on investment but provides the foundation that allows the purchase of meaningful deals. Let's take a quick look at how this would work in real life.

Investor A decides to go it alone and sets aside enough money to purchase a $100,000 property for cash. Investor A feels great about this decisions since there is less headache and hassle associated with a cash transaction, s/he saves on closing costs and is able to keep 100% of the profits without the need to make expensive interest payments each month. Investor A sells the property for $135,000 for a tidy profit of $35,000 on the original $100k invested (for the sake of simplicity we are keeping this basic) or roughly 35%.

Compared to the return most investors are getting on their money in today's tough economy, Investor A looks like a genius!

Investor B also decides to purchase a $100,000 property while using a bank loan. S/he puts $20,000 down and takes out a mortgage for the remaining $80,000. This property is also sold for $135,000 but due to slightly higher transaction costs and loan servicing, there were an additional $5,000 in costs. The total profit is $30,000...less than that realized by Investor A in nominal terms but higher in relation to the total amount out of pocket.

Because Investor B only put $20,000 down, the total rate of return was 150% on the initial investment. In fact, using the same $100,000 out of pocket, Investor B could afford to purchase five properties for the same amount out of pocket and a total return of $150,000 versus only 35%. Compared to Investor A, Investor B now looks like a genius!

Investor C also decides to purchase a $100,000 property by maximizing the use of OPM. S/he only puts down $2,000 out of pocket and uses OPM to cover the other $98,000. The property also sells for $135,000 with $5,000 in expenses. Total profit is $33,000 on an original investment of only $2,000....obviously Investor C is the real genius! By using OPM, Investor C would be able to purchase up to 50 properties for the same $100,000 with a total return of over $1.5 million dollars. Pure Genius!
http://www.assetunlimitedfinancial.com/
See you at the top!
Martin Crawford