Starting Out - Using other peoples money?

Question

What are some good strategies to get other people to fund a deal.

Laura C. · Answer

@Michael Evans

When using this strategy to invest with OPM what kind of documentation or agreement should I use? Does this have to go through a lawyer? I have a friend who is interested in investing with me by lending a flat amount and with me providing a return as you suggested in your second example.

Account Closed · Answer

When you are first starting out the most common way to use OPM is a bank loan unfortunately .  I would recommend FHA loan or any low downpayment first time home buyer program to get started .  Once you can get a little track record raising cash will be much easier .  I am not saying you can't attract investors now it's just easier with a track record .

Nick C. · Answer

The best strategy is to have a proven track record of success. The number one priority investors have is to not lose money. You've got to be able to prove beyond a shadow of a doubt that they will not lose first. Making a return comes in a distant second.

You may have to get your feet wet using hard money and putting a substantial amount down. Or start out with family members willing to take a chance.

You may have to get your feet wet using hard money and putting a substantial amount down. Or start out with family members willing to take a chance.

Michael Vieira · Answer

@Michael Evans @Andrew Johnson Account Closed Thanks guys. Really appreciate the input to help me gain some insight.

Jonathan Godes · Answer

You might be able to get 5-6% from someone... if you are closely related. Those rates do not exist for someone to provide a majority of the funding. You will be looking at least 12% and 2 points from a HM lender who will require a minimum of 30% down. Much more likely is a 50/50 JV partner split.

Michael Evans · Answer

Partner with someone has cash that is sitting in a savings account earning 1% per year.  Partner with them either as a Joint Venture and split the profit on the backend, or have them lend you the money at around 5% or 6%.  It's a win-win situation.

Sam Alomari · Answer

I have the same question. How can we structure a deal that makes partner/investor happy to fund a deal?

Starting Out - Using other peoples money?

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