How did you agree on equity when using OPM? Esp friends & family

Question

I wouldn't classify myself as a successful real estate investor yet. I just bought my first property and am in the process of renting it out and learning. (yay!) But that's not what this post is about.

I already want to scale my real estate portfolio, however I used all my funds in my first property. I also need to learn before I move onto more properties. So as I'm learning with my first property, wanted to see what suggestions or experiences that the BP community has when using OPM.

I keep hearing Brandon and David on the podcasts that (verbatim) "if you bring the deal and do the leg work, then it's okay that they bring 100% of the financing."

Since I'm brand new to this, how did you convince your friends and/or family members to finance 100% of the deal in exchange for half of the equity and cashflow (for those buy and holders)? Did you start with financing half, build a track record, then eventually get to that point? Or did you do something different?

Since I live in a HCOL, I was going hoping to use OPM and invest long distance in more cashflow friendly markets.

Jessie Kristie · Answer

@Dan Portka @Jordan Williamson @Casey C. My friends and family would tell you that REI is all I’ve been talking about for the past 4-5 months. Before I found my first rental, I had a deal fall through because of builder and lender requirements, and when I told people about it, many offered me money. I agree that money is easier to find than a good deal esp. in today’s market.

Max T. · Answer

@Casey C.

Offer them 80% for funding everything. If 50 isn’t enough

Dan Portka · Answer

@Casey C. From what I’ve seen after just doing a few out of state deals myself, finding people to lend you money isn’t the problem. The problem is finding the deals. I’ve had friends and complete strangers offer me money on numerous occasions. If you want to scale fast, make sure you have a solid deal flow - whether that be direct marketing, leveraging relations with wholesalers, etc

Jordan Williamson · Answer

If you're talking friends and family, it will be best to just share your love for real estate. Talk to them about it all the time. Don't stop. Show your passion, but also show your competence (humbly). Then talk about what your looking to do with investors, scale etc. THEN find a really good deal (its important to find a real deal) and then you've laid the framework to bring it to them.

Excitedly go to them and be like "Oh my gosh look at this awesome deal! I can get it for $70k and its worth $125k!! I'm out of investment dollars though. Want to do it together? I'll do all the work, you help me purchase it and we share the profits 50/50 etc etc"

If that feels uncomfortable another popular approach is to say something like "Hey I found this amazing deal, do you know anyone that has $XXk dollars and would want to invest together?" That gives them an out if they feel uncomfortable.

Good luck!

How did you agree on equity when using OPM? Esp friends & family

How did you agree on equity when using OPM? Esp friends & family

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