Advice on Using Other People's Money (OPM)

[Eric DeNardo]

Hey All, 

I wanted to get some advice on how to use other people's money to purchase a long-term rental property. What are reasonable terms  to attract others to invest in you with a property. I'm open to any experiences and advice. Thanks!

[Chris Seveney]

Quote from @Eric DeNardo:

Hey All, 

I wanted to get some advice on how to use other people's money to purchase a long-term rental property. What are reasonable terms  to attract others to invest in you with a property. I'm open to any experiences and advice. Thanks!

 Before you even get to terms, the investor needs to understand the risk they are getting into. First question I would ask is what is your experience? This is very important so they understand the risk. For example would you fly on a plane with a first time pilot for $100 flight or with someone who has been doing it for 30 years for $300.... I would not take that risk, some would some would not.

Real estate is similar in regards to your terms should be based on the risk profile.

As another comment mentioned, are you getting a mortgage and this a second position lien? How much money are you putting in the deal?

If you are trying to get others to pay your down payment and you have nothing in the deal, there are probably no terms that anyone would agree to unless they were getting credit card type returns.