Using OPM to invest in real estate
Investor · Joliet IL · Member since 2024 · 36 posts · 16 votes
Using OPM to invest in real estate
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Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
1yQuote from @Priscilla C.:
Hello fellow investors I would love it if you can please share any ideas on how to use OPM for a beginning investor when using the Brrrr strategy? I know about hard money lenders and a little on DSCR loans but how would I make these loans work to start my real estate business.In addition wondering if you all have any ideas on using a LLC to leverage OPM?
For most getting started, the best way to get into the game is with atleast enough of your own money to put a down payment. That is usually the blocker that keeps people out.
If you ahve a down payment, you can get a bridge loan to rehab the property and assuming that goes well you can then get a DSCR loan for long term hold.
I would not try and raise money from people (alot of legal implications), but if you know people with money who want to invest, you may be able to get preferred terms
Also sometimes best to partner with someone with experience as well.
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14 Replies
- Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes1y
Quote from @Priscilla C.:
Hello fellow investors I would love it if you can please share any ideas on how to use OPM for a beginning investor when using the Brrrr strategy? I know about hard money lenders and a little on DSCR loans but how would I make these loans work to start my real estate business.In addition wondering if you all have any ideas on using a LLC to leverage OPM?
For most getting started, the best way to get into the game is with atleast enough of your own money to put a down payment. That is usually the blocker that keeps people out.
If you ahve a down payment, you can get a bridge loan to rehab the property and assuming that goes well you can then get a DSCR loan for long term hold.
I would not try and raise money from people (alot of legal implications), but if you know people with money who want to invest, you may be able to get preferred terms
Also sometimes best to partner with someone with experience as well.
7e investments53 Reviews- Investor · Joliet IL · Member since 2024 · 36 posts · 16 votes1y
Quote from @Chris Seveney:
Quote from @Priscilla C.:
Hello fellow investors I would love it if you can please share any ideas on how to use OPM for a beginning investor when using the Brrrr strategy? I know about hard money lenders and a little on DSCR loans but how would I make these loans work to start my real estate business.In addition wondering if you all have any ideas on using a LLC to leverage OPM?
For most getting started, the best way to get into the game is with atleast enough of your own money to put a down payment. That is usually the blocker that keeps people out.
If you ahve a down payment, you can get a bridge loan to rehab the property and assuming that goes well you can then get a DSCR loan for long term hold.
I would not try and raise money from people (alot of legal implications), but if you know people with money who want to invest, you may be able to get preferred terms
Also sometimes best to partner with someone with experience as well.
I see yes I agree on that.As homeowners we understand how much sheer determination it takes to save for a down payment.Would you recommend using OPM like a hard money lender to buy the property or would you recommend buying a property in cash?Yeah we definitely do not want to raise funds as it can be many issues in bringing family and friends into our business we believe.I have just finished the Brrrr strategy book by David Greene and he talks about using cash to buy a property.We originally were leaning on doing this as we felt it would be wiser to buy a property in cash however after research I see that using OPM might be a better solution as it would allow us to scale our real estate business faster and also allow us to keep cash reserves for any emergencies that can arise from tenants not paying rent,property damage etc.
- Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes1y
Quote from @Priscilla C.:
Quote from @Chris Seveney:
Quote from @Priscilla C.:
Hello fellow investors I would love it if you can please share any ideas on how to use OPM for a beginning investor when using the Brrrr strategy? I know about hard money lenders and a little on DSCR loans but how would I make these loans work to start my real estate business.In addition wondering if you all have any ideas on using a LLC to leverage OPM?
For most getting started, the best way to get into the game is with atleast enough of your own money to put a down payment. That is usually the blocker that keeps people out.
If you ahve a down payment, you can get a bridge loan to rehab the property and assuming that goes well you can then get a DSCR loan for long term hold.
I would not try and raise money from people (alot of legal implications), but if you know people with money who want to invest, you may be able to get preferred terms
Also sometimes best to partner with someone with experience as well.
I see yes I agree on that.As homeowners we understand how much sheer determination it takes to save for a down payment.Would you recommend using OPM like a hard money lender to buy the property or would you recommend buying a property in cash?Yeah we definitely do not want to raise funds as it can be many issues in bringing family and friends into our business we believe.I have just finished the Brrrr strategy book by David Greene and he talks about using cash to buy a property.We originally were leaning on doing this as we felt it would be wiser to buy a property in cash however after research I see that using OPM might be a better solution as it would allow us to scale our real estate business faster and also allow us to keep cash reserves for any emergencies that can arise from tenants not paying rent,property damage etc.
I agree with Andrew, if you have cash do your first project with your own money to prove proof of concept, many lenders will want to see you have experience and can manage and handle the project. Some will not finance to first time investors and those that do you will pay more in interest, so if you have cash use it for starting out since you should not scale and buy more than one property until you can prove to be successful.
7e investments53 Reviews - Investor · Joliet IL · Member since 2024 · 36 posts · 16 votes1yOk so your saying if we are able to pay cash for the property and rehab with our cash it is better then buying a property in cash and getting a bridge loan?
Quote from @Chris Seveney:
Quote from @Priscilla C.:
Quote from @Chris Seveney:
Quote from @Priscilla C.:
Hello fellow investors I would love it if you can please share any ideas on how to use OPM for a beginning investor when using the Brrrr strategy? I know about hard money lenders and a little on DSCR loans but how would I make these loans work to start my real estate business.In addition wondering if you all have any ideas on using a LLC to leverage OPM?
For most getting started, the best way to get into the game is with atleast enough of your own money to put a down payment. That is usually the blocker that keeps people out.
If you ahve a down payment, you can get a bridge loan to rehab the property and assuming that goes well you can then get a DSCR loan for long term hold.
I would not try and raise money from people (alot of legal implications), but if you know people with money who want to invest, you may be able to get preferred terms
Also sometimes best to partner with someone with experience as well.
I see yes I agree on that.As homeowners we understand how much sheer determination it takes to save for a down payment.Would you recommend using OPM like a hard money lender to buy the property or would you recommend buying a property in cash?Yeah we definitely do not want to raise funds as it can be many issues in bringing family and friends into our business we believe.I have just finished the Brrrr strategy book by David Greene and he talks about using cash to buy a property.We originally were leaning on doing this as we felt it would be wiser to buy a property in cash however after research I see that using OPM might be a better solution as it would allow us to scale our real estate business faster and also allow us to keep cash reserves for any emergencies that can arise from tenants not paying rent,property damage etc.
I agree with Andrew, if you have cash do your first project with your own money to prove proof of concept, many lenders will want to see you have experience and can manage and handle the project. Some will not finance to first time investors and those that do you will pay more in interest, so if you have cash use it for starting out since you should not scale and buy more than one property until you can prove to be successful.
- Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes1y
Quote from @Priscilla C.:
Ok so your saying if we are able to pay cash for the property and rehab with our cash it is better then buying a property in cash and getting a bridge loan?Quote from @Chris Seveney:
Quote from @Priscilla C.:
Quote from @Chris Seveney:
Quote from @Priscilla C.:
Hello fellow investors I would love it if you can please share any ideas on how to use OPM for a beginning investor when using the Brrrr strategy? I know about hard money lenders and a little on DSCR loans but how would I make these loans work to start my real estate business.In addition wondering if you all have any ideas on using a LLC to leverage OPM?
For most getting started, the best way to get into the game is with atleast enough of your own money to put a down payment. That is usually the blocker that keeps people out.
If you ahve a down payment, you can get a bridge loan to rehab the property and assuming that goes well you can then get a DSCR loan for long term hold.
I would not try and raise money from people (alot of legal implications), but if you know people with money who want to invest, you may be able to get preferred terms
Also sometimes best to partner with someone with experience as well.
I see yes I agree on that.As homeowners we understand how much sheer determination it takes to save for a down payment.Would you recommend using OPM like a hard money lender to buy the property or would you recommend buying a property in cash?Yeah we definitely do not want to raise funds as it can be many issues in bringing family and friends into our business we believe.I have just finished the Brrrr strategy book by David Greene and he talks about using cash to buy a property.We originally were leaning on doing this as we felt it would be wiser to buy a property in cash however after research I see that using OPM might be a better solution as it would allow us to scale our real estate business faster and also allow us to keep cash reserves for any emergencies that can arise from tenants not paying rent,property damage etc.
I agree with Andrew, if you have cash do your first project with your own money to prove proof of concept, many lenders will want to see you have experience and can manage and handle the project. Some will not finance to first time investors and those that do you will pay more in interest, so if you have cash use it for starting out since you should not scale and buy more than one property until you can prove to be successful.
For your first project yes - but if you can get a bridge loan thats not bad, its just harder with no experience and you will pay more.
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- Residential Real Estate Investor · Kansas City, MO · Member since 2014 · 10k+ posts · 5k+ votes1y
It's generally fairly hard to convince someone to lend you a private loan if you have no experience investing. The only exception are parents, relatives and close friends (i.e. angel investors).
Best bet is to build some experience by house hacking (FHA loans allow for buying up to a fourplex, as long as you live there, with only 3.5% down). Then when you can show some success and a portfolio of experience, it's much easier to convince people to loan to you.
- Investor · Joliet IL · Member since 2024 · 36 posts · 16 votes1y
Quote from @Andrew Syrios:
It's generally fairly hard to convince someone to lend you a private loan if you have no experience investing. The only exception are parents, relatives and close friends (i.e. angel investors).
Best bet is to build some experience by house hacking (FHA loans allow for buying up to a fourplex, as long as you live there, with only 3.5% down). Then when you can show some success and a portfolio of experience, it's much easier to convince people to loan to you.
That's not a bad idea however we already have an FHA Loan for our primary home so that wouldn't be ideal and we are not looking to buy a property using a traditional loan as our goal is to use the Brrrr strategy for our first property.I believe If there is a strong strategy in place with a detailed bid of the rehab I believe that there is a possibility that we might find a hard money lender or possibly a DSCR loan opportunity.
- Specialist · NJ · Member since 2022 · 1k+ posts · 662 votes1y
How to use OPM....
Put yourself in their shoes. You have one million dollars and some investor, who is admittedly a beginner would like a loan. Would you?
OPM, at the beginning stage will most often be Private Money and I do not mean some PML that is lending no different than a HML, but true Private Money that you find in your Private Life.
Who would lend money to a beginner in any craft, you wouldn't and neither would I. There are some HML who will, but as far as someone individual handing you 100k and telling you to get in and out of deals using financing and the 100k to gap fund the closings, that would only happen if...
You have a track record of winning....
You know the market inside and out...
You have the ability to perform rehabs, you have the connections...
You understand what opportunity looks like in RE
You have other investors dying to work with you....
Then maybe you can use OPM, but other than the rich friend/Uncle/Sibling/Parent, you'll need 50k+ just to fart around in the small markets.
- Rental Property Investor · Philadelphia, PA · Member since 2021 · 782 posts · 505 votes1y
Priscilla - I think for your first deal you'll need to put in a chunk of cash yourself and perhaps combine with another private investor/lender. For example, if you buy with cash maybe you find 2-3 people to give you money for the renovations. Then, after you drive up the value you can refinance the property and get a 75% cash out refinance. With that cash from the refinance you pay your lenders back and retain what is left. I think if you do that once or twice you'll be in a better position to then secure a hard money loan from another lender and appropriate leverage OPM in a larger way. Good Luck!
- Investor · Joliet IL · Member since 2024 · 36 posts · 16 votes1y
Quote from @Greg Kasmer:
Priscilla - I think for your first deal you'll need to put in a chunk of cash yourself and perhaps combine with another private investor/lender. For example, if you buy with cash maybe you find 2-3 people to give you money for the renovations. Then, after you drive up the value you can refinance the property and get a 75% cash out refinance. With that cash from the refinance you pay your lenders back and retain what is left. I think if you do that once or twice you'll be in a better position to then secure a hard money loan from another lender and appropriate leverage OPM in a larger way. Good Luck!
Great advice.I believe there is also an opportunity for creative financing with a high credit score.Do investors pursue alternative financing for the Brrrr method?
- Investor · Joliet IL · Member since 2024 · 36 posts · 16 votes1y
Thank you everyone for your advice.I will keep this in mind.Appreciate it and so glad to be apart of this community of knowledgeable investors!
- 1yWale LawalBusiness MemberReal Estate Broker · Houston | Dallas | Austin, TX · Member since 2018 · 5k+ posts · 2k+ votes
Leveraging Other People's Money (OPM) as a beginner using the BRRRR strategy is a great way to scale without tying up your own capital. Hard money loans can fund the purchase and rehab, and once the property is stabilized, you can refinance with a DSCR loan (based on rental income, not personal income). To maximize leverage, consider structuring your LLC properly to build business credit and attract private lenders or partnerships for future deals.
Good luck!
NETWORTH BUILDERS5236 Reviews - Member since 2025 · 35 posts · 14 votes1y
Hi Priscilla,
Depending on the investor, hard money can be a benefit even on your first investment deal. Companies like ours spend time before the deal happens to make sure you understand your numbers and have the right strategy. For example, we can help you make sure your bridge loan is set up to properly refinance into a DSCR without having to bring more cash to the table at closing. It all depends on your priorities, but it may be worth paying a moderately higher cost for the money if it comes with experienced support. Best of luck to you!
- Investor · Member since 2025 · 21 posts · 21 votes1y
@Priscilla C. While not OPM, consider any retirement funds you have as a funding source. You could roll it over to a self-directed IRA and use that to fund your investment. You could also partner with other people's retirement accounts - so I suppose that's OPM!
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