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5 Simple Ways to Use OPM in Real Estate

Jerry Norton

Aug 8, 2024

white-and-red houses

You’ve wanted to invest in real estate, but you don’t have hundreds of thousands of dollars laying around to buy your first property. 

So how can you get started?

The truth is you don’t need hundreds of thousands of dollars to invest in real estate. 

In fact, you can get started with as little as $0 of your own money. 

It’s true!

How is this possible?

We’re talking about using other people’s money, or OPM.

By using other people’s money, you can kickstart your real estate investing career without using a penny of your own cash. 

Sounds too good to be true?

In this article, we’ll break down 5 ways to do just that. 

What Is OPM in Real Estate?

OPM — or other people’s money — refers to investing in real estate without using your own capital and instead investing using other people’s money. 

Picture this scenario: A property full of ROI potential just became available in an up and coming neighborhood. Whether you’re a new investor or an investor with a handful of investment properties already, you don’t have money to spend on it — but at the same time, you can’t just let it go. 

What can you do?

By leveraging OPM, you can acquire the property — and others — that you wouldn’t otherwise be able to afford. 

Common Misconceptions about OPM in Real Estate

Before we take a look at how to use OPM in real estate, let’s look at a few misconceptions associated with OPM. 

OPM is only for experienced investors.

If you think that OPM is exclusively for experienced investors or those with extensive networks, you couldn't be further from the truth. Anyone with a well-prepared investment proposal who has the ability to network can obtain OPM for their first or next real estate deal. 

OPM has excessive interest rates.

While terms will vary depending on the type of loan and the amount of cash you need, you aren’t stuck with one interest rate with OPM; you can shop around and find the best interest rate for you and your real estate investing business. 

How to Use OPM in Real Estate

Here’s 5 ways to get started with OPM in real estate. 

#1: VA loans and USDA loans

While traditional loans will require a downpayment, government back loan options — such as VA loans and USDA loans — don’t require such, making them a perfect choice for OPM in real estate. 

To qualify for a VA loan, you must have served in the military, and to qualify for a USDA loan, you must use the loan in a rural setting. 

#2: Private Money Loans

A private money lender can be anyone willing to loan you money for your real estate endeavors. 

That’s right: a private money lender can be anyone! 

Because private money lending is not subject to the same regulations as other lending options, money can be provided fast and at better interest rates. 

What matters the most with a private money loan is not your credit score or your investing portfolio; it’s your reputation and relationship with private money lenders in your surrounding area. 

#3: Hard Money Loans

Another OPM real estate option, hard money loans differ from traditional loans in that they require you as the borrower to use an asset, such as your home, as collateral to secure the loan. 

Hard money loans are often finalized much faster than traditional loans. Also, because the loan is secured by collateral, you’re more likely to get approved for the loan even if you have a poor credit score. 

#4: Home Equity Loans

A home equity loan, or HELOC, is a loan that gives you access to the cash value in your current home. This money can then be used to invest in real estate, whether it's fixing and flipping a property or becoming a landlord. 

#5: House Hack

House hacking is a real estate strategy where you rent out either a room or an entire section (such as one part of a duplex) of your house to tenants.

The rental income that you receive can then be used to pay off your current mortgage loan, or be used to invest in real estate elsewhere. 

The Bottom Line: OPM in Real Estate

That’s right: you don’t need hundreds of thousands of dollars to invest in real estate. 

You can invest in real estate without a penny of your own money thanks to OPM.

If you’re looking for your first or next property to invest in using OPM, get started today with Propwire’s up-to-date MLS tool that allows you to search 157+ million MLS & off-market properties 100% free.