Successful Real estate investors follow one concept: OPM or “Other People’s Money”!
Those type of investors understand that the best way to get a high return is to have as little of their own money in a deal.
Successful real estate investors spend their time finding the best deals and then present them to other investors who are willing to use their money to fund the deal. When structured right, OPM allows a real estate investor to secure a valuable, high return, cash-flowing asset for little-to-nothing.
The good news is, anyone can start to invest like this. You might have to start small, like a single small apartment but but it can grow into a big apartment building. Follow these 3 steps:
1. Find a property with significant upside potential
Find properties that underperform. Because the value of a commercial real estate asset like an apartment is based off the Net Operating Income (income after expenses), any opportunity to increase NOI is an opportunity to see a healthy return.
2. Package the deal and find investors willing to invest to be part of it
Create a solid business plan and form a legal entity (limited liability company) for the property and create an investor prospectus. Go out to investors and raise the capital to purchase the property (OPM) by selling shares into the property company. Once the asset is secured, execute your plan, as well as bring your management expertise to the table.
3. Refinance the real estate project, give the money back and do it again
Once the property substantially increased in value (may be after several years) refinance the property, pay back all investors their original investment including a generous return on that capital. You keep ownership in the building that produces cash flows every month. And the beauty for Ken and his team is they create this wealth with a little bit of their capital and a bunch of capital from other people. If investors are happy with their return you pay them, you won’t even have to look for new investors in a new project because the former will re-invest into the next project with you. You will enjoy income with little or no money in the deal. Continue doing it and you will produce infinite return.