Think you need your own money to invest in real estate? Think again. Many successful investors scale their portfolios using Other People’s Money (OPM), leveraging different funding sources to grow without waiting years to save up capital. In this episode, I break down four key strategies for using OPM: private lending, hard money, syndication, and creative financing. Whether you’re looking for flexible funding, fast financing, or ways to scale into larger deals, these methods can help you take your real estate investing to the next level.
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Think you need your own money to invest in real estate? Think again. Many investors scale by using other people’s money, commonly called OPM in the real estate investing world, and you can too. In this episode, I break down the different types of leverage real estate investors can use to 10x their growth. A new episode comes out every Monday, so be sure to subscribe.
If you didn’t hear the last three episodes, go check them out as well. I talk about leveraging virtual assistants, leveraging technology, and leveraging a local boots-on-the-ground team. Now, let’s talk about other people’s money. Using OPM doesn’t mean you don’t have money. It means you can do more investing by leveraging OPM than you could with just your own funds. The right funding sources let you grow your portfolio without waiting years to save up capital.
Today, I’m breaking down four specific ways to use OPM: private lending, hard money, syndication, and creative financing. We’ll also cover structuring deals in a way that attracts investors. If you’re new to the idea of OPM and it feels unfamiliar, think of it like a mortgage loan from a bank. Many investors start by putting down a percentage of a property’s cost and financing the rest. This leverage allows for higher returns. If you put 20% down on a $100,000 property and its value increases by 5%, you’ve made $5,000 on a $20,000 investment—a 25% return.
Real estate investing thrives on leverage, but traditional bank loans aren’t always an option. Maybe you already have multiple investments, don’t meet a bank’s income requirements, or lack W-2 income. These alternative funding strategies give you more options. Another angle to consider is becoming a lender yourself. I personally operate a hard money lending business, providing capital for investors who handle the active work of flipping or BRRRR properties. While today’s focus is on securing funds as an investor, let me know in the comments if you’d like a future episode on being a private lender.
The first type of OPM is private lending. While the term is sometimes used interchangeably with hard money lending, I’m distinguishing them here. Private lending is the most flexible funding option, involving loans from individuals rather than banks or institutional lenders. Investors often source private loans from friends, family, or fellow investors looking for passive returns without the hassle of managing deals. Some private lenders act like banks, structuring secured loans with liens on properties, personal guarantees, or other forms of collateral. Others operate informally, simply agreeing on a return and repayment date.
Private loans can also be structured as equity partnerships, where instead of charging interest, a lender takes a share of the deal’s profits. The downside of private lending is cost—flexibility often comes with higher interest rates. Where do you find private lenders? Your network is a great place to start. Friends, family, and colleagues may be looking for passive income opportunities. Real estate meetups, content marketing, and partnerships with mentors or experienced investors can also connect you with potential lenders. If you’ve built a track record, it’s easier to attract lenders by showing your investment history and success.
How do you structure a private loan? Interest rates typically range from 8% to 16%, depending on risk and experience. Loans may be secured with liens or unsecured with promissory notes. The repayment term could be short (six months or less) or long (over a year), depending on the deal. The structure is highly customizable between you and the lender.
The next option is hard money lending. Hard money lenders are private individuals or small companies that provide short-term, asset-based loans, typically for fix-and-flip or BRRRR projects. These loans fund both the purchase and renovation, with repayment coming at the sale or refinance. Hard money lenders focus on the deal rather than the borrower’s personal finances. They evaluate purchase price, rehab budget, and after-repair value (ARV) rather than traditional creditworthiness. Many require appraisals or market analyses to confirm a project’s profitability.
Hard money loans are designed for short-term financing, usually lasting from two months to a year. They carry higher interest rates (10%-18%) and closing costs (1-4 points). The advantage is speed—loans can be approved within days, making them ideal for off-market or wholesale deals that require fast closing. The downside is cost, but for investors flipping properties or executing BRRRR strategies, the benefits can outweigh the expenses.
The third strategy, syndication, is used by advanced investors to scale into larger deals. A syndication pools money from multiple investors to buy larger properties, often multifamily or commercial real estate. There are two main roles in a syndication: general partners (GPs) and limited partners (LPs). GPs actively manage the deal, find the property, raise capital, and oversee operations. LPs invest passively, contributing capital in exchange for returns without taking on management responsibilities.
Syndications require experience and credibility. Investors won’t trust a GP with their money unless they have a proven track record. Syndications are structured with a profit split, such as 70/30 or 80/20, favoring LPs. Some syndications offer preferred returns, ensuring LPs receive a set return before profits are shared. While GPs earn equity with minimal personal investment, they take on significant responsibility, including SEC compliance, legal fees, and investor management. For those interested in syndications, partnering with experienced investors and starting with smaller deals is key to building credibility.
Finally, creative financing provides alternative funding strategies, often with little or no money down. The first method is seller financing, where the seller acts as the lender instead of a bank. Payments go directly to the seller, often with negotiated terms that benefit both parties. This can work well in cases where traditional financing isn’t feasible. I personally acquired a property through seller financing when rising interest rates made bank loans less attractive. In that case, the seller offered a better rate, making the deal possible.
Another creative financing method is subject-to deals, where an investor takes over an existing mortgage without applying for a new loan. This is common when a seller has little equity and can’t afford traditional selling costs. It allows the buyer to assume a lower interest rate, making the numbers work in today’s high-rate environment. However, subject-to deals come with risks, including legal complications if the original borrower stops making payments.
Lease options are another strategy, allowing investors to lease a property with an option to buy at a set price within a specific time frame. This can be beneficial for investors who want to secure a property while building capital or improving cash flow. Lease options provide flexibility, but they require sellers who understand and agree to the terms.
If you want to scale your real estate investing, you need to run it like a business, where deals, funding, and systems flow seamlessly. I can help. Inside my coaching program, we build processes, teams, and funding strategies to help you scale without working 24/7. If you’re serious about growing, book a free strategy call with me at adriennegreen.com/coaching. I look forward to connecting with you and helping you build your real estate business.