Using other people’s money when investing in real estate. This method is being practiced all the time and it is much easier than many thought it would be. Many people don’t want to invest in real estate because the perception of high capital of entry, but many practices done by many investors, the capital is really very minimal if the investors are creative enough or good in negotiation.
Who are the other people so nice enough to lend us money to invest in real estate?
Bank – If you have credibility and pay you bill on time, for the bank it is why not? just as you swipe your credit card for a few thousand dollar purchase that end up in servicing the high interest each and every month. You might as well borrow the money to make you richer by investing in real estate. Of course it will be back to square one if you get the bank money to pay the purchased properties and then having to service it yourself, the number of real estate properties loan you can service is only limited by your own active income. Fortunately, we can use another people money to service the loan installment – your tenant.
Tenant – The equation of OPM will not be completed if tenant is not included. If you are the landlord, then your tenants are the one who work for you to make you richer. For rental property that fetches zero to positive cash flow, in another word rental income is more than the loan installment plus property maintenance cost, the investment is self sustaining.
If investor can achieve zero-positive cash flow on every rental property, then he/she can keep buying more and more real estate and banks are willing to lend as much as they deem fit. By doing this patiently and with due diligent, many people are able achieve financial freedom and better. So are you still wondering why the rich get richer?