Everyone wants to be a real estate investor, but are you comfortable with taking on the risk required to be one?

One loophole you could explore to minimize your risk and still access capital for real estate is to use other people’s money (OPM). This simple but useful investment strategy has helped launch thousands of real estate portfolios and make people millions–all without using a dime of your own savings.

This guide will explore ways to leverage OPM in real estate, including using loans, partners, and even other people’s retirement accounts.

What Does OPM In Real Estate Mean?

In real estate, other people’s money (OPM) refers to an investment approach in which you leverage someone else’s capital to fund transactions. The “other people” don’t refer to a single source but instead a collection of options that can give you access to funds through a third party.

To successfully engage in OPM real estate investing, it’s important to understand your goals and the OPM options available to you.

7 Ways to Use Other People’s Money to Invest in Real Estate

Conventional loans are one way to leverage OPM in real estate, but there are several other options that may be more suited to your needs. Here are seven to consider.

1. Private Loans

Private loans allow you to acquire investment capital through an individual or private entity. For instance, you may be able to get a private loan from a friend, certain relatives, or a peer-to-peer exchange.

One advantage of private loans is that you will often be granted a longer grace period to repay the loan and a much lower interest rate. Likewise, there is a greater likelihood of acquiring the loan, which is not always guaranteed in real estate transactions.

2. Hard Money Loans

Like private loans, hard money loans give you access to a lump sum of cash to help you purchase real estate. However, unlike private money, this lender is a financial entity with its own set of eligibility requirements and loan terms.

Hard money loans are typically approved quicker than traditional loans but carry strict lending requirements, higher interest rates, and shorter loan terms.

When you invest in tax liens, earnings come from the interest applied to the lien

3. Seller Financing

Seller financing is a purchase agreement in which the real estate buyer makes regular payments directly to the seller instead of getting a mortgage loan through a third-party financier. The buyer and seller negotiate the mortgage contract, including the down payment, interest rate, and repayment schedule.

If you’re a buyer working with a motivated seller, this arrangement can be more affordable than working with lenders, particularly when interest rates are high. However, you should discuss these terms before committing to a deal so you can be assured you can afford the transaction.

4. Infinite Banking Method

When you use the infinite banking method, you rely on the cash value of a personal life insurance policy, typically whole life, to cover the cost of your real estate investment. In this case, you borrow against your life insurance policy.

This option can help you avoid strict eligibility or credit score requirements and may be faster than a traditional recourse loan. However, keep in mind it will affect your beneficiary’s death benefit or the amount of money they receive upon your passing. If the loan is not repaid before you die, the life insurance company will deduct the outstanding balance from the policy’s death benefit.

Furthermore, these insurance policies come with higher monthly costs.

5. Crowdfunding

Like crowdfunding for start-ups, crowdfunding for real estate allows you to pool your money with other individuals or investors to purchase real estate. This method allows you to purchase a physical property or share of a property, such as splitting profits from a rental property.

You’ll generally need to work with a crowdfunding platform, which may charge management fees, and in some cases, you may need to have a specific amount of capital or network to participate. However, there are several benefits.

Crowdfunding a real estate purchase divides the risk of investment and ownership among multiple investors and can also provide the opportunity to invest in more costly real estate investments, such as large commercial properties that may otherwise be financially out of reach.

6. IRA Partnering

What is one unlikely source of cash you might not have thought about? Your retirement account.

However, you can use other people’s retirement funds to partner in a deal if you both own a self-directed IRA. This specialized retirement vehicle allows you and your partner to purchase real estate directly in your IRA.

A self-directed IRA for real estate is a great option if you want to fund a real estate purchase with your IRA but don’t have enough, as it allows you to avoid a recourse loan.

Keep in mind that all profits and proceeds will flow directly to your self-directed IRAs. But you will also avoid capital gains taxes on all earnings if you both have a Roth IRA.

7. Syndication

Finally, real estate syndication allows multiple investors to raise capital and purchase real estate as a group. In many ways, syndication works much like crowdfunding, but there are generally stricter rules when it comes to who can participate. Often, investors must be considered “accredited” by the IRS, which means they must:

  • Have an earned income of $200,000 or more ($300,00 with a spouse),
  • Have a network of $1 million or more (with or without their spouse),


  • Have a Series 7, 65, or 82 license in good standing

Is Using Other People’s Money for Real Estate a Good Idea?

Whether or not leveraging OPM for real estate is a good idea depends on your personal finances, investment goals, and the type of OPM strategy you choose.

For instance, if you want to take advantage of a real estate opportunity and have a friend or family member willing to assist you, private lending can be a cheaper and faster way to finance the investment. On the contrary, private lending scenarios can leave relationships strained.

Similarly, relying on crowdfunding or syndication can make it easier to invest in larger real estate projects, spreading the risk across multiple investors, but that also means you don’t have complete control over the investment.

Still, OPM investing has many benefits when it comes to opportunity and eligibility. Though some OPM options, like hard money lending, have strict eligibility criteria and higher interest rates, others may make it easier to invest by offering fast access to funds, less stringent eligibility criteria, and lower interest rates.

Always analyze your options before choosing an OPM strategy, making it a point to thoroughly understand the eligibility requirements, borrowing terms, and any other implications it may have on your finances. Speaking with a financial advisor can help you cover your bases.

OPM real estate FAQs

How do I attract private investors for real estate projects?

One of the best ways to attract private investors for a real estate project is doing your homework and gathering all relevant information. Not only does this show that you’ve done due diligence on the project, but it also establishes you as a serious investor and allows others to understand the scope of your project from the start.

Once you’re prepared, you can network with investors in a number of ways, including social media, real estate events, and investing websites. You can also work with a trusted real estate agent or network of agents in the community.

What are the potential risks of using OPM in real estate?

When you use OPM in real estate, you give up at least partial control of your investment, but that’s true whenever you finance real estate with any sort of loan. Other potential risks of OPM real estate depend on the OPM source.

For instance, hard money can leave you vulnerable to higher interest rates and shorter repayment terms. Private money can strain your relationship with friends, family, or your professional network, depending on who is lending the capital.

Is OPM suitable for beginners in real estate investing?

OPM is very suitable for beginner real estate investing because it makes it easy to invest in property without having to have thousands of dollars available.  When an OPM real estate investment succeeds, your earnings can bolster your investment power, moving you closer to invest on your own.