Real estate has always been considered one of the safest and most rewarding investment options. However, the biggest challenge for many investors is raising enough capital to start or grow their portfolio. This is where the concept of Other People’s Money (OPM) comes in.
Using OPM allows you to leverage financial resources from lenders, private investors, or partners, so you can scale faster without relying solely on your own savings. In this blog, we’ll explain how OPM works, the best ways to use it, and strategies to minimize risks—so you can start building wealth like a professional investor.
What Is OPM in Real Estate?
Other People’s Money (OPM) refers to using funds from external sources to finance your real estate investments. Instead of using 100% of your own money, you combine your equity (down payment, knowledge, or management skills) with borrowed funds.
This strategy works because real estate is an asset class where leverage multiplies returns, as long as the property value appreciates or generates high rental income.
For example:
- You purchase a ₹1 crore property.
- Instead of paying full cash, you invest ₹20 lakh (your equity) and borrow ₹80 lakh (OPM).
- Even a 10% appreciation increases your equity significantly because of leverage.
Ways to Use OPM for Real Estate Investments
There are several ways investors can use OPM. Let’s explore the most common and effective options:
1. Bank Loans and Mortgages
The most traditional way to use OPM is through housing loans or investment property mortgages.
- Banks finance up to 70–80% of the property value.
- You contribute the down payment.
- Rental income or property appreciation helps you repay.
Best for: First-time buyers and investors with stable income.
2. Private Investors and Joint Ventures
Sometimes individuals or groups are willing to fund your project in exchange for profit-sharing or equity.
- You bring the deal, market knowledge, and management skills.
- They bring capital.
- Profits are shared after selling or renting.
Best for: Bigger projects or when banks won’t fund.
3. Hard Money and Private Lenders
These are short-term, high-interest loans provided by individuals or firms.
- Useful for fix-and-flip projects.
- Faster approval than banks.
- Higher risk due to interest rates, so use wisely.
4. Seller Financing
In this arrangement, the property seller acts as the lender.
- Instead of paying full upfront, you agree on installments directly with the seller.
- Useful when bank financing is not available.
5. Crowdfunding and Syndication
Real estate crowdfunding platforms allow multiple investors to pool money into one property or project.
- You can start with small amounts.
- Developers get access to large capital pools.
- Risk is shared across investors.
6. Partnerships and Family Loans
Sometimes, friends or family are willing to invest with you.
- They provide funds.
- You handle operations.
- Ensure legal contracts are in place to avoid conflicts.
Benefits of Using OPM in Real Estate
- Faster Portfolio Growth – You don’t need to wait years to save enough capital.
- Leverage & Higher ROI – Small equity + borrowed capital = bigger returns.
- Risk Sharing – In partnerships or joint ventures, risks are divided.
- Tax Advantages – Loan interest is often tax-deductible.
Risks of OPM (and How to Manage Them)
Using OPM isn’t risk-free. Common risks include:
- High Debt Burden – Overleveraging can cause repayment issues.
- Market Downturns – Falling property prices may hurt returns.
- Partnership Disputes – Misunderstandings in joint ventures can create problems.
How to manage risks:
- Do due diligence before buying.
- Keep the debt-to-income ratio healthy.
- Always use written agreements with investors/partners.
- Maintain a cash buffer for EMIs and expenses.
Practical Steps to Start Using OPM
- Educate Yourself – Learn about financing, markets, and property laws.
- Build Credibility – Lenders and investors fund people they trust.
- Start Small – Begin with one property before scaling up.
- Network – Attend real estate meetups, seminars, and connect with investors.
- Create Win-Win Deals – Always ensure your partners or lenders see value.
Using Other People’s Money (OPM) is not about taking shortcuts—it’s about smart leverage. The most successful real estate investors in the world rarely use only their own money. Instead, they master the art of structuring deals, managing risks, and creating profitable opportunities for all parties involved.
If you’re serious about building a long-term real estate portfolio, start learning how to responsibly use OPM today. With the right strategy, you can multiply your returns while minimizing your personal financial burden.
FAQs About Using OPM in Real Estate
Q1. Is using OPM in real estate safe?
Yes, but only when done responsibly. Overleveraging or poor deal analysis can increase risks. Always run numbers carefully.
Q2. How much of my own money do I need if I use OPM?
Most banks require 20–30% as a down payment. In partnerships or private deals, it depends on negotiations.
Q3. Can beginners use OPM?
Yes, but start with safer options like home loans or family partnerships before approaching private investors.
Q4. What’s the best OPM source for rental property investments?
Bank mortgages are best for rentals, as interest rates are lower and repayment can be covered through rental income.
Q5. What happens if the investment fails?
You’re still responsible for repayment. That’s why you should never take OPM without a clear exit strategy.
Q6. Is OPM the same as debt?
Not always. OPM can include loans (debt) but also partnerships or joint ventures (equity-based funding).
