Building a portfolio with OPM!

Building a portfolio with OPM!

As real estate investors, building a portfolio of rentals is the single biggest wealth-creating opportunity of our lifetime.

row houses

Real estate investors who rely on bank financing are struggling and failing because the large down payments required and mortgage underwriting criteria make it very difficult to buy investment real estate.

As you learn to use other people’s money (OPM) you can succeed big time!

A lot of real estate investing elements must be completed correctly in order to create cash flow and long-term wealth.  The good news is, real estate is still “on sale” and widely available.

In many markets, investors can buy rental property for less than the price of a new car. But even the price of new car still takes a lot of capital to acquire, so the key to investing in real estate remains finding the best way to leverage real estate acquisitions without using your own money.

Last week, in my own market of Richmond, VA, I put a house under contract for $45,000.  It has a current tax assessment o

jim successlogo

f $105,000. It will need about $25,000 of repairs and then it can be rented for $995 per month.

 

How I Bought the House Without a Bank or Any of My Own Money

To buy this home without needing a bank, westructured a joint venture.  For this deal we funded with a self directed IRA.   The IRA will fund the entire acquisition, closing costs, and repairs, for a total funding of approximately $70,000.

My side of this deal includes doing all the work, including finding the house, negotiating, completing the repairs, and then managing the house for the next 5 to 10 years.

With this joint venture, we are splitting all net income and future upside equity 50/50. The rental income is $995per month, taking out taxes and insurance this will net at approximately $800 per month.

The $800 per month is then split 50/50. I retain $400per month and send the other $400 per month to the self-directed IRA. If we keep this property for five years, and it is full occupied, both the IRA and I will receive 60 payments of $400 per month for a total rental income of $24,000.

 

It’s a Win-Win for Everybody

win win dice

If we sell the house in five years for today’s tax assessment of $105,000, our upside gross equity on the $70,000 investment will be  $30,000, which is split 50/50 and another payday of $15,000 for each party in the joint venture.

Given the nature of the joint venture being a 50/50 deal, every second acquisition is the equivalent of one free and clear house.  How many of these deals do you need to be able to live just off of the monthly rental income?  If you could structure 20 of these deals, you would be at $8,000 per month

Structure 40, and you have $16,000 per month.

Don’t even focus on the equity and net worth, just focus on the cash flow and creating free and clear houses to hold long-term.

Make the acquisitions without banks and you can succeed massively.

 

Focus on the cash flow and build your portfolio one house at a time.  Make every purchase right by buying a discounted home with equity on day one and start receiving cash flow!

What do you think?  Leave me your comments below!

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Comments

  1. Brian Doneghy says:

    How can I learn how to do this?

  2. Yes we all know the concept, but is there a detailed plan out there on this?

  3. I understand a little bit of it Jim but I really need a Mentor that I can learn from in order to bring me were I need to be

  4. Hi Jim-
    I’m in the business & have a great pulse on the market. I find properties for other investors all the time. Would love to meet & chat more about details.

  5. I like this blog. Where can I find JV partner.

  6. How do we get started?
    What procedures are required to get going..

  7. Kyle Barnett says:

    I would like to know more about how to do this and how to find OPM.

    • Jim Ingersoll says:

      Hi Kyle – Start with learning a lot about self directed IRAs and how they can be used to invest in your deals with you. Learn to structure the deals where the seller can be your bank also will help you out. Check out our Mastermind & Coaching Program also at http://www.investorsuccessmastermind.com

      Thanks!
      Jim

  8. Jim,
    Always a pleasure to witness you at work, physical and educational. Continue success.

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