by John Merchant, JD
OPM is every bit as addictive and dangerous as O P IU M and it's caused grief to many victims, both "users" and their money sources. OK, just a minute here! What's OPM?
As the more worldly and experienced realty investor knows, it means Other Peoples' Money (OPM) and I'd suppose most or all of us who weren't born with a built-in golden spoon have looked at or taken a bite or two of that apple at some stage of our housing and Real Estate Investment (REI) career.
To prove my point, anybody in the room you are in who has NEVER used money or credit belonging to somebody else (with their ostensible consent of course) please raise your hands.
Those 2 or 3 who's hands aren't raised* just aren't thinking or their hands wouldn't be up either…come on, you never got a short term "loan" or gift from Mom, Dad, Aunt Jessie? With some extravagant promises about what and how they'd be repaid?
Of course as we matured, with the big question as to who did or didn't ; ) our requests for help became more sophisticated and frequently involved the acquisition of some "great" investment.
Instead of just Mom or Dad some of us have gone to ever larger deals using OPM; sometimes in the Millions or Billions.
Some of these have been done legally, too many others may not pass the legal test of state and federal regulators.
Whereas some of these deals DO pan out and work** many of course do not.
In Part 2 I'll discuss some ways to legally work with OPM and some illegal ways that are commonly used.
*I once attended a Bar Association talk where the speaker was a lawyer who specialized in suing LAWYERS (!) for their professional malpractice.
He told us he quite routinely gets booed when introduced; whereupon he asked his audience to stand, then asked all of us who had ever been the cause of a loss of funds of any client through the attendee's negligence or carelessness to sit.
In that room of 300 or so, nobody sat. Every one of us was painfully aware that somewhere along our professional paths we had, through our negligence or carelessness cost some client money.
**Reading the Facebook story one sees that its founder got a helping hand in the form of $500k loan from a perceptive venture capitalist early-on and that loan has been repaid in the millions. ##
(Editor's Note: John Merchant is a member of MHSpeakerTrainer.org. Check him out and consider Tim or others for your next association or corporate event).