Getting rich with OPM

  You can borrow yourself rich. It is not for everyone. It requires good analytical ability, a lot of discipline and self confidence. If you tend to be a procrastinator this is not for you. Borrowing yourself rich can best be explained as borrowing to purchase income producing assets, properties or an income producing business and using the income thus generated to repay the loans. As the loans are repaid you become a little richer each month.

Buying a Business: You can do this when buying an existing business using the business's cash flow and assets to borrow the needed fund to take over the business. That is why leverage buy outs are done. There are so many ways to finance a business that are specific to the particular deal that I can not give you a step by step how to, you will have to think creatively. The business broker will have suggestions and most sellers know that they have to finance part of the deal.

I do know of one deal some years ago where a small manufacture of portable buildings sold his business to another business man with 100% financing. The buyer used a leasing company to fund the production and delivery equipment. The buyer got the seller to co-signed a loan at the bank to pay for the inventory on hand, the loan being secured by the inventory with a percentage of the sales proceeds from each portable building sold going to the bank until the loan was paid. The seller then carried the rest of the purchase balance (the blue sky part) with delayed payments until the bank loan was paid off.

Real Estate is a safer bet: With single family homes borrowing yourself rich is fairly easy. I will assume you are in an area where reasonably priced houses are available. How can you tell if your area is priced correctly? Take the going monthly rent rate for homes in the area you are thinking of buying into and multiply the monthly rent $ by 100, the houses need to sell for that amount or less.

For Example; if the rental for houses in your area of choice is $1,100 a month, then the most you will want to pay for a rental house is $110,000. Include in the price you pay all of your cost, to buy the house and get it into a rentable condition. Let us look at the numbers. I am going to make a few assumptions here to simplify the example, you are financing 100%, you are paying the closing cost out of pocket.

There is a lot of good information on the Towards Wealth web site about using real estate to get rich and some of the tricks of the trade, I will assume you will be reading those articles.

You buy a house in a ready to rent condition for $110,000 you finance the house at 6.5% interest. payments on a thirty year mortgage of $110,000 has a payment of $695.27, add taxes at $225.00 and you have a total payment of $921.00 a month. Rent is $1,100 a month, giving you a positive cash flow of $179.00 a month.
At a 7% mortgage rate your payment is $731.00 a month reducing your cash flow to $143.00 a month. To the positive cash flow you add the principal pay down on the mortgage and your total return is $279.00 a month ($179.00 plus $90.00 principal = $279.00).

This is a realistic example taken from a real life situation. What if you did ten of this type of rental, in five years you would be $161,400 richer not including, the appreciation on the properties, not including any rent increases, plus you will get some income tax savings. Chances are the total would be closer to $250,000 everything considered.

Down payment? or I don't have any:
Not a problem, the rule is: The less money you have, the more of your time will be required, the more money you have, the less time you will need to spend.
Ways to avoid down payment include. Owner financing, buying re-po's direct from banks, pre-foreclosure take overs, using other properties you own as collateral to borrow down payments, taking on partners who will supply the cash, trading other assets in lieu of cash, and lease purchase to name a few.

I know I am simplifying things a bit but the results are real enough. I ask you this! where else can you get a part time job that has the potential to pay you $50,000 a year.

 Want to make even more, read about leasing and sub letting without borrowing, or using mobile homes to create rental income without land and the rest of the real estate series on this site. This is real, and can be done. Are you bold enough to do it?

How to Borrow Yourself Rich