Wealth Building – Other People’s Money (OPM): What the high and Wealth…

Getting high isn’t all about hard work. In fact hard work has got little to do with getting high. It’s not that I don’t advocate hard work, I do. I love working hard but I especially like to see myself and others working smart. I know that getting high and achieving success is not exclusively the domain of blood, sweat and tears. I’ve seen friends, work colleagues and family work themselves to the bone for little or no reward.

The Cult of Hard Work, Self-Sacrifice and The Golden Goose

There is a cult of self-sacrifice apparent in our culture that warrants you to be additional busy, working super hard, and putting in crazy hours. When it comes to personal wealth building and attaining success, you’re the golden goose. However, you can only push the golden goose so hard before he/she stops laying those golden eggs. Without exception every golden goose will ultimately run out of energy, capacity or enthusiasm. consequently, learning how to utilise Other Peoples Time, Money and Skills (i.e. leveraging) is a pre-required to becoming high, building wealth and achieving success.

Other Peoples Money & Leverage

In general terms, getting access to Other People’s Money (OPM) is a form of leverage that enables you to go beyond the limits of your own resources and instead apply resourcefulness to everything you do. In business terms, leverage is the meaningful that differentiates self-employed person who owns a job from the business owner who own a business. In financial/investment terms it method getting access to cash that’s not yours in order to buy assets that you control and that produce income.

What the high and Wealthy Have Know for Years

The richest and especially the wealthiest people in the world have known about leveraging Other People’s Money for years. Everyone from Jean Paul Getty, Aristotle Onassis and Donald Trump have excelled at this wealth building rule numero uno. Their use of OPM to buys assets is mythical. Onassis in particular is known for having secured contracts to transport ore and oil in ships and tankers he didn’t however own and then going to the edges securing the loans to buy the ships and tankers using the contracts. A brazen and gifted deal-maker if there ever was one!

People go about building wealth or acquiring assets in different ways based on their background, past experiences and what they have been taught or know about money. For the most part people think of great riches and wealth as largely unattainable because of the form or mindset they have about money. What most people fail to understand is that you truly don’t need money to make money. Sure it helps but what you really need is access to Other People’s Money in order to make money.

The Benefits of Utilising Other People’s Money

OPM buys you time; it enables you do things before you would otherwise be able to do them. It allows you participate in deals your own resources don’t allow you to do. It enables you make choices you couldn’t otherwise make. It takes the average person many, many years to build up wealth or build a business thoroughly from their own resources. By utilising the strength of Other People’s Money you can fast-track your personal wealth building or the growth of a business. Importantly, your personal wealth building is no longer limited to what you have been able to save and invest from your earned income.

Getting High on OPM – Real Estate

Most people’s typical first experience of using Other People’s Money is when they take on a mortgage to buy their home. Typically, their initial down-payment combined with their contract of employment that demonstrates their ability to produce future income is enough for them to obtain a mortgage loan against home. Unfortunately your home is not an asset, well it is, but it’s the bank’s asset as they are making income from the loan progressive, not you. If you can get a bank to improvement you a mortgage loan so as to buy an investment rental character (an asset) whereby you get to retain what remains of the rental income after you pay the mortgage, then you have used Other People’s Money to buy and asset to produce income. In order to obtain this loan you need to demonstrate to the bank that you are a safe bet. They will typically want to see that you have at the minimum 20% of the buy price as a down-payment and sufficient net income being generated by this asset and other supplies to ride out any changes in interest rates, rental void periods etc.

Getting High on OPM – Business

In business, entrepreneurs and business owners get access to Other People’s Money when they write a business plan which they present to a business agent or venture capitalist i.e. investors. This course of action is known as raising capital. In return for the money (known as capital) received the investor who provided the capital typically receives equity (i.e. shareholding) in the business. Money can also be borrowed from a bank and the bank is repaid the principal and also receives interest on the loan. It’s the business owner’s job to put this capital to good use; to produce products or sets that generate sales revenue to pay back the loan and, of course, all the other expenditures of the business.

Other People’s Money is always obtainable and easy to reach to a greater or lesser extent depending on overall market conditions. Your first responsibility as an entrepreneur or investor seeking capital is to understand and inform yourself as to the multiple supplies of OPM and numerous deal structures that utilize OPM.

Jumping by the Window of Opportunity

Finally, the chief take-away from all this talk about Other People’s Money is that instead of saying to yourself “I can’t provide to start a business” or “I don’t have the money to invest in that deal” you now know there are no real excuses or limitations. Not that using Other People’s Money is without its pitfalls. Like every financial transaction there are inherent risks. Firstly, you are liable to repay the capital borrowed and generally provide an agreed additional return to the investor. However, that’s not up for discussion here. The meaningful thing for now is to realize that you can always get access to Other People’s Money to permit you participate in deals and do things you before thought weren’t possible. You can start jumping by the window of opportunity when it’s open…and as you begin implementing this rule of Other People’s Money into your business and personal wealth building endeavors you begin to realize its open all the time!

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