OPM (other people's money) is a tool to gain serious leverage in real estate investing, often used by Robert Kiyosaki, author of Rich Dad Poor Dad. The basic principle here is to buy a property with the least amount your personal money, then cash-flow that property via rental agreements. This has huge advantages and at the same time, can be very dangerous.
When I purchased my Victorian property, I had a very small income and almost nothing in savings. I managed to dive into this contract for less than $1,000 down and start generating $2,400 cash each year from that initial investment. With the revisions of modern lending polices in place, it would be impossible to jump into the market like I did.
It was fun reaping the rewards of the big yield when I became a landlord, but one factor kept my profits low and my risk high.... this was the huge DEBT that the deal put on my lap. If the property becomes vacant I get stuck with a huge bill, thanks to the mortgage. I find that buying real estate with cash is most sensible option for me now. Being in my situation back then, OPM was my only choice.
I feel like the main reason I didn't fail was because the houses I purchased were cheap, and never lost value during the declining housing market. Imagine the others who tried what I did, who were stuck with huge house payments, taxes and declining house values... From now on if I don't have the cash for it, I wont buy it. With leverage out of the picture, risks decrease and rewards increase. This is always a good thing for investors!
Disclaimer: I am not a financial planner, advisor, or accountant. The financial
actions mentioned were only suited for my own risk tolerance, strategy,
Copying another's financial moves can lead to large losses. Each
person needs to do their due diligence in researching and planning their
own actions in the financial markets.