How much experience before raising OPM

[Chris Seveney]

I get this question asked a lot and it’s difficult to answer as it varies per investor. Unfortunately I see many people starting out attempting to raise $ without doing a deal because of some guru training they took over a weekend that teaches them more about shady marketing strategies than how to buy and manage notes.

Curious what people think on this topic. I would say it should be around 10 deals acquired with 5 completed / worked out (big difference between deals acquired and completed in my mind). From a time period this is probably 2+ years of experience.

Thoughts / opinions ?

[Michael Hayworth]

Been investing and renovating for 11 years. Probably 70ish single family homes plus a handful of multifamily. Only now, with tons of experience and a sizeable infrastructure around me, am I even starting to think about OPM.

I know many investors are much more aggressive than I am, but their natural constituents are family & friends. I grew up in a family business and saw the fights that money can cause. Then for 16 years, I owned an advertising company that focused on small businesses. Met with hundreds of small business owners over that time, saw dozens of them have difficulty in their family/friend relationships if they took investors and made promises they then couldn't keep. It can kill relationships.

At this point in my journey I've got enough experience and had enough friends ask me to help them invest in RE that I think I could ensure them a good return, but many of the OPM structures are set up to guarantee the primary emerges unscathed even if the investors are left with nothing. That's maybe OK for an arms-length investment, but I just think it's wrong if you're taking money from friends & family.