OPM is the key to building wealth quickly. Understanding how to use “other people’s money” will help you acquire more wealth than you could just using your own cash. But you have to do it right. Unfortunately, lots of people are trying to take investor money when they don’t really have the experience to do so.
Most people know that banks are our financial partners. We can go to them to get financing to buy a home or commercial building. It’s straightforward. You agree to the loan terms, sign the docs, and they wire you the funds. If you don’t pay the bank back, they take your property as collateral.
As we get more advanced as real estate investors, we learn to “joint venture” or JV. This means we might partner with another investor, often splitting the work load and the profits.
But when you JV, and one person is doing all they work while the other person is just putting up the money, this is no longer just a real estate deal. The person doing the work — the operator — is getting capital from an investor who is passive. This is no longer just a real estate transaction. It’s now become a security, and falls under SEC requirements.
Unfortunately, too many people are taking money from passive investors without fully understanding Security Exchange Commission laws. And you’ll need a really good SEC attorney to truly understand these rules. Or you could start by reading some books on how to raise capital legally.
My guest today has been putting on events to help people raise money properly. In fact, I’ll be speaking at his Raising Money Summit in Denver this weekend.
Adam Adams, welcome to the Real Wealth Show!
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