Other People’s Money
Posted by Elizabeth Dennis on June 18, 2010 | No Comments
OPM or “Other People’s Money” is a financial term describing the situation when you use other people’s money to make money. Taking out a mortgage to invest in a home is a perfect example. When you buy a home with a mortgage it is not actually your money you are investing. You only invest the down payment and are using a loan to invest in the rest of it.
For example, if you buy a home for $100,000 with a down payment (investment) of $20,000 and the value of the home then increases to $140,000, you can sell your home and make $40,000 from your $20,000 investment. Although you will most likely use a chunk of that for the fees to sell your home, you can see how using other people’s money can be a great way to invest.
Filed Under: Mortgage, Newbuyer's Own
