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How To Get Rich Using Other People's Money
This section reveals a unique concept in the wealth-creation process, namely how to get rich using other people's money. That's right - Other People's Money - OPM to those who use and profit from the technique. We won't show you how to rob the bank or earn your fortune from ill-gotten gains. Instead, we reveal ways for you to borrow fairly and squarely from people who want desperately to lend you the money you need.
Okay, so it's not just a question of going into a bank or visiting some venture capitalist and asking - or begging - for the cash you need. There's much more to it than that. You have to know how to ask, what subtle techniques will have prospective lenders begging you to take their money. This section is dedicated to the most profitable ways of getting rich through the power of:
O P M ! Other People's Money! It's Magic!
Borrowed money really can work wonders, for you and your lenders. This is especially so where you have the talents and energy to earn a fortune from your ideas but you lack capital to get started. There are lots of places to borrow from, I hear you argue. And, yes, you are right. Places like banks, building societies and loan companies, organisations that will generally lend on their terms, subject to you playing their game, and most will require you to offer your home and everything else you possess as security. Bad news!
The good news is that these restrictions are unnecessary: the are many ways to borrow without the worry of burdens like these to weigh you down.
The magic of OPM is primarily that it does not have to be repaid in the immediate future. In fact, some loans - even major sums - can be re-negotiated over a period of many years, meaning the money keeps on earning and increasing in volume until the amount you repay is a tiny fraction of the money you will make.
OPM opens up a whole new world, allowing you to start the business you've always dreamed about, buy the machinery and stock you need to get your venture up and running, with staff to help you expand as fast as you like.
At best, OPM gives you:
100% control over your project. A large income within days of closing a deal. The chance to own a going concern without capital investment. The chance to pyramid your wealth into newer, more profitable projects.
In short, other people's money can be made to work for you rather than you working for it.
Why It Makes Sense to Borrow Money to Finance a New Business Venture
Many of these reasons are common sense but overlooked by most people:
a) Speed. You can have money to use as you please within days or weeks instead of having to wait until your business is in profit. Why work hard for years when you can have the money now and work at a more leisurely pace to repay the loan? b) Tax Relief. Most loans are subject to income tax relief. c) Help Others. By borrowing you are putting the lender's money to work, generating useful interest for him and satisfying profits for you. Everybody wins! d) One successful loan opens the way to further borrowing. Once you establish a good credit record, other lenders are keen to provide more money, meaning you can increase your working capital and generate even higher profits. e) Most repayment periods can be extended, allowing you more time to repay your loan and meaning you retain more of the profits from your investment. f) Some lenders are prepared to give you more cash than you actually need, meaning you have more to lend to others or spend as you wish. g) Loans are an incentive to work harder. The mere fact there is a loan to repay means you pay more attention to the business. By working harder and longer to repay a loan, many businesses find themselves generating far higher profits than others who haven't borrowed.
The Beauty of Commercial Banks
Commercial banks want to lend and they will provide money for countless purposes, including buying property, starting a business, and many more. Banks want to lend you money. Do not forget this. All you have to know is how to ask for what you want and what reassurances the potential lender needs from you. Make a point of visiting several banks before you decide which to borrow from. Visit lending officers before you actually submit your application. Ask questions, get a feel for how the bank operates, find out what lending terms they offer and when and how repayments are made. Obtain as much literature as you can about the bank and its loan facilities. Read and learn. Now compile a list of potential lenders, in order of priority, starting with the one that suits you best based on the amount you can borrow and the appropriate repayment time. Particularly look for those prepared to lend high amounts over lengthy repayment periods. Apply to the first name on your list and work downwards until you succeed.
A Never-Ending Loan Source
'Open-end' loans are invariably for purchasing real estate and allow you to keep on borrowing up to your limit as long as your repayments are as agreed. So, if you have a ceiling of $1,000,000 and you borrow just $50,000, you can ask for the remainder at any time. Similarly, if you have a ceiling of $1,000,000 and you borrow that amount and subsequently repay $20,000, you can keep on borrowing up to the specified maximum.
Borrowing like this is particularly popular with buyers of going concerns, like shopping malls and industrial sites, where income from those properties exceeds the amount of loan repayments. Easy money and, better still, an investment which grows in value and generates rental that increases where loan repayments are static! Open-end loans are available from various sources, including traditional and private sources like banks, real estate mortgage firms, private lenders, and so on. Property is the best game to play and, with careful borrowing arrangements, you get to keep almost every penny generated by the property. A standing mortgage or 'interest only' loan is usually best.
Imagine you buy an income property like shops or factory units, or maybe a block of flats and you take out a mortgage for 20 years, where you pay interest only for a specified period. So, if you borrow $1,000,000 for factory units that generate $200,000 per annum and you repay interest only at 10% per annum, income over the period (assuming it remains constant, which is unlikely) will be $4,000,000, against repayments of $2,000,000. At the end of the 20 years, you repay the capital of $1,000,000, meaning you net $1,000,000. Like we said, this assumes constant returns on your property, which is highly improbable. More likely, that $200,000 per annum will multiply several times over in the 20 years before your loan matures. Easy profits!
Benefits of this kind of borrowing/earning situation are obvious:
a) A constant, and growing income source. b) Cash deposits are sometimes unnecessary, meaning you can step straight into a source of income that grossly exceeds interest repayments. c) Property increases in value while your interest repayments remain unchanged. d) Income from the property can be increased at regular intervals. e) Most loan repayments are tax-deductible.
Be Different
'Creative Financing' is a term used to describe unusual ideas for putting borrowed money to work and making it work even harder for the borrower. The ideas themselves don't have to be that unusual but they have to be something new to the area concerned. Here are a few ideas based on actual case studies:
Turn a derelict piece of land into a treasure hunt centre. In California, one zero-option purchaser took over a car park beside the beach which he converted into a treasure hunt site for children. He added supervisors so parents could leave their children while they attended to other things, like lazing on the beach, going for a drink, taking a nap.
Turn a piece of land close to a popular leisure attraction into a parking site for caravans and trailers and make it worthwhile for families to park their own 'homes' with you rather than take bed and breakfast elsewhere.
Turn a piece of land close to a busy factory site into a 'pay and reserve' car park where workers are guaranteed the same parking space every day in exchange for a fixed annual rental.
Make Sure You Know What Loans Are Available and Where From
There are countless places ready, willing and able to lend you money. But you can hardly present a case for money if you don't know who your prospective lenders are. Keep a file of contact names and addresses of anyone and everyone you might approach, including commercial and private lenders. Include: savings and loan associations, commercial banks and high street banks, insurance companies, savings banks, mortgage brokers, venture capitalists, pension funds, finance companies, equity trusts and foreign lenders, alongside countless others.
How to Obtain a Huge Loan for Your Business Without Having to Pay It Back
Venture capital is the name given to a source of funding where the lender offers money in return for a share in the profits of your business. Imagine you have a wonderful idea for a business and you have already proved your idea works on a small scale. But you have no money to expand your business to other areas. So you turn to a venture capitalist, someone who can see the potential you offer, and who is prepared to give you the funding you need in return for an ample share in subsequent profits.
Some venture capitalists want a say in how the business is run; other don't. Make sure you understand what conditions exist before you take a loan from this source. But remember, too, that your lender might bring good experience to the business, in which case even higher profits are possible. DOUBLE YOUR MONEY
The story goes that a prospective employer once asked a salesmen whether he'd prefer a salary of $100,000 a year or one cent for his first day's work, doubling to two cents the next day, four cents the next, and so on. The person he was interviewing reached quickly for the lump sum, seeing no potential in the cent proposal.
He didn't get the job. This is why!:
In a month of say, 30 days, that one penny doubled each day means income very quickly exceeds the original offer of $100,000 per year.
Starting with one penny then, doubling up over 30 days, the result is:
1c .... 2c ..... 4c ..... 8c ..... 16c ..... 32c ..... 64c ..... $1.28 ..... $2.56 ..... $5.12 ..... $10.24 ..... $20.48 ..... $40.96 ..... $81.92 ..... $163.84 ..... $327.68 ..... $655.36 ..... $1310.72 ..... $2621.44 ..... $5242.88 ..... $10,485.76 ..... $20,971.52 ..... $41,943.04 ..... $83,886.08 ..... $167,772.16 ..... $335,544.32 ..... $671,088.64 ..... $1,342,177.28!
Less than 30 days, in fact, and the $1 million mark has already passed.
Sometimes investing money does the trick, as for example where an investor finds a business with high potential but low on capital to fund an expansion programme. In return for money the business offers the investor a return of at least 100 per cent. Not uncommon. Look for several such businesses to invest in concurrently or consecutively and your fortune is assured.
MONEY MULTIPLICATION theories like this are used by the world's richest men and women, and can be adapted on a smaller scale by ordinary people with less capital to invest. The multiplication principle can be seen to work well in Multi-Level Marketing, Direct Mail, even party plan and by marketing your product through agents, where profits are taken and reinvested into larger expansion programmes, literally doubling activity at each profit stage.
ROLLING PROGRAMMES
I tested a rolling programme recently in direct mail, where I ordered enough printing, mailing lists and envelopes for a 10,000-size mailshot. But that would have cost me about $3,000 which I had but didn't want to risk. So I established a self-funding programme, where I made up all 10,000 packages but only posted 1,000. The whole thing meant forking out less than one-third of the original investment. As orders started coming in, I used the cash to fund more postage, and so on. The same thing could be done without purchasing the initial stationery, as long as you have quick access to these items and some means of stuffing envelopes quickly as profits appeared.
As you see, I didn't get to save anything on the mailshot, but nor did I have to fund it one hundred per cent up front.
I might even have got away with up-front costs altogether by arranging 30 days' credit with my mailing list broker, printer and envelope supplier. With a good product and a list you've already tested you'd be almost guaranteed to repay your debts quickly and have profits to spare. The same thing could be done with advertisements in national newspapers and magazines. I learned this from a colleague who now runs a very successful mail order business, turning over about $1,000 a week, having started the whole thing with advertisements and stationery gained purely on credit. Not a penny of his own was invested. OPPORTUNITY THINKING!
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Find out about a unique home-based business that I have been building since 2002 here |
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