What Is Other People's Money? the OPM playbook

The definition

Other people's money is any capital deployed into an asset that did not come out of your own savings. That includes obvious debt — a mortgage, an SBA loan, a business line of credit — and less obvious forms: a seller who waits to be paid, a limited partner who funds the equity, a tax deferral that leaves cash in your hands for another decade, or a government grant that never has to be repaid.

The distinction that matters is not borrowed versus owned. It is whether the capital is serviced by the asset it buys or by your paycheck. Capital serviced by the asset scales. Capital serviced by your income has a ceiling and a stress point.

• Bank and agency debt — the cheapest capital most people can access
• Seller financing — the seller becomes the lender and stays invested in your success
• Investor equity — partners fund the down payment in exchange for a share
• Government programs — SBA guarantees, grants, credits, and incentive zones
• Tax deferral — deferred dollars are an interest-free loan from the Treasury
• Retirement and insurance structures — self-directed accounts and policy loans
• Trade and vendor credit — supplier terms that finance working capital

Why OPM beats saving your way in

A saver buying a $500,000 property in cash needs $500,000. A buyer using 80% financing needs $100,000 and controls the same asset, the same appreciation, and the same depreciation deduction. If the property throws off enough income to cover the payment with margin, the lender's capital is doing the work that would otherwise take a decade of savings.

The same arithmetic runs on operating businesses. An SBA 7(a) acquisition can be structured with roughly 10% buyer injection, part of which may be satisfied by a seller note on standby. The buyer's own cash becomes a minority of the capital stack while the cash flow of the business services the rest.

The coverage tests before you use it

Every responsible use of other people's money passes the same three tests. Skip them and leverage stops being a tool.

• Coverage: the asset's own income covers debt service with margin — roughly 1.25x or better
• Shock survival: the deal still services its debt after a rate, vacancy, or revenue shock
• Structure: fixed rate where possible, long amortization, no personal cash flow required to hold it
• Exit: at least two ways out — refinance, sale, or recapitalization

Where beginners should start

The cheapest leverage available to an employed person is owner-occupant real estate financing, followed by tax planning — a dollar of tax legally deferred or eliminated is capital with no interest cost and no market risk. From there, business credit and seller-financed acquisitions open the larger structures.

The order matters: fix the tax leak first, map real borrowing capacity second, then deploy into one asset that pays its own debt before repeating with the equity that creates.

The legal line

Everything described here is ordinary, documented finance: statutory tax provisions, guaranteed loan programs, and negotiated private contracts. What makes a structure defensible is documentation, economic substance, and passing the tests in the code — not secrecy. If a strategy only works when nobody looks at it, it is not an OPM strategy.