Summary:

In this video, Ken McElroy shares how he built a portfolio of over 10,000 real estate units using other people’s money (OPM)—and how you can do the same. He explains why having money isn’t the starting point—having a good deal is. Investors are always looking for strong, cash-flowing opportunities. If you can find them, the money will follow.

Highlights:

• You don’t need to be rich to start in real estate—Ken began at age 34 with one small deal.

• Money chases deals—not the other way around.

• Start with something that cash flows and makes sense—don’t overcomplicate.

• Use bank loans (debt) and investor capital (equity) to fund deals.

• A good structure: you bring the deal, the bank brings the loan, and the investors bring cash.

• Trust is everything—build your reputation by delivering returns, one deal at a time.

• Start with friends, family, small business owners, or attend events like Limitless Expo to connect with potential investors.

• The ultimate goal: structure deals to earn an infinite return—get all your money back and still own the asset.

TRANSCRIPT:

I bought over 10,000 units using other people’s money. And in this video, I’m going to show you how you can, too. Most people think that you need to be rich before you start in real estate. I am living proof that that is not true. And let me tell you, I was not rich when I got started.
In fact, I didn’t buy my first rental property till I was 34 years old. Today, I control over 10,000 units. And I didn’t do it all with my money. I did it with other people’s money, and you can, too. So, a lot of people just don’t understand how money really works. So, all money starts on Main Street, just like you, just like me.
We make our money through paychecks or hard work or whatever we’re doing, but we typically stick it into a bank. Well, that bank then now has an expense to you because they have to pay you interest, which is an expense to the bank. It’s revenue to you, but that’s how the system works. So, all money goes into a bank or some kind of savings institution that becomes a liability for that institution.
At that point, you’ve moved your money from Main Street to Wall Street. Now, Wall Street has a problem. They actually have to make money on your money. So, that is exactly how it’s reinvested back down to Main Street, back to guys like me. So, money starts on Main Street, goes to Wall Street, then gets invested back down to Main Street.
The question you need to ask yourself is, how can you be in a position to be able to invest that money back into projects and use it for yourself? So, in this video, I’m going to walk you through exactly how I did and how you can start to do this today, even if you have no money in the bank. Money isn’t the problem. The deal is. So, here’s the first thing that you need to know.
Money chases deals, not the other way around. Most people think that they need a lot of money in the bank before they start. Typically, that’s just an excuse. What everyone invests in is a deal. Until there’s something they can actually look at, there’s nothing really to discuss. If you got a deal, I mean something that cash flows, something that’s good, something that’s understandable.
People are always looking for safe places to invest their money, especially when the stock market is bouncing all over the place. Your job as an investor is not to have money, it’s to have a place to put money. It’s to find the opportunity. That’s exactly what I did. I started with a deal that made everyone money.
And after they all got paid, then I got paid. My first deal wasn’t fancy, but it worked. Back in 1995, I bought my first property. It was a two-bedroom, two- bath condo in Las Vegas. I put down about 30 grand, which was my savings at the time, and it cash flowed somewhere between $50 and $100 a month.
Nothing crazy, but it taught me how the game worked. My debt, by the way, that I used to buy this property was technically other people’s money. I got my loan or my debt to buy the condo from a local bank. After that, I found a second deal and did it again. And then soon, I was out of money. At that point, I realized if I wanted to continue in this business, I was going to have to learn how to raise money from other people and show them the value that I was creating for myself.
Now, I would just split the deal and do it with partners. That was my turning point. You don’t need 100% of the deal. You need 100% of the strategy. And it needs to make sense to whoever is investing in it. I have a saying, the bigger the brochure, the worse the deal. In other words, the more you have to sell it, it’s probably not a great deal.
Deals need to make sense. Like you would sketch it out on the back of a paper napkin at a restaurant. It has to be that clear and that easy. The business plan that you put around that later is typically just all the details. But from a high level, it needs to make sense as an investment to somebody else. It’s very important that you have some experience before you raise money.
I find a lot of these gurus and seminars out there to try to help you raise capital. And there’s nothing wrong with them. But most of the time, they don’t even know what they’re buying. They don’t know why they’re buying them. They just know how to raise capital, which is one piece of a very complex process of actually closing a deal.
Raising money typically is the easiest part. Finding the deal is the hardest part. So, when you find a great deal and you don’t have the money, that’s when you raise money. You don’t raise money first and then go find a deal. That’s typically just placing people’s money into a deal that you found.
That’s exactly why Wall Street has a problem. That’s exactly why banks have a problem because they already have the money and now they’re looking for a home for somebody that can invest it just like you. So, the key to all of this is to find a deal first and then the investors will follow both on the debt and the equity side.
This is the simple structure on how to raise money. The investor brings the cash, the bank brings a loan, and you bring the deal and manage it. That’s a very traditional structure. So, let’s say you found a $10 million deal you like that has forced equity in it. So, you’d go to the bank and you get a $7 million loan or 70% loan to value, and then you need 30%, which is the balance from investors, so another $3 million.
So, you would raise $3 million. And what the investors look for at this point is what am I going to make on my 3 million? because the debt or the bank is already covered with the cash flow through a mortgage payment. So, the real issue is how much cash flow will that $3 million make.
So, let’s say it makes $300,000 a year in cash flow. That’s a 10% cash on cash return. The $3 million that you’re actually going and getting from investors. That’s an attractive return for a lot of investors. They can make 10% or $300,000 on 3 million. That then that’s much better than a lot of places where they would park their money. That’s precisely how you put together a deal.
And on top of that, they get the tax benefits. And then you, as the person who puts the deal together, you actually are behind all of that. So, you’re not going to build this overnight. It takes a long time to understand. When I started, I was just trying to buy one cash flowing property per year. And after a few years, people started following me and then asking if they could invest with me.
Once you start to jump in the game, like any game, you’re now in the circle and you start to meet other people. And then once you start to invest other people’s money and it starts to produce results and you start to actually return their checks, that’s when they start to reinvest more. They bring their friends and families and other investors to your deals because now you’re delivering on what you said you’re going to do in the first place.
When you take care of your investors, they keep coming back and they bring their friends. And let me tell you a secret. Raising money is not about being a good salesperson. It’s about solving a problem. Your investor is going to ask one thing. If I give you my money, will it make more money than if I keep it where it is today? So, if you’re sitting in a high savings account making three or four or 5% or even a onemon T- bill for example of four or 5% whenever you bring them obviously has to be much higher than that.
If your deal cash flows is as well managed and it is in a good market, you’re solving that problem. That’s how I’ve raised millions and that’s how you will, too. If you’re still wondering where I found money, here’s where I started. The first one was friends and family. Yes, really. I really did have a rich uncle and I sat him down and he politely told me no.
That was my first attempt at raising money. Small business owners with tax problems that are looking for passive income. High paid employees like doctors and lawyers that have tax problems. Retired professionals with 401ks and IAs that are looking for somewhere else other than the stock market. local meetup groups, conferences, or even real estate conferences, similar to Limitless Expo, as an example, where you’re going to step into a whole arena of people that are already doing this now for lots of different kinds of deals. And you’ll
be immediately introduced to new people and new investors. Investors are everywhere, but they only invest if they trust you and believe in the deal. And that trust, you build it one deal at a time. Most people are investing for maybe 5, 10, or even 15% returns. But what if I told you there’s a way to earn an infinite return where you get all your money back and still own the deal while collecting cash flow each and every month.