Debt Arbitrage – Earn Interest on Other People’s Money

The Big Picture on Debt Arbitrage:

• • Debt arbitrage enables investors to buy assets using borrowed money, profiting from the spread between borrowing and lending interest rates.

  • Brent Bowers purchased discounted land with a loan and resold it with seller financing, earning over $100K in profit—without using his own cash.

  • Risk is managed by buying at a discount, structuring favorable financing terms, and holding appreciating assets, ensuring profit even if the buyer defaults.

Most people believe you should only invest the money you already have. But banks don’t follow that rule—they use your money to make even more money. This concept, known as debt arbitrage, allows investors to leverage borrowed funds to generate a profit.

To break this down, we spoke with Brent Bowers, a former army officer who transitioned into land investing. He’s the founder of The Land Sharks and host of the Wholesaling Inc. Podcast. Brent has successfully used debt arbitrage in his business and shared how you can do the same.

How Debt Arbitrage Works

Brent shared an example of a land deal he structured using debt arbitrage:

He found a piece of land worth $90,000 but was able to purchase it for $40,000.

Instead of using his own money, he borrowed the $40,000 from his mother-in-law at 9% interest over five years.

He then sold the land for $90,000 to a buyer who put down $5,000 and agreed to finance the rest at 12% interest over 14 years.

His monthly payment to his mother-in-law: $800

His monthly payment from the buyer: $946

He kept the $5,000 down payment upfront and also earned a $146 profit per month.

After five years, his mother-in-law is paid off, and for the remaining nine years, he keeps the full $946 per month in passive income.

That’s over $100,000 in net profit, all without using his own money!

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The Key Advantage of Debt Arbitrage

The best part? The risk is minimal. Even if the buyer defaults, Brent still owns the land—an appreciating asset. If necessary, he could foreclose and resell it for another profit.

Banks have been using this strategy for centuries. They borrow money at low interest rates and lend it out at higher interest rates, earning a spread on the difference. By thinking like a bank, investors can generate passive income while limiting their financial exposure.

Managing Risk

While debt arbitrage is a powerful strategy, it does come with risks—mainly buyer default. Brent minimizes this by:

• • Buying land at a deep discount – Ensuring he has a margin of safety.
  • Selling on seller financing – Creating steady monthly cash flow.
  • Structuring shorter loan terms – Quickly paying off his lender (his mother-in-law).
  • Holding an appreciating asset – If the buyer defaults, he can resell the property for a profit.

Because of these safeguards, even in worst-case scenarios, Brent is still in a strong financial position.

Learn More About Debt Arbitrage

Brent helps people quit their jobs and achieve financial freedom through land investing. If you want to learn more, visit TheLandSharks.com.

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Final Thoughts

Debt arbitrage allows you to invest without using your own money while earning passive income like a bank. If you found this strategy interesting, share it with others who might benefit from it.