How To Raise Capital For Real Estate Ventures

You may be interested in pursuing real estate investment opportunities. Investing in real estate can prove to be highly lucrative and a solid source of passive income that can allow you to live the lifestyle of your choosing. However, you will have to consider where and how to secure funding. Real estate, whether commercial or residential, is extremely expensive to invest in upfront. Like when pursuing any business venture, you will need to carefully plan ahead to avoid remaining in debt and experiencing costly failures.

Get A Loan 

Loans can be secured through a lending institution such as a bank, private family offices or you can borrow money from friends or family members to start a real estate venture. Be sure to familiarize yourself with what lenders will look for in your loan request to stand the best chance of being approved.

Getting approved for what essentially amounts to a business loan will likely require a business plan. A solid financial and credit history will also be to your benefit, and you should follow most standard advice for how to manage your credit before applying for a large loan. There are a number of quality companies that will give out commercial real estate loans.

If you choose to proposition friends and family for the money, it will likely come to you in smaller amounts. For example, you may get $10,000 from one source and $50,000 from another. Those amounts can obviously add up and build the financial foundation of a real estate venture.

Rent Out Old Properties 

If you cannot or don’t want to go into debt, this is an excellent option for getting into real estate investment while raising capital for future ventures. When you plan to move from your old house to a new one, rent out the old one instead of selling it. For this to work, you have to get a loan or be able to put up cash for a new house.

There are plenty of pros and cons to gaining capital by this method. Aspiring investors need to truly and realistically analyze their situation, which will help them determine if this is the right decision for them.

The same can be done with commercial properties if you already own one but need to upgrade to a bigger space, for example. Your old office space may not be suitable for your small business anymore and instead of selling it you can rent it out to another company as your first commercial rental space.

Save Up Over Time 

This method is time-consuming and does not allow you to jump into real estate investment immediately. However, it may be your only option if you do not have an existing property to rent out and for any reason cannot secure a loan. All you have to do is put aside money from your regular income every month until you have enough to invest in a commercial or residential property.

If you are quite handy at fixing up old or problem properties, this can be a cheaper way to get into the real estate investment business. However, if you are unable to do much of the work yourself in preparing a property for rental or resale, you should consider alternatives. Hiring others to do the work can end up costing too much and subpar presentation will drive renters away.

Crowdfunding 

Crowdfunding is a relatively new method for raising capital to put towards real estate ventures, but it can be highly effective. You will need to pitch and defend your proposed venture in order to attract funds. Typically the amounts provided are small per investor, but they add up.

Sites like Fundrise and Realty Mogul can facilitate the crowdfunding of real estate ventures. Both sites have good resources to help you understand how they function and to get started on your proposed real estate ventures. There are other options as well, so take the time to find the option that will be most beneficial to your real estate venture.

The high price tag on pursuing real estate investing ventures should not deter you if you have determined that real estate investment is the business you want to be in. Consider your options and perhaps even get money from different sources. Be sure to have a solid plan before beginning so you can pay off your debts quickly, grow your investment business and start buying new properties.

Adam Richards

About Adam Richards

Adam Richards is a semi-retired business professional originally from Bangor, Maine. He spent the majority of his career in sales and marketing where he rose to the marketing lead of a Fortune 1000 company. He then moved on to helping people as a career counselor that specifically helped bring families to self-sufficiency through finding them rewarding careers. He has now returned to Bangor for his retirement and spends his free time writing. This blog will be about everything he learned throughout his career. He'll write on career, workplace, education and technology issues as well as on trends, changes, and advice for the Maine job market and its employers.