real estate investing

How to Raise Capital for Real Estate Investing and More

The year 2020 is going to be a big year for renters, flippers, commercial property investors, and more. The last thing a prospective investor will want to do is sit on the sidelines because they don’t have the funds for real estate investing. In this post, we share some ideas you can use.


2020 Should Be a Good Year for Real Estate

The housing market in 2019 has been strong but slightly softer than last year, at 5.25 million existing houses sold. On the other hand, the year 2020 is projected to surpass the last two years in housing sales. Moreover, as any real estate professional will tell you, how housing sales go, the rest of the real estate market goes.

Fortunately, there are a lot of ways you can raise the capital you need to make a splash in the market. To this end, here are a few options:

Get an FHA Loan for Your Real Estate Investing

This suggestion catches a lot of up-and-coming real estate moguls off guard. That’s because conventional wisdom says that FHA loans are only good for houses you intend to live in. This is contrary to most people’s real estate investing ambitions.

However, as it turns out, there is fine print in FHA terms that enables real estate investors to purchase multi-property dwellings of three units or fewer so long as they inhabit one of the units.

This means you could get a loan right now that would require less than 4% down. Plus, this would net you up to two cash-flowing rental units.

Talk to Hard Money Lenders About Your Real Estate Investing Plans

Whether it’s for development or for property purchases, hard money is at the core of most investors’ real estate investing strategy.

A hard money lender is a lot like a traditional lender in that they give people cash and expect to be paid back plus interest. However, what makes hard money lending a little bit different are the terms that hard money carries.

Hard money almost always has a fast turnaround time. For example, most borrowers will be expected to pay back their loan in less than three years. On top of that, private money lenders charge high interest rates. This is because their money is usually being used in high-risk ventures.

Crowdfund Your Real Estate Investing

There are a number of emerging private online lenders that give out loans more freely than traditional banks do. These lenders are able to accommodate people borrowing money for riskier ventures such as real estate investing because they charge a high interest rate. Also, they mitigate their risk by having multiple lenders fund your loan.

Any time more than one lending party has a lien on a single piece of your debt, that debt is “crowdfunded.” Borrowers are increasingly using crowdfunded lending for their real estate investing. It can be a great resource for developers and other buyers.

Go to Your Personal Network

If you’ve got friends and family who have money and ambitions of being real estate investors, give them your pitch. Let them know that providing you with financing for real estate development is going to benefit them. Moreover, be clear and honest about what you’re projecting as far as returns are concerned.

Just make sure that your family members understand the risks involved with real estate investing. Be sure to stress to them that not every investment pays off. Nothing ruins a relationship quite like losing $20K or more on a real estate investing deal.

Liquidate Your Assets

Most people don’t realize they already own all the wealth that they need to get into real estate investing. It’s just that their wealth is tied up in “stuff.”

To remedy that problem, start liquidating.

Have a home? Take out a second mortgage on it and use the cash you get to fund your real estate investing ambitions. Got a bunch of gadgets that are valuable but you don’t use? Sell them.

The more of your wealth you can convert to cash, the more flexibility you’re going to have when it comes to real estate investing.

Take out a Personal Loan

There’s only so much money that a bank is going to give you for a personal loan. They’re almost certainly not going to give you enough to fund a sizable real estate investing venture.

However, what they will do is help you fill in the gaps if you’re $15K or so short on what you need for your real estate investing project. So if you have good credit and need a quick but sizable kick of cash, waltz into your bank of choice and fill out an application.

Borrow from Your Future Self

Depending on how old you are, you probably have money tied up in your retirement account. While it would normally cost you money to pull from your retirement prior to retirement age, there are special allowances for people who withdraw money for the purpose of buying real estate.

You’ll have to talk to a financial professional to see if your real estate investing ambitions would qualify for fee-free withdrawals.

Save Up for Real Estate Investing

Financing for real estate investing and property purchases doesn’t need to be complicated. For many people who have a good job and are working hard, getting the money you need to dive into real estate investing could be as easy as putting away money every month until you’re ready to pay for that big deal.

Here’s a Little More About Financing for Real Estate Development and Related Ventures

Real estate is the single most reliable producer of wealth in the world. However, in order to get in on that cash generator, you’re probably going to need financing.

Explore our suggestions and see which ones work for you. If none of them sound great, talk to a real estate consultant. They can walk you through other fundraising options for your real estate investing dreams.

Also, if you find yourself in need of additional quick, easy, and reliable advice, check out more of the newest content right here on our blog.