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How to Raise Capital for Real Estate Investing

If you’ve found your way here, you’re probably interested in getting started in real estate investing. It can be an incredibly profitable and rewarding experience for the smart and motivated individual, but how do you get started when you don’t have the requisite amount of capital to purchase your first property? No matter what kind of investment you’re looking into, whether it’s a fix-and-flip, multifamily property, or a home with good long-term tenants, you need funds to get your foot in the door. While it may seem like a significant barrier, there are many opportunities for first-time investors to get the capital they need to start. If you’re thinking about real estate investment, we have some funding strategies that you might be able to implement.

 

Hard Money Loans

Undoubtedly The Hard Money Co. thinks that Hard Money loans are one of the more viable options investors have to get started in real estate investing. Hard Money loans are short-term, high-interest, loans that allow you to acquire your target property quickly and with limited strings attached. Though they can be viewed as expensive, there are some substantial benefits that make them optimal for quick-turn-around such as fix and flips or BRRRR Method investments. Our products are available with no credit checks or income verification and can be funded within a week if necessary. They also come with the ability to draw funds for repairs or renovations that allow for improvements to be made quickly with no out-of-pocket cost to the investor.

Once the property is renovated, investors typically sell or refinance with a long-term product through a company like CashOutLoans.com to pay back the initial hard money loans and realize their profits. For more information about whether a hard money loan, contact us or fill out our loan application today as a no-strings-attached starting point for your financing.

 

Mortgage Loans

There are a number of mortgage products that may be available for your real estate investment. With different products for different investment types, you may be able to secure financing through a more conventional loan. These mortgage products can help you get the funds you need with relatively lower interest rates over a longer period of time. Of course, they often are not provided for fix and flips, or other distressed assets are given the inherent risk in the investment asset. You will also be required to provide higher down payments and a credit check will be in order. That said, these are completely viable options for the right investor.

 

Private Money Lenders

We like to call this OPM, or “other people’s money”. Private lenders can be anyone including friends, family, co-workers, or simply acquaintances who have additional capital on hand. Though they may give you preferential terms, you will likely have to offer some form of interest or return on investment. No matter how much of a slam dunk a property is, there is always some form of risk and they will need to be compensated accordingly. The benefit, of course, is that there is little to no bureaucracy and you can get your funds on a faster timetable. Be wary though; just because this is not a traditional financing option doesn’t mean that the expectations of you, the investor are any less. You need to be diligent about repayment and communication to make this a successful avenue.

 

Crowdfunding

Kickstarter, GoFundMe, and a number of other crowdfunding platforms have become immensely popular over the last decade. Similar mechanisms exist in the real estate sector as well. Here investors, who you do not know, can lend for a portion of the project and its return.

Where to Find Funding:
Fund That Flip
GroundFloor

Sites Where You Can Invest:
CrowdStreet
FundRise
Realty Mogul

Home Equity Loans

If you already own property, there are loan products that provide capital based on your existing equity. Either with existing rental properties or home equity lines of credit (HELOC), you can get funds to finance your next project. Cash-out refinancing is also an option. This is where you restructure an existing loan over a longer term to withdraw your equity. CashOutLoans.com is a great resource for additional information.

 

Get Creative

The methods that we’ve outlined here are some of the more common options, but success in real estate is about creativity and drive. There are countless ways to secure financing and even more ways to earn a dollar. Start planning today to create opportunities for yourself. Networking is a big part of this. Your goal should be to open as many doors for yourself as possible and when you’re ready to walk through one, TheHardMoneyCo is will be there to help.