3 Ways to Raise Capital for Real Estate Investing

It may not be necessary to have significant resources, lots of your own cash or perfect credit to invest in real estate but for those who want to hit it hard and go all out how can capital realistically be raised to kick things into high gear?

Conventional mortgage lending is slower and less conducive to profitable real estate investing than ever and while transactional lending can provide all the funds needed for acquiring and flipping distressed properties it doesn’t always provide all of the flexibility and additional liquid capital investors desire for really taking their businesses to the big leagues.

Fortunately there are at least 3 others ways to raise capital for your real estate investing business and no they don’t involve borrowing from mom and dad or stripping the equity from your home.

  1. Soliciting Private Mortgage Lenders

Private mortgage lenders (as in directly receiving funds from individuals, rather than organized hard money lenders) is popular for providing great flexibility, speed and is easy to use. It also makes great sense for the individual lender today due to a lack of other attractive investments or appetizing returns. They can be found via in person networking, direct mail to targeted lists and PPC advertising on the web. However, ensure you have a well thought through system and are organized before pitching these prospective lenders and remember just because it isn’t your cash on the line there is no excuse not to be thorough in due diligence.

  1. Web-Based Peer-2Peer Lending

Online peer-to-peer lending platforms have been around for several years and occupy a niche between soliciting private mortgage lenders manually and the latest breed of crowdfunding options. Peer-to-peer lending sites like Prosper enable individual real estate investors to post their needs, whether it is for funding an individual project or starting an investment business and borrow private funds with less hassle. For lenders this also offers a little more confidence and security as well as minimizing risk by enabling them to spread smaller amounts of capital among different projects. This can streamline the process for investors and provide much needed liquidity.

  1. Crowdfunding

Crowdfunding has created quite a bit of buzz recently and offers a variety of options for raising capital for more seed money or working funds without the confines of a traditional loan. There are no many crowdfunding platforms popping up on the web with different structures including MicorVentures, WeFunder, Kickstarter and IndieGoGo. Take a look around and find the best one or two which work for your business model and goals. Some do require quite a bit of transparency into personal finances and require high minimum investments from those with the money while others enable investors to pull in funds a dollar or two at a time and are donation based, which means no having to give up control of your real estate investing business or paying back the money. However, in order to be successful it is crucial to grasp what the most important elements for these investors are.

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