Are you planning to raise capital for your real estate investments? That’s a smart move. Real estate is a capital-intensive investment. Instead of stepping away when you’re unable to self-fund, you’ve made a bold decision to reach out to investors. Unfortunately, finding real estate investors isn’t as easy as finding a rental property to buy. You must be well-prepared and know exactly where to go looking for them. You’ve come to the right place for help, though. Continue reading to learn how to find real estate investors and raise the capital you need to supercharge your real estate portfolio.
Draw Your Real Estate Investment Business Plan
If you show up in an investor’s office and ask for $100,000 (or whatever amount) to invest in real estate, they’ll want to know about your strategy. If you don’t have any, nobody is going to trust you with their money. Remember, investors want to safeguard their capital in addition to angling for good returns. As such, think of yourself as a startup founder looking for investors. Just as founders must have a detailed business plan, so you must have a real estate investing business plan. The plan fleshes out the investments you’ve made so far, as well as where you want to invest. If you already have a couple of rental units, your plan could focus on expanding your residential real estate portfolio. You could also branch out into commercial real estate, industrial real estate, raw land, and/or real estate investment trusts. You should also be able to articulate your strategy. Know your numbers. If an investor asks you about the rate of return over a certain period, you should be able to give a clear, well-thought-out answer.
Approach Your Bank/Credit Unions
Banks and credit unions aren’t what you’d typically call a real estate investor, but they’re a major source of capital for many real estate ventures. If you have built a financial relationship with a retail bank or a credit union, there’s a good chance they’ll consider your request for real estate funding. That’s because they already have products that are tailored to people like you. If you already have a home loan, for example, you can think of your lender as a real estate investor. You can go in for a conventional mortgage and use the property you’ll buy as a rental. A big downside of taking money from a bank or credit union is you’ll have to pay it back within the agreed timeframe. If you fail to do so, the lender can start a foreclosure process, which will result in you losing the property. Although banks and credit unions are reliable partners when you meet their requirements for lending, they’re not going to keep lending to you every time you want to invest in a property. If you’ve applied for a second or third mortgage without any success, it’s time to spread your wings and find other investors.
Join Real Estate Investment Clubs
A real estate investment club is a group of people who come together to share ideas about real estate investing. The club can be local, where local investors meet physically from time to time. There are also digital clubs run on social media, often open to investors from a wider region, such as a state, or even across the whole country. Joining such a club will enable you to interact with fellow investors. As you build your network, you’ll gain access to high-net-worth individuals who can fund your investment dreams. Keep in mind that most real estate investment clubs have a membership fee and a code of conduct members need to adhere to. This helps ensure only serious investors join them. So, if you’re on the fence about paying an annual fee to join a club, rest assured that it’s worth it.
Make the Most of Professionals in the Real Estate Industry
If you’ve been in the real estate game for a while, you’ve probably interacted with real estate agents, brokers, attorneys, and other professionals. In many cases, your relationship ends the moment the engagement you had with them comes to a close. If you are buying a house, for example, you will typically not see the need to engage with your agent after the deal closes. Well, when you’re looking for real estate investors, it’s time to get close to some of those professionals. If your paths have crossed with a real estate investor attorney, for example, get in touch. These attorneys represent investors in various transactions, so they have access to people who could potentially become your investors. Striking relationships with these professionals takes effort. Don’t shy away from inviting someone you believe will open doors to investors for a cup of coffee or a round of golf if that’s your kind of thing.
Real Estate Crowdfunding
Crowdfunding has taken the fundraising world by storm in recent years. It has revolutionized how entrepreneurs in diverse industries raise capital without going through traditional paths. Real estate hasn’t been left behind. Real estate crowdfunding platforms like CrowdStreet make it possible for retail investors to come together and raise capital. With crowdfunding, you can raise enough capital to acquire pieces of real estate, such as commercial complexes and multi-family estates, that are usually reserved for uber-wealthy investors. That being said, real estate crowdfunding requires effort. Don’t expect to launch a campaign today and suddenly everyone is chipping in. You must have a compelling investment idea that thousands of people can get behind.
Know How to Find Real Estate Investors
Investing in physical real estate assets requires adequate capital. In a perfect world, you should be able to fund your investments out of pocket. This world is far from perfect, though. Many people have to turn to third parties for investment capital. With this guide, you now know how to find real estate investors who can inject the capital you need to pursue your investment strategy. Stay tuned to our blog for more tips and insights on a wide range of topics.
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