Introduction
When it comes to funding your real estate deals, many people think that the only options are a traditional bank loan or a hard money lender. Both these options have their drawbacks, especially if you’re just starting out in real estate. But don’t worry—there are plenty of ways to find private funding for your next project!
Learn how to find private funding for your real estate deals
Finding private funding for your real estate deals is not as hard as you think. The key is to learn the right way to ask for help, and then do it.
If you’re like most people, though, asking for money is one of the hardest things in life–even when it involves something that could make a big difference in your life (like investing in real estate). But if this kind of rejection has been keeping you from getting started with private lending or crowd-funding platforms like Lending Club, Prosper Marketplace or Patch of Land–or even just putting together a deal on your own–it’s time to get over it!
Get creative
Your first step is to think about what you have to offer others, and how you can help them in return. If a friend has capital and wants to invest in your project, ask him if he would consider working out an arrangement where you both contribute equal amounts toward the purchase price of the property–and then split any profits 50/50 after closing costs are paid back.
Perhaps your aunt has some money she’d like to invest; or perhaps she could act as cosigner on a friend’s mortgage who needs help getting approved for their dream home because they don’t meet one or more underwriting criteria.
Or perhaps your friend has a car he could trade in as collateral, or maybe you can help him get approved for an auto loan if he agrees to cosign on the property. The point is that you don’t have to be stuck with traditional financing options in order to buy real estate.
Think of alternative ways to raise money.
- Consider crowdfunding, which allows you to raise money from a large number of people. You can give them a return on their investment, such as shares in your company or property.
- Investigate peer-to-peer lending platforms and real estate crowdfunding platforms that allow you to borrow money directly from individuals instead of going through banks or other financial institutions (which is often more expensive). These platforms are generally easier than traditional methods because they don’t require credit checks or collateral–but be sure you understand all of the terms before committing yourself!
Start with the people who are closest to you.
You can start with the people who are closest to you. Your family and friends may be able to provide advice and guidance, as well as introductions to other people who can help.
If they’re not able to contribute financially, don’t forget that their expertise is invaluable and may even be worth more than whatever amount they could give.
Network your way into a loan.
Find the people who have done what you are trying to do, and ask them if they would help you. If they don’t want to help, then ask them if they know anyone who might be able to help. If that doesn’t work, ask them if they could introduce you to someone else who could potentially invest in your deal.
This method works very well in my experience as long as there is trust between all parties involved; otherwise it can fall apart quickly!
What if you’re just starting out and don’t have a lot of connections?
If you are just starting out and don’t have a lot of connections, it’s okay! You can use social media to connect with people. If you don’t know anyone in real estate investing yet, start reaching out to potential lenders through Facebook and LinkedIn groups. The best way is through personal connections–people who know and trust you will be more likely to lend money because they know that if something goes wrong, they will still get paid back.
And while we’re talking about social media: make sure that your profiles are up-to-date and professional looking so potential lenders can see what kind of person they’re dealing with (and whether or not there might be any red flags).
Private money is easier to access than you think.
There are many ways to find private funding for your real estate deals, and there are many different types of private money lenders. The key is to find the right lender for you, and then make sure that lender is willing to fund your deal.
Conclusion
If you’re looking to get into the real estate game, private money is a good option for you. You can use it to fund your own deals & scale your business quickly. Private funding has many benefits, including lower interest rates and flexible terms–which can mean more money in your pocket!
