8 Ways to Find Capital for Real Estate Investing

Hello World!  Welcome Friends!  There is no denying that real estate investments can be pretty profitable. However, you need the necessary capital to enjoy those benefits. After all, it’s the capital that gets the ball rolling, right from buying that foreclosure, investing in the multifamily property, or paying the contractors for a house flipping project. In simple words, if you don’t have the capital, your real estate investment plan is nothing more than only an idea.

The good news is that raising capital for your real estate investments is easier than you think, even when you are a new investor. So, if you are trying to gather investment capital for the first project, these are the ways that can come in handy for you.

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1. Home Equity

Home equity loans are a good option if you already have a property. In this case, you can easily tap into the equity of the existing property through a loan and use that cash for funding the next real estate project you have. Basically, you are using the unutilized monetary value of an asset like your house.

One of the best parts of this option is that, with a reliable name like Alpine Credits by your side, you can take out multiple mortgages based on the equity of your existing property. These loans are also handy for debt consolidation, home renovation, and even student loans.

2. Private Moneylenders

You do not need to go to an established lender or bank to finance your projects. You can even get loans from a colleague, family member, friend, or business professional. Naturally, you will have to pay interest on these loans, as well. Otherwise, you can offer the private lender some kind of return on the investment.

Now, the advantage, in this case, is there are no red tapes involved. You get hold of the necessary amount fast enough. However, keep in mind that isn’t a long-term solution because private lenders will want the money back within a couple of years.

3. Hard Moneylenders

The other private financing choice you have is that of a hard moneylender. Like the previous option, they also don’t have such strict qualifying standards as the usual financing products and mortgage loans. But the catch is that they charge a significantly high rate of interest.

Due to this, hard money loans are the best for fast jobs, such as a bridge between securing a long-term loan and purchasing a house. It even works for the fix-and-flip investors.

4. Mortgage Loans

When it comes to funding the next real estate investment of yours, there are plenty of options in mortgage loans for you to consider. Based on the kind of property you are going for – you can use a conventional loan or an FHA (more on this coming up shortly!). If you are rehabbing this property, 203k loans can be helpful, as well.

Most lenders provide investment-based loan programs, too, although they usually have down payments, high cash reserves, and credit score verifications involved.

5. FHA Investment Loans

The Federal Housing Administration backs the FHA loans, and these were made to aid the low to middle-income families buy properties. Based on their actual purpose, you might wonder: “Can I possibly use FHA loans to make real estate investments?” Well, yes, you can!

As long as the house serves as your primary residence, you can use FHA loans to invest in the property. So, what you can do is use the loan to purchase a multifamily house, live in one unit, and rent out the others.

This way, this loan also offers a viable opportunity for anyone planning to live on and generate rental income from the same property. But remember: FHA loans need your credit score to be a minimum of 580 and the down-payment to be nearly 3.5 percent.

6. Crowdfunding Platforms

You might have donated to one or two Kickstarter or GoFundMe campaigns before. Now, you can use the same tactics for your real estate investment.

All you need to do is pitch your idea on a popular crowdfunding platform and let interested investors contribute to that endeavor if they find it viable. In return, they will own a part of that project, along with its profits. ‘Groundfloor’ and ‘Fund That Flip’ are two of the popular platforms you can check out in this regard.

7. P2P Lending Options 

Peer-to-peer (P2P) lending operates more like loans than crowdfunding deals. Upon posting your projects on the P2P lending platforms, you get an interested investor. Now, this investor will lend you the amount needed, and you can pay him back over time with interest.

There are multiple P2P platforms found online, and the terms vary wildly across them. Thus, ensure that you go through the finer details before choosing this option.

Also, consider the data security features of the platform and reviews from the investors. Similar to conventional banks and mortgage lenders, every fundraising tool is different from the other.

8. Partner Up With Someone

If you have a part of the capital but not the entire amount, all you need is a partner. So, both of you can pull your funds together and invest in this real estate project. It will solve the issue of capital investment, and you also get someone who will share the responsibilities with you.

However, you will need to be careful in selecting the person you partner up with. They need to showcase absolute commitment to the project and contain the bandwidth for embarking on this investment journey. Furthermore, their knowledge and expertise should match yours, as well.

You will also want to have a lawyer write out the deal completely. It will help to make sure that you are clear on the handling of future losses or profits.

Endnote

And now you know eight viable ways to find enough capital for your next real estate venture. It is now time to weigh the pros and cons of these options in terms of your situation and come to a decision.

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