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Some Ways to get funding in real estate

Some Ways to get funding in real estate

Samir Chopra, Founder & CEO, RE/MAX India

Jul 17, 2015 1:28 PM

To be successful as a realtor, proper funding is actually the key to being profitable in this business. It provides you with the much required capital for your current and future investments.

Usually the phenomenon of real estate funding is more common in commercial and corporate properties but nowadays investment through funding in raw and agricultural spaces is also becoming common. Investments in real estate through direct ownership or collective investment funds has been going on since ages but the way real estate has grown and flourished in the past years, funding in real estate has emerged as a business opportunity to multiply your money! Since real estate gives people a better return on their investments, an avid investor will always be open to all the ways which give him better returns.

Here are some ways which can be looked upon to get investors that can help you with funding in real estate:

Private Investors: Private investors are the individuals who have liquid cash and are willing to invest their money in deals that give them a certain percentage of that deal. The terms on which the profit sharing takes place would depend on the agreement that has been signed. With private investors, it is more of a number game. Showcasing them the expected profits that they will reap will attract more and more private investors towards your business.

Partnership: Partnership is one of the most traditional and a great way to get started with investing in real estate. A person with similar interests, vision and goals can be a partner who can pool in resources along with you. He/she can be a co-worker, business partner, a friend or anyone who is an active investor. With two requirements; money and the art of investing this money in the right director required for any good investment to be fruitful, partnership can be a great option to successfully execute the business ideas.

Real estate Investment Trust: With REIT’s offering ways to individuals to share from the income thorough commercial Real estate ownership without actually getting involved in buying/selling it; it is another most preferred method of enjoying high dividend yields and also include Real estate amongst one of your investment portfolio.

Conventional Mortgage Loans – If you have a good credit, lending money from a bank for investing is one of the best and a traditional option available. Mortgage loans are usually 15 to 30 years in duration with interest rates in the 6 per cent to 8 per cent range depending on your credit score and history. They require you to go through a qualifying process and involve a lot of documentation.

Hard Money: With their specialisation in real estate financing, hard money lenders are the ones you can look up to when you need quick funds for a deal. It is generally preferred for short term financing and their interest rates are usually very high. The positive side being that they can get your funds to you fast and the generally require less qualifying on the part of the investor because of the very low LTV ratios.

Investing in real estate through funding is a wonderful opportunity for those who are ready to get into the game of real estate. It is way of turning into an entrepreneur but also involves a risk taking appetite. The investors should be careful in selecting their partners. There are always risks and returns which should be reviewed by all the parties involved so that you make best out of your investments.

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