Creative Funding for Your Next Development Project
Investing in commercial real estate is dependent on acquiring capital upfront. This is easier said than done. Decades ago, there were very limited options for entrepreneurs to get this capital, and most people were limited to getting a loan from a bank. However, a bank loan may not be best for everyone. Additionally, banks may not be willing to loan to certain people based on a previous investment record or poor credit score. These days, there are plenty of create ways to get the funding you need to take your development project to the next level.
One of the most popular financing methods used today is crowdfunding. Sites such as Kickstarter and Indiegogo have been used by numerous entrepreneurs to fund their projects. There are even sites available specifically designed for people who want to invest in commercial real estate. Your project can be presented to investors, and you can receive your money relatively quickly.
There are also joint venture partnerships. This is when you have an idea for a development project but lack the funds to bring it to life. Therefore, it may be in your best interest to bring a partner onboard who handles the financial aspect of the plan. In exchange for the money, the partner receives a percentage of the future profits. Additionally, bringing a partner in can be helpful if this will be your first business venture. A partner will most likely have experience in this industry and can provide you with useful advice.
Different types of loans are available aside from the conventional ones available from banks. There are also private loans you get from private individuals. This can include fellow entrepreneurs or even family members who are willing to lend you money. Hard money loans are another option where you receive money from a source, such as a mortgage broker.
Entrepreneurs can also consider equity trades. This is useful for people who have already been successful in the real estate industry. You can take equity from one property and use it as a down payment on another property. Therefore, you are using your own money and own property to further create capital.
Securing funding for commercial real estate is sometimes the most difficult part of the process. You can certainly try to obtain a commercial loan from a bank, and many entrepreneurs still take this route. However, you may be able to get better interest rates and better deals elsewhere if you think outside of the box.