Raising Private Money to Finance Your Real Estate Investment Deals

How can real estate investors raise private money to finance their deals?

Financial leverage is one of the most important and powerful parts of investing in real estate. And raising private money is becoming an increasingly important and attractive niche for real estate investors to learn.

So what options are there for raising private capital today?

And what do you need to know about them, before getting started?

Private Money 101

Real Estate is a great investment for those starting out with cash, credit and equity that want to build passive income, rental portfolios, wholesale real estate, rehab houses and invest their money safely while putting it to work for them. But whether you are starting out with capital, or barely a pocket full of pennies learning and knowing how to leverage real estate can make doing this business a whole lot easier and fast track you towards your financial and real estate goals. Mortgage lenders, banks, business loans and credit line providers have often filled this space. That has dramatically changed over the last 20 years. But there are now a variety of new and returning loan and financing products that you can take advantage of.

This includes:

Commercial mortgage lenders
Small business lenders
Peer to peer social finance websites and portals
Transactional lenders
Cryptocurrency Lenders
Hard money lenders
Crowdfunding platforms
Individual private Lenders

The last two options on this list have become incredibly popular with real estate investors looking to raise money to purchase, rehab, develop, rent, flip houses, multifamily apartments, mixed use properties, and other types of commercial real estate.

So how do you get private money? What does it take?

Friends and Family

Private money is really just investment capital from other individuals. A great place to start is with friends, family, colleagues, current and former co workers. These folks already know you, trust you, like you, and have probably seen the great results real estate investing has and is providing for you. Or at least how much you have invested into making it happen. These will be the easiest, fastest, and guaranteed sources to raise private money from.

Increasing Your Network

While real estate investors still need to be careful about publicly pitching their projects and asking for funds; take the next step and expand on your inner circle by making more connections. Connections with individuals that want to, or who are already investing in real estate with their capital, cash, equity or credit.

Great ways to do this include:

Attending local real estate investor meetings, REIA’s, Meetups
Attending national/local seminars, conferences, boot camps and trade shows
Join Social media networks
Online via a real estate investment website’s

Crowdfunding

Crowdfunding keeps growing. And it has become an increasingly popular channel for real estate investors to raise private money from a much larger crowd. Thanks to President Barack Obama’s JOBS ACT. However, while there is a lot of noise being made about real estate crowdfunding and new state and SEC regulations making it easier, there are still rules. Equity and debt crowdfunding promoters should still meet with a securities and real estate attorneys to ensure you following the rules to a T and getting the necessary approvals before you start raising money .

Private Lending

Obviously private lenders willing to give you their hard earned money to put to work in real estate are going to want an attractive return on their investment, and often some type of security. However, the really big blunder many make is failing to anticipate and budget. Whether you plan to raise money from extended contacts or online, you’ll want to be armed with some good marketing and presentation materials. Even if you create your own there will be minor costs for website hosting and printing. Make sure you account for this because presentation is everything when asking for capital.

I”ll See you at the closing table,

Marcel Umphery the “R.E.I. Successmaker”