There are numerous individuals who want to get into real estate investing but are hesitant to take the risk. These folks are ready to leave behind their current 9-5 so they can go after a life of financial freedom. However, they’re unaware of how to finance a real estate business. They think that if they don’t have the money in their own pockets, it is hard to get started. This isn’t true.
There are numerous ways of financing a real estate business without using your own money. Not only are there loans offered by the government (it has a vested interest in helping small businesses prosper), but there are lots of private lenders who are willing to take a risk on your business. If you really want to leave your day job so that you can flourish as an entrepreneur, here are some financing options.
Hard Money Lender
Hard money lenders are a financing tactic typically used by real estate investors. Rather than coming from a bank, the funds for these investments come from a private individual or group. Because these loans don’t have to go through any corporate procedures, they often have looser qualifying requirements and can be secured faster. Additionally, private lenders may be more susceptible to backing risky projects.
Microloans are usually geared toward startups or newer businesses that need capital to generate further growth. As the name suggests, these loans are smaller than what’s usually provided with conventional bank financing.
Real Estate Crowdfunding
In the past, investing in real estate was only for those with deep pockets. However, since the passage of the 2012 JOBS Act, crowdfunding has become a source for investors to expand their portfolios at a much lower cost. Instead of having to search out and restore properties on their own, investors can search crowdfunding platforms to pick from a list of available investment projects in which to participate.