Raising capital for real estate can be the hardest thing you'll ever do if you're not prepared.
You need to know what type of real estate investor you are, how much money you need, and where it's coming from.
Once you have established these things, there are some ways to raise capital for your real estate opportunity.
This blog post will discuss 11 things that will make it easier for you to raise capital for your deal.
1. Define your clear investment strategy clearly.
If you're a buy and hold investor - say so.
If you're looking to buy something outdated, do the renovations and flip the property for a profit.
Every potential investor will want to know how you see them getting their money back.
Your strategy will likely be the primary driver of that.
2. Determine how much money do you need and where it's coming from.
Investors expect you to tell them how much capital you need and where it's coming from.
3. Get real about your budget. Don't forget that there will be fees involved!
If you're spending money on renovations or other costs, you need to be realistic about how much these things cost.
For example, have you built in contingencies? What happens if things cost more or take longer?
Investors will want to know.
4. Have a plan in place before you begin.
Business plans are not just for operating businesses like restaurants and manufacturing plants.
The property you want to need is a business.
You should be able to present your investor with a detailed plan on what you plan to do.
5. Get legal advice.
Raising capital is a regulated activity. So spend the time and money to make sure you are doing it right.
6. Be patient...it takes time!
Finding the right investors for your projects takes time.
Mainly if you have limited experience or have not worked with investors before.
7. Educate yourself on real estate investing to increase your credibility.
Regardless of how long you've been in the business - remain a student of your craft.
People who have the student mindset overpower people who act as if they know everything there is to know (in any industry).
8. Don't take it personally if people are hesitant or say no - you'll find someone that says yes!
Rejection is part of the business (and life).
Take the lesson(s) from the rejection and move forward. Not everyone will see your vision - your way.
9. Do thorough research before making an investment, don't just jump into anything blindly.
You must know your market, strategy, and all the potential issues better than anyone. Competence creates confidence.
10. Don't be afraid to ask for referrals! It's a great way to get real estate investor leads.
If you know your business and you've made a great impression - ask for introductions.
Just because it's not a fit for someone at that moment doesn't mean that they can't introduce you to someone else.
11. Stay organized and have an accountability partner.
If you need help, consider hiring someone that has done what you're working towards.
12. Document everything for tax purposes.
Find a strong accounting professional to help you make sense of things regularly.
It's hard to steer the ship or build investor confidence if you don't have solid financial reporting.
13. Keep your composure and know that things will fall into place at the right time - just wait it out!
Raising capital, finalizing your negotiations, and due diligence on the property all together can be nerve-racking.
Keep your composure, don't ever let anyone see you sweat.
Hope this list helps you on your journey.
What obstacles have you encountered trying to raise capital in the past, and how were they resolved?