Owning real estate is one of the surest paths to passive income and even wealth. If you’re a real estate agent, you have an advantage most people don’t – you come across properties that would be great investments all the time. The problem is, even if you see all the best deals, it’s meaningless if you don’t have the capital to buy into them.
You would be surprised to find out that raising money for deals isn’t as much of an uphill battle as you might think. There are actually several strategies you can use to raise money to invest in real estate, and the best approach will depend on your individual situation and goals.
Here are some strategies that you may want to consider as you look for ways to raise money to invest in real estate:
Use Your Personal Savings
One of the simplest ways to raise money to invest in real estate is to use your own personal savings. If you have been saving money over time, you may be able to use these funds to make a down payment on a property or to cover other upfront costs associated with real estate investing. If you own your primary residence, your home equity is a bit like a secret savings account and you can tap into it to buy an investment property.
Take Out a Loan
Another option is to take out a loan to cover the costs of investing in real estate. There are several different types of loans that you may be able to use. As a real estate agent, you might qualify for a personal line of credit or loans for small businesses using the track record of your business entity to show your credibility. Keep in mind that you will need to have good credit and a solid financial history in order to qualify for most loans.
Partner With Other Investors
If you don’t have the funds to invest in real estate on your own, you may be able to find partners to invest with you. This can be a good way to share the risk and costs of investing in real estate. Just be sure to carefully vet any potential partners and to have a clear agreement in place before moving forward. Syndication is an investing model where up to 10 investors pool their resources, which allows them to buy bigger properties, even commercial ones. Joining a syndication group would allow you to get into an amazing deal without financially overexerting yourself.
Partner With Your Clients
As a real estate agent, you already have a wide database of people and a lot of them actually have capital to help you invest in real estate. In this current economy, most people are taking their money out of things like the stock market because they’ve become too volatile. You can offer those people a safer place to put their money. Whether you need cash for a short-term real estate deal or a long-term buy and hold, your own sphere of influence probably has people who would want to partner with you on deals, and you can very easily reach out to them letting them know you have a great deal. If you don’t have your own money to contribute to the deals, you can offer to do all the legwork, while they provide the capital. You can also offer the same thing to friends and family who have access to capital. For most people, the offer to grow their money without them doing any extra work will be an offer too good to pass up.
Consider Alternative Financing Options
There are also alternative financing options that you may be able to use to raise money. For example, you may be able to secure financing through a hard money lender. This is especially great if you’re doing a short-term flip where you can pay the money back before the interest skyrockets. You could also consider a seller financing deal – this is where you pay the seller in installments instead of buying the home through a traditional mortgage. Make sure you’re 100% clear on the terms of these kinds of deals so that there’ll be no unpleasant fine print to come back to bite you.
Overall, there are many different strategies that real estate agents can use to raise money to invest in real estate. Don’t think that just because you don’t have the money yourself that you’ll never be able to get into an investment property. There are many sources you can tap into for the cash you need. By carefully considering your options and working with a financial advisor or other professional, you can find the best approach for your needs and goals.
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