Raising Real Estate Investment Funds
Getting involved in real estate and starting your own investment company is one of the best ways to generate sustainable income and build wealth. To enable you to buy into larger deals, such as apartment syndications, however, it may be necessary to get real estate investment capital from accredited investors who want you to go out and find the properties while they provide a portion of the financial support.
There are a variety of advantages that come from raising funds this way, including:
- Larger Deals
You may not have the real estate investment funds to purchase a 500-unit apartment community or a large commercial building, which is where your fellow investors come in. Combining forces (and capital) means you are able to bring them larger investment opportunities.
- Additional Support and Advice
It’s possible the passive investors you work with have been involved in real estate for a while, and you can gain some wisdom from their experiences and advice. Maybe you want the low-down on recent market trends in the area or you’re not entirely sure how to find potential buyers once you’re ready to sell. Similarly, being responsible for other people’s money will give you a great incentive to invest in only those properties you know will offer a big return!
- Long-Term Capital Gains
The larger the deal, the larger the potential return on investment (ROI). Your cut of the sale will obviously depend on the terms of your agreement with investors, but the revenue earned from an apartment deal is likely to be more than on a single-family home, for example. Plus, while a rental property is still in the hands of you and your investors, you will collect that rent as well.
It’s easy to understand why so many people today are interested in getting involved in real estate. But how do you know where to start looking for accredited investors? Particularly if you’re just starting out in the business, raising real estate investment funds can be challenging.
Here are my top 3 recommendations on how to raise real estate investment capital:
Build Trusted Partnerships
One of the best ways to raise the capital you’ll need is by using your network. Especially if you don’t know where to start, start with what, or in this case, who you know. Think of every person you’ve met and whether or not you think they would be interested in real estate. Once you have narrowed down your list of both personal and professional contacts, begin scheduling time to meet with everyone on that list to discuss your plan. Even if they are not interested in investing with you, they may be able to introduce you to someone who is. It is always important, particularly in business and real estate, to build trusted partnerships and relationships. Keeping in touch with the right people could help you land your first big real estate investment.
Develop a Strong Back and Forth Conversation
Once you’ve started identifying potential investors and contacts to target, you’ll need to offer them the deal and center the conversation around why you think it will be a good investment for them. Having a strong plan that grabs the attention of your investors, while also providing an overview of the project, is key.
One of the most important things to remember when preparing for the discussion is to be authentic. You’re asking people to invest their money in you and your knowledge, so you need to make sure that it is something that you fully believe in. Don’t be afraid to practice and rehearse until you have a strong command of what you want to say.
Time is precious, so you should be able to quickly brief anyone on your idea in a few minutes. After you’ve been able to get their attention, you can then go into greater detail about your idea and the investment opportunities.
Build Your Brand
Building credibility is one of the most important aspects of raising real estate investment funds. Investors only want to give their money to people they trust and know are credible. Building your own brand is a great way to build legitimacy when first starting out in the real estate business. One of the most effective ways to do this is by creating thought leadership content.
Having your own thought leadership channel is a great way to build your brand and also reach a broader audience. Examples of thought leadership channels include having a podcast, YouTube channel, blog, or being a contributor for a notable website or financial magazine. The key is to actively get your ideas and content published so that you are able to reach as many people as possible. In addition, regularly sharing your strategies, ideas, tips, and tricks is a great way to build your audience but also your credibility.
Raising real estate investment funds is a great way to begin your journey of investing in larger and larger deals. As the real estate market continues to grow and change, there are endless possibilities. By creating lasting relationships, having a strong conversation, and building a solid brand, you’ll be able to lay the foundation for a success in real estate.
Learn more about raising funds through various means here.