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Many people dream of investing in property but one of the major hurdles is lack of capital. The fact is that property investing requires substantial amount of money. However, if your savings are not enough, you can still raise the capital through other means. Here, you will learn a variety of ways to raise capital for investing in property
Methods of raising property investment capital
This is always the first option for many people. If you want to invest in property, you can start saving for that. You can start saving by opening a savings account in any of the financial institutions, mutual funds, cooperative societies, etc. Just make sure that your savings are in a reputable organization. However, raising capital through savings can take many years before you can afford to invest in property.
Family and friends
You can raise property investment capital by borrowing from your family members and close friends. These are people who know you better and can give you money easily depending on your relationship. Therefore always create and maintain good relationship with your friends and family members because they may be your source of capital. However, do not take advantage of this and fail to repay the money as agreed.
This is another great way of raising capital for investment in property. You can look for partners to share the cost of the property and returns too. In most cases, it is you who will be in charge of developing and managing the property because it is your idea. The partners can be individuals or a company. Some partners can also provide full amount needed as long as the property investment is attractive and likely to generate higher returns. Have a good business pitch to convince your parties to give you the capital.
You can also raise capital for property investment through borrowing from lenders. There are numerous financial institutions, such as banks, that provide loans at an interest rate. The amount of loan you can borrow is usually determined by your credit score and collateral. If your credit rating is good or have some collateral, raising capital through a loan will be simple trough relatively expensive because of the interest rates. Some of the specialty loans you can borrow are mortgages.
You can also raise capital by pitching your property investment idea to a group of private lenders such as venture capitalists, angel investors, etc.
Real estate crowdfunding
This has also become an alternative source of capital for many real estate projects. You simply submit your project on a real estate crowdfunding platform and their registered investors who are interested in the project contributes the amount needed. Thereafter, you develop the project and payback principal amount and interest as agreed.…
Property prices in many parts of the world are impressive and this has always attracted many investors in real estate sector. The sector principally generates higher and steady returns, things that every investor looks for. However, there are several factors that you need to know before making that final decision of investing in real estate. By understanding and considering these factors, you will be in a better position to make informed investment decisions. These factors are discussed below
What every real estate investor should know before investing
Know the market
As a potential investor, the first thing you should do is to study the current real estate market. Do extensive research about trends of property prices, market performance in different geographical locations, and performance of different types of properties. By doing adequate research, you will avoid making numerous common mistakes among real estate investors.
Know the location
Property prices are largely influenced by location. Before you invest in real estate, make a decision on where the property you are looking for should be located. Some of the areas that are likely to generate higher returns are those that have high employment rates, great tourism rates, numerous development projects (such as infrastructure and social amenities), etc. You can also check the track record of the area in terms of increase in property prices and value. Therefore select the right neighborhood.
Know the type of property
There are two major categories of properties: residential and commercial properties. If you opt to go for residential properties, you can decide whether to invest in single family, multifamily, new or established properties. Another decision you should make is whether you want to invest in buy-to-let or buy-to-sell properties. Other property types are non-luxury or luxury, and low-end or high-end properties. Do your homework and choose the property you want. Knowing the type of property can help you to decide whether to focus in a specific niche or to diversify.
Know the process and charges
Investing in real estate is usually an involving process. You will probably need an attorney to help you through the process. For this reason, you need to know all the steps needed, necessary documents, and charges for each process. Remember that besides the cost of the property, you will have to pay several other hidden charges such as legal fees, negotiation fees, inspection fees, etc. You need to do some calculations so as to have enough money to complete the investment process.…