Are you looking to step into the exciting world of real estate investing? Setting up a real estate business is lucrative and fulfilling. It provides an incredible opportunity to help people find their dream homes while building a passive income stream.
That said, getting your big break in real estate investing is not easy, especially when you don’t have the money to start investing. Raising the required capital is a massive concern whether you’re just starting in the real estate business or need money to capitalize on an available business opportunity. Fortunately, there are several funding options to give wings to your real estate dreams.
This post will outline the three most popular real estate funding options for entrepreneurs who need cash fast.
1. Transactional Lender
Real estate wholesalers often use transactional lenders, especially when they need immediate funds. Instead of the loan coming from a traditional lender like a bank, a private individual or company loans the amount. The most significant benefit of transactional funding is that it’s quick. You don’t have to go through any credit checks or wait weeks for your loan to be approved.
At DoubleClose.com, we fund different real estate deals and specialize in working with wholesalers across the country. We can provide immediate funding with no minimum or maximum limit, and our simple qualification process ensures that you get the required funds immediately with minimal hassles. Private transactional lenders like DoubleClose.com are more open to backing non-traditional real estate projects, helping you reach your real estate goals.
2. Real Estate Crowdfunding
Traditionally, real estate was considered the playground of wealthy individuals and companies with deep pockets. The 2012 Jobs Act changed the status quo, and today crowdfunding presents a viable alternative for budding entrepreneurs to get started with real estate investing. Rather than searching for properties independently, they can use crowdfunding platforms to choose from available investment properties and participate with other interested investors.
But crowdfunding has its disadvantages. Unlike traditional fix-and-flip property, you have much less control over the outcome. Also, depending on the number of investors, it can take several months to raise the necessary funds to pay for the property.
3. SBA Loans
The Small Business Association (SBA) acts as a guarantor of repayment to banks for new entrepreneurs. The guarantee gives banks the confidence to take more risks, making it easier for entrepreneurs to secure loans in cases where they were previously denied. While the actual loan amount varies case-by-case, you can get up to $2,000,000 with SBA loans. Other benefits include lower down payments, longer repayment terms, and protection against balloon payments.
The caveat is that you cannot use SBA loans to invest in real estate. However, you can use them to start a real estate business, such as a property management fund or a brokerage. Another hurdle is that only entrepreneurs with high credit scores qualify for SBA loans.
What Real Estate Funding Strategy Is the Best?
Financing a real estate venture requires plenty of planning and thought. Review all your options, run through the pros and cons of each strategy, and understand the best option that fits your requirements.
If you’re looking for the best transactional funding lenders near you, reach out to Double Close. We can help you secure the funds you’re looking for within 24 hours. Fill out this form, and our team will get back to you within the next few hours to discuss your real estate venture.