Raising investment capital is a challenge in today's tight credit market. Today, I want to share creative ways of raising capital that you should be employing. Namely, networking with people that invest in business opportunities.
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Look around at those that are the most successful at real estate investing and you're sure to notice one thing they have in common is networking. People that are making serious money and have the best deals have large networks throughout the business community.
You will find plenty of networking opportunities at the local level. Real estate investment clubs, the chamber of commerce, and civic clubs like the Rotary and Lions are great places to meet people looking to network for business opportunities just like you are.
Building Your Financing Network
Here is some important advice. Your need to be networking for financial capital well beyond the real estate industry. However, these key players are naturals for your financial network:
But don't limit your network to the real estate investment profession. You want to follow the money.
Accountants Know Where the Money Is
Getting to know accountants on a professional level is a must when you're looking for nontraditional real estate financing sources. Who knows where the money is better than those responsible for counting it? Accountants are constantly giving investment suggestions to those that entrust their money to them.
Bankers might not be willing to make you a loan but they know people with money that are willing to make you a loan. It's about finding the people that know individuals having money to invest. You may be surprised at the number of financial sources you'll find outside of the real estate profession.
Doctors and dentists are other groups that you should approach for investment capital to grow your real estate holdings. As a group, medical professionals are constantly on the look out for investment opportunities.
And then there are angel investors. These are people that have already made a large amount of money in business. Many made their fortune in the technology sector where they build a business and then sold it for tens of millions. Now they are looking to help others achieve their business dreams.
However, take angel investors with a caveat. Their business model is to invest a large amount of money in other people's businesses but not as a loan. Instead, they take an equity position in the business, meaning they become a business partner with you. If you structure it correctly, you can make this work with real estate investments. Instead of allowing them to take part ownership of your entire business, convince them to take part ownership in independent properties you invest in.
The bottom line is this is a fantastic time to be investing in both the residential and commercial real estate markets while they are still close to the bottom of the cycle. I've found the only thing holding most investors back is the difficulty finding financing because of the tight credit market. That should never hold you back when you find the right real estate investment. When the opportunity is right, the money will follow. All you need is to partner your real estate investment expertise with private money that is looking for the best investment opportunities.
Author bio: Brian Kline has been investing in real estate for more than 30 years and writing about real estate investing for seven years. He also draws upon 25 plus years of business experience including 12 years as a manager at Boeing Aircraft Company. Brian currently lives at Lake Cushman, Washington. A vacation destination, a few short miles from a national forest in the Olympic Mountains with the Pacific Ocean a couple of miles in the opposite direction.