Tips On How To Raise Capital For Property Investment

Tips On How To Raise Capital For Property Investment post image

You want purchase an investment property or buy a home but are wary of taking out a mortgage. Here’s a few other alternatives to help you raise capital so you can buy your dream property.

Tip 1 – Friends And Family Investor

One way to go is to team up with members of your family or your close friends and pool your money and resources together. This way you can all come in as joint investors and get the property you’re after.  The benefit is that everyone will all trust each other and have a close bond. However, if you do use this method it’s important to remember that this is still business. You should hire a lawyer to draw up an agreement between all the partners and everything should be clearly spelled out in terms of what each persons investment, responsibilities and shares of the property will be. There’s nothing worse than a bitter family fall out over money so make sure everything is professional and transparent.

Tip 2 – Angel Investors

You can also access capital through private investors. These have many advantages over the banks and other financial lenders. There’s no limits to what you can borrow and you’re not tied down to a package you didn’t choose. However, to convince private lenders to invest in you will test your skills as a sales person. You need to outline a convincing case and have a strong presentation of what the investors’ will get in return. Here is where you will need to completely research the property investment you have in mind. You’ll also have to show the private lenders that you have a water tight system: that you are able to manage renovations; be aware of the market and meet all loan repayments and deadlines.

Finding private lenders has become much easier with the advent of the internet. There are a number of social lending websites where you can pitch your property investment proposal and hopefully pick up lenders straight away. Social media sites such as Facebook or Twitter are also excellent tools at reaching large numbers of people. You may also wish to target a specific industry (like lawyers or accountants) in which case you should network through their professional websites.

Tip 3 – Super Fund

You can also use your super fund to purchase property. There are a number of conditions attached to this and you will have to show that the property investment is viable and utterly safe. Also you won’t be able to touch any of the money you make from the property until you retire. Nonetheless, this is an excellent way of tapping into another line of credit. You should check with your accountant or financial advisor on how you can go about this.

Tip 4 – Extra Income Alternatives

There are many other ways you can augment your own personal income. One way is to take a second job. Even if its only a few hours a week, you’ll be building up a source of revenue you can tap into. If you currently own a property or home you  may be able to draw equity off it or else take out a second mortgage. Also consider making some personal sacrifices. If you go out fewer times a week, spend less on entertainment or cut down on luxury items then you’ll be making significant forced savings that can all go into your investment pool. These are just a few bits of property investment advice that may help you raise capital.

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  • imoti October 21, 2011, 10:45 pm

    convincing investors in these days is very very hard

    Reply