Every business is set up with the sole aim of making profit and real estate is not an exception. Without money, businesses are threatened. In Nigeria today, many real estate investors, have difficulties in financing their businesses as a result of financial constraints, cash-flow issues and also bank stress (loan objections and interest rates). Nevertheless, some real estate developers have discovered that there are other ways to find the much needed capital to finance a real estate project.
So, we have come up with few ways to source funds for a real estate investment
- Through Family and friends
You might be wondering how your family and friends will finance your real estate business, here is how it works. The first thing you have to do is research to find individuals interested in earning as low as 8-12% interest or whatever you deem attractive and affordable on investments with real estate. These people are everywhere, your church, mosque, book club, doctor, lawyers etc. Just spread the word. You might not get an outright yes, but trust me you will eventually find people who like extra money.
- Partnership Agreement
If you have big ideas, strong business plans and a great track record, then you can get a partner who has what you don’t – Money. The person can provide the money while you provide the managerial aspect of the business. You should also discuss how profits will be shared. Make it a win – win situation for your partner and watch it happen.
Creating a partnership, with a group of investors, provides a source of financing for your real estate investment.
- Bank Loans
Borrowing from banks is an important source of finances to companies. With a viable business plan and business proposal, commercial banks provide a short and long term funding to real estate investors.
Crowdfunding is a new tool for raising money for businesses and a much easier way to access such ventures for investors. It utilizes social media platforms to reach an audience of potential investors. The idea behind crowdfunding is that many people are willing to invest a small amount, and when they do, large sum of money can be raised quite quickly. It opens doors for businesses to investors they could never reach otherwise.