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Different Ways To Raise Down Payment Funds For Commercial Real Estate

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Ten-X Commercial
Different Ways To Raise Down Payment Funds For Commercial Real Estate

Investing in a commercial property for sale in America usually requires big down payments. A lot of new investors run into issues as they try to save up money. They may even come across 36-unit buildings that have a cash flow of about $5000 per month but they may lack the $200000 to close the deal. This does not mean that they should give up. You are going to find ways to raise money to invest in commercial real estate using creative methods. Here are a few ways you can secure funds for down payment funds for commercial properties.

 

Capital from private investors

It is important to learn how to raise capital. There are two main reasons you should learn how you can raise capital: You are going to run out of money and it is the best way you can leverage your resources to do bigger deals. When you see a new building being built, it is not just one rich person financing this building. It is more likely that a group of people pool together their money to finance such larger projects. You should be the leader of this pool. You should be the person who knows different ways to raise funds.

 

Structuring a deal with a private investor

You can use an LLC if you know a private investor that is willing to put up all the money for a certain deal and you want to have an active role in the investment. Your lawyer can write up an operating agreement to explain what each of your roles is when investing in a property from a commercial real estate app. You will be managing the LLC and the investor will be a member with a title. This structure is very simple when dealing with an investor.

 

If you have more than one investor that is passive, then things will be quite different. There are a lot of disclosures and paperwork involved. You will need help from a lawyer with SEC experience.

 

Raising money using creative financing

You can raise money using creative financing in four different ways: seller carry the first mortgage, the master lease agreement, hard money loan and seller carry the second mortgage.

 

Raising money using self-directed IRAs

You can also use your self-directed IRA or another person to fund your down payment. Partnering with someone with a self-directed IRA can help you get funds. There are trillions of dollars in the IRA accounts today. You can invest in real estate using self-directed IRA through direct purchase, mortgaged-backed purchase, partnerships and a limited liability corporation (LLC).

 

Raising money using crowdfunding

You can raise money for investing in commercial property for sale in America using crowdfunding. Crowdfunding enables you to raise capital through the collective efforts of family, friends and investors. Crowdfunding taps into a large pool of people in an internet platform known as a crowdfunding platform. It leverages their work for greater exposure and outreach. To get funds through this method, all you have to do is to go to a crowdfunding website and submit an application.

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