How to Get Commercial Real Estate Financing Without Bank Loans
Succeeding in commercial real estate requires grit, know-how, and a whole lot of capital. If you’re ready to start or grow your firm, you may wonder how to get funding best. The traditional route of bank loans can be frustrating and time-consuming.
If you would rather avoid the hassle of a bank loan, you still have options., Below are a few ways you can get commercial real estate financing without relying on bank loans.
“Crowdfunding” has become a buzz word in the financial word, but it’s so much more than that. New crowdfunding sites have become successful in the real estate sector. You can post the details of your project on one of these sites.
Make sure that you show why your project will benefit potential donors. People can then see why they should donate and can give money to your cause. Don’t mistake this as a silly trend that’s going away. Crowdfunding can get you some serious financing.
Joint Venture Partnerships
Some people have the ideas but not the money, while others have the money but not the ideas. If you’re the former, consider working with a financial partner. Your partner will expect a percentage of the profits.
There are plenty of ways that you can get this type of partnership going. Whether you want someone who has just some of the funding, multiple partners, or some other arrangement, you can make it happen in the commercial real estate business.
Another way to finance your project is your seller. This set up is particularly useful for rehab projects. Typically, this type of financing costs less than more traditional routes. Furthermore, it keeps your seller invested in the property both literally and figuratively.
Why would a seller want this? Most of the time, seller financing can delay tax payments and lower the burden altogether. It’s honestly a win-win situation, which may seem rare in this business.
You can use the equity in one property as a sort of collateral for another project. You give someone equity in your completed property, and that entity gives you money to invest in your new project. Then, when the newer one sells, you buy back the equity in the first project.
This is one of the more complicated ways to finance a commercial real estate project. However, it can be quite useful. Make sure to speak to an experienced financial adviser about this or any financing you choose to pursue.