By Greg Herlean
If finding the money for your real estate deals is proving to be a giant headache and putting a damper on your real estate dreams, don’t worry. You’re certainly not alone. Of the thousands of real estate investors Mike Baird and I mentor each year, at least half of them refer to their lack of access to funding as being a major obstacle to their success.
The good news is that today there are more financing opportunities out there than ever before—if you know where to look.
Approaching a bank to provide you financing to fund your real estate business can lead to disappointment—fewer than 30 percent of businesses are actually funded this way.
Don’t get discouraged with those kinds of odds. This is where you have to get creative.
Don’t limit yourself to traditional banks. Instead, it’s all about thinking outside the box. Two of the biggest trends in real estate funding are peer-to-peer lending and real estate crowdfunding.
Peer-to-peer lending is literally one person, or peer, loaning money to another. No banks are involved. This is also known as a private money loan—and contrary to what you might think, it’s not about tapping a friend on the shoulder to spot you some cash. Peer-to-peer lending is big business and there are many organizations set up to match investors with opportunities. This kind of lending has been successful in countries all around the world including England and New Zealand, but it is still just catching on in the United States.
Another new trend in creative funding is crowdfunding. Crowdfunding works quite literally as its name suggests—funding sourced from a crowd, usually using an online platform. You might already be familiar with crowdfunding sites like GoFundMe.com or Kickstarter.com. There are crowdfunding opportunities specifically for entrepreneurs, and even those specifically catering to real estate entrepreneurs.
Bear in mind that peer-to-peer lending and crowdsourcing are just two ways of financing your real estate deals out of a list of more than 39 different options that I could rattle off without thinking twice.
The bottom line is this: you don’t need banks to loan you the money to succeed in real estate investing. You don’t even need good credit to be loaned money. All you need is a great real estate deal and an investor, or a group of investors, that can see the value of the deal, and who are happy to pony up the cash in return for your sweat equity.