How Do You Finance A Commercial Real Estate Purchase?
If you enjoy making money, you most likely look for opportunities past the conventional savings many people do. Most people save up six to nine months of income in a bank account or money market fund and then start saving for retirement in stocks and bonds.
It's good to do all that yourself, but if you already have plenty of money there, you've likely turned to real estate to make even more money. However, the residential real estate market might not be right for you. Either you're already active in savings, money market funds, stocks or bonds and looking to branch out, or you want to get involved in commercial real estate investing given its higher potential for a better ROI.
The profit potential is higher, but so is the entry fee. The simple truth is that you need help if you want to finance a commercial real estate purchase, so keep reading to learn 5 ways you can go about it:
1) Dip into your own savings: This way is very dangerous because if any property deal goes south, it could ruin you financially quite drastically. You might think there's no other way, but it's quite risky to do.
2) Find an investor: If you're not able to afford something on your own but ready to do a lot of the work, then finding a silent partner or financial investor is a way to bring spending power to the table so you can get in the door and start working on a property.
3) Join or create an investment group: Investment groups can be anywhere from a handful of people to an entire group. They all have one thing in common: a bunch of people get together to pool their money because their collective investing power is far greater than any of them could individually get done on their own.
4) Talk to banks: Whether you use your own personal credit or establish a formal business entity, you might be able to borrow the money you need or even arrange for a purchase or commercial loan. You can use this to find the money to buy your commercial real estate, which pays for itself and then some in some form or fashion. We found getting a commercial loan from Highrise Investment Group very helpful.
5) Online Crowdfunding: Crowdfunding has become a viable resource, especially through sites like GoFundMe or Kickstarter. The chances of you raising enough money to get a commercial piece of real estate are rather low considering the money involved. And in the case of something like Kickstarter, you might only get money if you promise something in return. Still, it's worth looking into. On the other hand, you might also be better off looking for investors.
The right commercial real estate purchase can make you money from leasing and renting to businesses, making money off the businesses on the property directly, or even just buying and flipping. Whatever the case, you now know 5 ways you can finance a commercial real estate purchase.