How to Get Investors for Property Development

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Today, you'll learn how to source investors for your property development projects.

property development

We all know the challenges that present themselves when entering the real estate investment market. Working out which sector or area you want to invest in is only part of the battle. Funding your investment and finding investors can be the real challenge. If you have decided that you want to get into property development, you are going to need to find funding through investors. But this can be easier said than done. So, what are some ways to get good investors for your property development project?

What exactly is property development?

Before we start working out how to find investors, we need to establish exactly what we are wanting the investors for. If you are wanting to enter the world of property development, what does this mean? Medium mentions that property development is all around us. If we are surrounded by real estate, then we are surrounded by real estate development. And for those who are interested in investing in property or real estate development, this means the process of developing buildings or land into a high use value.

Property development is more than simply purchasing property. It is the raising of the value of that property for investment purposes. If you are a developer, you could say that your job is to add value to any properties you own or manage. Property development has the potential for very high returns. However, like anything in real estate it comes with risks.

What are the best ways to manage risks with property development?

Property development like any real estate strategy has the potential for high returns, but also for major risks. If you are looking for investors for your development projects, you will need to demonstrate that you are able to mitigate these risks in order to create a sense of security. After all, it is not only your money that is at risk with some of the large development projects. Property Development System highlights some of the key ways to best manage potential risks.

No matter what source of funding you choose, there will be risks. But with some management these can be managed, and even used to the benefit if your project.

What are methods for sourcing investors?

Unless you have a large contact list of savvy investors on speed dial, you will need to source some outside assistance to help fund your project. One common way is mentioned by Gower Crowd as being the following:

You may find it difficult to get sufficient funding for your development projects. A lot of projects require high capital and because of the risks, you may be faces with resistance.

Can you use a loan to fund real estate developments?

While it is always going to be preferred to have a few investors assisting with the funding of your real estate development projects, it is actually possible to finance using a loan. There are loans by certain lenders specifically for real estate development. These tend to be higher interest rates than standard loans, however if you find a development project that you think can be very profitable, it can certainly be worth it. Other ways to finance development projects with loans are through individual investors or investment companies (source: Chron).

One good strategy for financing a development project could be combining debt and equity. You could use a loan for a portion of the project (say 60% – 80%), and then source individual investors for the remaining. That way you have the lender as a source of debt, and the other investors as a source of equity.

Conclusion

Real estate or property development can be a very profitable and rewarding field of real estate to get into. Although finding investors and different sources of funding can be one major barrier. But there are ways around it. So, whether your find individual investors, bring your family on board, or even take out a loan, there are ways to get the capital to begin your next project.

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About the AuthorCharles at infoSpike

Charles is the founder of infoSpike.com. His real estate investing experience started in 2004 and he is currently focused on rental property projects. He enjoys learning about real estate investing, personal finance, and marketing. Read more about Charles here.

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