What are the most effective ways to raise funds for your biggest San Diego real estate ideas?
Some individuals simply dream of achieving, or re-staking their claim to, the American dream of homeownership. Others have goals of building sizable rental property portfolios. Some want to be engaged in developing the commercial property scene. A few have even grander visions. Among this group of visionaries and leaders are those that would like to transform the Southern California landscape with innovative new communities, revitalize inner city areas, green the waterways and preserve the coastline. However, the majority face one common challenge. They lack the funds to make their visions reality.
So where is the money at, and what are some of the best fundraising strategies for those aspiring to make their San Diego real estate vision a reality? Those looking for a place to start should consider the following real estate fundraising strategies:
Kick-Starting Your Real Estate Project
For many, real estate is the culmination of their life’s work. If the funds can be raised appropriately, it will be permitted to become a legacy that could be passed on for generations. However, the size of these aspirations are usually matched by equally daunting fundraising prospects. The bigger the dream, the more money you will need. So, before creating presentation materials and pitching the world, consider breaking the project into smaller stages. Approach each stage independently and they will seem more “doable.”
This does not mean scaling back your vision, but rather optimizing the path to achieve it. Obviously, in many (not all) cases, it is easier to raise less money with very specific goals at hand. Perhaps stage one would be acquiring the land. Stage two, building the first phase of the project, and then a final round of funding for put the finishing touches to the vision. Before going full speed ahead, it will also certainly pay to do some form of testing, get feedback, tweak and recruit some interest and fans that will help form some grassroots support.
4 Fundraising Options for Large Scale San Diego Real Estate Projects
1. Angels & VCs
Angel investors and Venture Capital firms have long been one of the first stops for entrepreneurs looking to fund aggressive business plans. These sources of capital are far easier to reach and get in front of today than they ever were before. Of course, there is a lot more competition for their money, and some will ultimately want more control, but it could be well worth it.
2. Partnerships
Promoters may also find that they can fast track to their goals through joint ventures or partnerships with contacts they already have. However, partnerships are not for everyone. You will want to evaluate each individual you are considering as a partner. Make sure you know, without a doubt, that you want to partner with them.
3. Commercial Mortgage Lenders
Commercial real estate lenders are becoming very aggressive about getting capital out the door and working to earn a return. They may be willing to fund on an equity basis alone, or help individuals release equity they have in existing San Diego properties.
4. Crowdfunding
Crowdfunding remains one of the best tools for raising large sums of capital, and in many ways can be more efficient than other strategies. Done correctly, it can propel your business to the next level with minimal effort.
Real Estate Investment as a Capital Building Vehicle
There is another alternative; one which could be even more attractive to those wishing to retain full control of their projects, and not have to be burdened with debt. Investing in real estate to generate cash is something everyone should consider. Flipping houses or wholesaling could be an excellent strategy for rapidly generating lump sums of cash to self-fund larger projects.
