Property developers and builders can earn a great deal of profit from upcoming developments and invest in real estate projects. However, the challenge lies in raising capital for their forthcoming projects without giving away too much equity. Be it early-stage developers or seasoned builders; both struggle to raise capital for their new projects. From meeting multiple lenders in order to find the most suitable option to pitching investment opportunities to high net worth individuals, builders and developers really have to work hard towards raising capital. If you are a property developer or a builder who is looking to raise capital for an upcoming project, here are 5 easy ways to raise capital with the lowest equity brief.
Peer to peer lending
Peer to peer lending has always been a widespread method among seasoned developers and builders in order to raise capital and finance. Basically, builders and developers approach peers and high net individuals in order to seek a loan for their upcoming project, which is then paid along with the predefined rate of interest. Check the widely used E-learning app development. Nowadays, there are quite a few peer-to-peer lending platforms in the market, making it easier for builders and developers to connect with like-minded investors. Of course, the amount of capital raised and the rate of interest on the loan depends on the reputation of the builder and the specifications of the upcoming project. For seasoned developers, raising finance for property development using peer to peer lending is always fruitful.
Crowdfunding platforms
Crowdfunding platforms have become a trendy online finance raising tool for property developers in recent years. There are quite a few websites and platforms that have come about in recent times which help builders and developers connect with various investors. Some crowdfunding platforms are solely made for builders to connect with high net worth individuals, while others connect developers with high turnover and angel investors. Some crowdfunding platforms allow the average person to invest a certain amount in upcoming projects while some provide debt and equity investment opportunities to potential investors. There are also quite a few platforms that connect builders and developers with accredited investors who can finance hard money loans, bridge loans and even mezzanine debt.
Joint venture funding
Joint venture funding is a prevalent concept among builders and developers. Basically, joint venture funding is when builders and developers form a temporary partnership with other builders and developers in order to pool their resources and complete an upcoming project. The terms and conditions of the partnership are decided beforehand, and the equity is predetermined before signing the contract. In some cases, builders and developers can team up to share resources on a profit-sharing basis, in which case the equity does not get diluted.
Online tools
There are many platforms and websites which have been created for developers and builders to secure funding. Read the important pros and cons of using Python for web development. Using online tools and platforms, property builders and developers can secure various loans such as mezzanine debt, 100 per cent development finance, bridge loans as well as short term equity and senior debt loans.
Applying for a loan
The simplest way for developers and builders to secure funding for their project without giving up any equity is by applying for a loan or a line of credit from a bank or a lender. However, in this case, the rate of interest for the loan or line of credit depends on multiple factors such as the reputation of the developer, the number of years in the industry, the scope of the upcoming project, the timeline for the project, the amount of credit required, the financial status of the builder and so on.
