Accredited Real Estate Investors Vs Loans to Fund Your Deals

Securing a real estate investment deal that will generate a comfortable revenue stream for you is your dream. Unfortunately, if you’re like many real estate investors, you’re currently walking through the nightmare of figuring out how to fund real estate investment opportunities.

You’ve considered going to local banks to get help with funding your deals, but these traditional lenders may not necessarily be the best entities to partner within your real estate business. Instead, you may want to consider going to an accredited real estate investor to fund your deals with passive investment capital.

Here’s a rundown on who accredited investors are and how they can help you to more easily achieve your financial goals than a traditional lender can.

A Glimpse at the Accredited Investor

These individuals are different from banks and even hard money lenders in that they are not professional lenders themselves. Instead, they are high net worth individuals who are looking for greater returns on their monetary investments.

By definition, an accredited real estate investor in 2019 is any person whose income surpassed $200,000 in both 2017 and 2018. This figure jumps to $300,000 if he or she has a spouse. Or, an accredited investor is anyone whose net worth exceeds a million dollars (with or without a spouse). Accredited investors also include trusts whose assets total more than five million dollars or entities where each equity owner is an accredited investor.

Get More Flexibility

If you’re wondering how to fund real estate investment opportunities, a major reason to choose accredited investors over banks is that passive investor money doesn’t come with the types of points and fees you get with traditional lenders. In addition, you can more easily negotiate the loan’s term length in a manner that will best serve your interests and the other party’s interests equally.

These Investors are Qualified to Work with You Financially

In addition to offering flexibility in the area of funding, an accredited real estate investor has the net worth and income needed to finance large deals—something that small investors simply can’t do. This is a major advantage because these investors enable you to take advantage of opportunities you otherwise may not be able to tap into. These deals may include a large apartment building or even a retail shopping center investment, for example.

Knowledgeable Partners

If you’re wondering how to fund real estate investment opportunities, having accredited investors on your side is also a wise move, considering that investments in real estate are inherently complex.

Accredited investors are known for having extensive experience and knowledge in business and financial matters, particularly when it comes to evaluating a prospective deal’s risks and merits. In addition, these investors are sensitive to market conditions at the local level as well as the nation’s economic cycle. Therefore, with the help of an accredited real estate investor, you can more easily understand your investments’ risks and thus absorb possible losses.

You May Have More Success with Obtaining Funds through Accredited Real Estate Investors

Another major reason to consider passive investor capital over loans to fund your deals is that you may have more success.

The reality is, banks are tightening their standards when it comes to commercial real estate loans. As a result, going through the process of attaining a bank loan can feel like fighting a battle that will never end. However, with an accredited real estate investor, you don’t have to go through all of the red tape associated with banks. This means you can get your deals funded more quickly and without the headache that banks typically cause.

What Accredited Investors Get Out of the Deal

So, why exactly are accredited investors so much more agreeable and easier to work with than banks in general? Here are a few reasons.

Higher Returns

First, whereas banks tend to be more cautious, an accredited real estate investor is more willing to take greater risks, as these risks lead to higher returns on their cash. Some of their deals can easily generate returns of around 8%, mirroring what they’d likely get in the stock market, but other deals can lead to returns of between 15 and 25%.

Accredited investors are generally willing to take on the additional risk of working with you and having an illiquid investment because they know that the returns will be higher than what they may get with bonds, stocks, and real estate investment trusts.

Diversified Investments

Seeking funding from an accredited real estate investor rather than a bank is also a wise choice because these investors are all about diversification. Because today’s stock market remains volatile, investors are focused on diversifying their portfolios by pursuing assets that aren’t as correlated with the market. These assets include, for example, industrial buildings and apartment buildings. In this way, if the stock market ends up tanking, their real estate investments can help them to buffer their losses.

Start Investing with the Help of an Accredited Real Estate Investor Today!

If you’re trying to figure out how to fund real estate investment opportunities, you generally can’t go wrong with an investor. These investors can quickly become your new partners, helping you to more quickly and efficiently achieve your monetary goals in real estate.

The question is, how exactly do you go about seeking these investors and taking advantage of their funds? I can show you how to start using accredited investors’ funds instead of going to banks. With my help, you can become educated on this funding method and learn how to network with investors, all the while practicing due diligence. Contact me today to find out how I can work with you to take your real estate investment business to another level this year.