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7 Ways to Raise Down Payment Money for Commercial Real Estate

Author: Betty White
by Betty White
Posted: Feb 28, 2020
real estate

Whether you've been in the world of commercial real estate for a long time or you're a newcomer, it's always good to brush up on ways to raise down payment money for commercial real estate. Having said that, know that not every way is going to work for you personally. Luckily, there are a lot of different options and you can even make use of more than one. In other words, you can use a combination of two or more ways for a winning combination. Depending on which stage of life you're in and what your previous experience with commercial real estate is, you'll have more or fewer options available. However, if you're a rookie, don't dwell on it. If you are persistent and resilient enough, you'll have more options open up for you in no time at all.

Think, but don't overthink

Don't get us wrong, there definitely is some truth in the old 'think first, act later' saying. However, it's quite obvious that whoever said this, most certainly wasn't a big shot in the world of commercial real estate. What we mean by this is that in this world everything is very fast-paced and fluctuating. Oftentimes the offers go on and off the table quickly and there's no way of predicting it. Be decisive, listen to your instincts and use the chances you get wisely and you'll relocate your firm to its new address in no time at all.

7 ways to raise down payment money for commercial real estate

After you've considered everything before investing in commercial real estate and made your decision to proceed, there are new problems that may occur. As you know, commercial real estate prices can be very high. There's no denying that. And then on top of it all, there's usually a fair percentage of the whole price that you need to pay in advance. It goes as high as 30 percent.

It can be very overwhelming reading about success stories of people who somehow managed to get three 59.7 million non-recourse construction loans when you can't even begin to understand how to start the process. The whole ordeal can be quite stressful and it's easy to just give up if you don't have that kind of money just lying around. However, with the option of raising down payment money for commercial real estate, your life can become a lot easier. Luckily for you, this can be done in a number of ways.

1. Private investors and sponsorship

Firstly, if you decide to use this way of raising down payment money for commercial real estate, you need to know how to protect yourself. This might sound a little strange at first. What we actually mean by this is that you shouldn't hesitate to get your attorney in the game as quickly as possible. This should be done even if you personally know and trust you the future investor to some degree. Its purpose is to protect you, but it is also to protect them. This means that if their intentions are clean and they are actually doing this to help you and earn their agreed share, they will not hesitate to sign an agreement.

There often is a stigma of not having access to enough of investors to make a good choice. There's a lot of ways you can find an investor:

  • Ask your colleagues

    If you're in this business sometime now and have been looking for ways to raise down payment money for commercial real estate, you must've stumbled upon a few colleagues that have some experience in the matter. Ask around for some advice on how to find the best private investor or sponsor.

  • Search the web

    There are a lot of people who share their own experience and advice just for the sake of helping others. Don't hesitate to reach out to them.

  • Let them come to you

    By making a good name for yourself, there's a big chance that they'll come to you with propositions. The trick with this one is that you have to be patient. Slow and steady wins the race.

2. Ask for a loan from your friends or colleagues

If you're a cautious person and don't like mixing your private and professional life, we get it. This way of getting down payment money for commercial real estate is not for everyone. However, you might want to wait before completely ditching it. If you approach your friend in the same manner as you would a potential investor, you won't have as much to lose. If you think about it, it's sort of a win-win situation 'cause you'll know exactly who you're in business with and won't have that factor of fear stopping you from making this decision.

3. Sell real estate

If you've been in this business for a while, you might have some real estate lying around. If buying this commercial real estate is something that you really want and think is a great career move, you might want to consider this. Making a certain sacrifice when something greater comes along is risky. However, depending on your certainty of its success, it just might be worth it.

4. Raise down payment money for commercial real estate with crowdfunding

Crowdfunding is getting more and more popular these days, and for a good reason at that. It is a similar process to our first step. However, it has a couple of improvements. It uses the Internet as a sort of a mediator. This means that getting loans will be much easier and more approachable. It also, as a rule, has more people donating to the same cause, your commercial real estate in this case. With this, the chances of someone deciding to fund your project are significantly higher because of the lower risk of their (and your) failure.

5. Negotiate the down payment

Although a somewhat obvious step, many fail to remember it. Whether we're talking about apartments sold for 110.25 million dollars or just a simple, non-extravagant exchange, the principals are the same. It easy to forget that the initial proposal you get doesn't necessarily have to be the final one. Of all the ways raising down payment money for commercial real estate, this might be the least stressful one. The chances of its success might not be the greatest, but it doesn't hurt to try.

6. Do it the old fashioned way

If you have a decent income on the side, this might be an option for you. There are banks out there that are open to commercial real estate lending. If you're a rookie in the whole ordeal, it probably isn't the best idea for you seeing that banks prefer to cooperate with people who's income balance has been, well, balanced for a while. But if you are, see into this option and think about its advantages. Extra tip: Beware of hidden moving costs!

7. Partner up

If you, for whatever reason, have tried or thought about using all of these options to raise down payment money for commercial real estate and they just don't work for you, don't worry. You can always take on a partner. This way you'll have someone to rely on and, who knows, maybe your business will blossom more than it ever would if you were on your own.

About the Author

My name is Betty and I have been writing expert articles in relation to the moving industry for the last couple of years. Besides this specific area, I am also experienced in other spheres pertaining to the concept of relocation.

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Author: Betty White
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Betty White

Member since: Jan 16, 2018
Published articles: 118

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