# Real Estate Partnerships, Mortgages & Capital Raising # EntrepreneuroftheWeek # Post4 #DaniBeitOr - Warning:…
# Real Estate Partnerships, Mortgages & Capital Raising
#EntrepreneuroftheWeek # Post4 #DaniBeitOr -
Warning: This post was not written in the context of Corona
Financial constraints and solutions
Many investors, beginners and advanced, find it difficult to start or even continue investing because of financial constraints.
There are several ways to overcome this obstacle.
Loans
1. The trivial solution of course is to take out a mortgage. Many investors whose center of life in Israel thinks they cannot get a mortgage in the US - this is not true, it is possible. Some banks are willing to give their mortgage at market interest rates.
The main problem of these banks is that they have to build a borrower profile for everyone and it takes time, and even then these banks will use mechanisms to protect themselves in terms of risk, and therefore will require higher capital adequacy or higher interest rates than market interest rates. But it is important to understand that there are "ordinary" mortgages - that is, from institutional entities.
For some of us, the direction of a loan from a non-banking entity, for example a flip deal, can also be a solution. For those who work in this direction, it is important to understand that there is quite a bit of ability to negotiate with such a body.
Negotiating guidance on mortgage terms. For example, the ratio of the value of the property / the amount of the mortgage will affect the interest rate, in addition, the borrower's experience can also affect the terms of the loan.
I recommend that those involved in this field collect and track the transactions in an orderly manner so that in the future they can present past transactions that testify to the experience. These entities are often willing to give a discount to a returning investor.
3. There is also the possibility of taking a loan or mortgage in the country on an existing property.
4. There is also the option of an owner loan. Quite a bit has been written about this topic here. And is a topic for the post in itself.
5. There is another option that is less common in the country - a private loan.
What is a private loan? - An entrepreneur takes a loan from a friend, and not from a commercial entity, and against this loan gives him collateral in the property just as a bank or commercial entity will grant.
That is, instead of raising capital to execute a transaction, an entrepreneur can raise capital in the form of a loan from a friend or group of friends.
Before anyone goes in this direction it is important to know how to build control mechanisms for such a loan.
Partnerships
Many entrepreneurs operate in an approach of raising capital in partnership. That is to bring in a passive or active partner and work on some model of profit sharing one way or another. This is a great method and there are many ways how to maximize it.
But I would like to talk about a different kind of partnership. Something I see less and always think can be significant for a lot of investors at all sorts of experience levels.
Many times we think of a partnership as something between an entrepreneur and an investor. I personally very much connect and really like the direction of two entrepreneurs, especially with the novice entrepreneurs, who invest together.
For example, two investors who buy one property for $100,000 in cash instead of two properties for $50,000 each. There are several benefits here:
First, we probably bought at 100,000 a better quality property.
Second, bringing in a partner cuts the risk in half for each party.
Third, connecting with an investor with a profile similar to my profile.
Throughout my career I have seen quite a few times couples who are investors who have decided to invest either together right in one deal or go through the process of investing together that each one buys his property.
In my opinion and experience, when there is a combination of two people with a similar investment profile, the chance of success in terms of execution and investment increases significantly. Precisely two is much stronger than one but also three or more.
I therefore suggest mainly to those who have various inhibitions to locate a friend with a similar profile and invest the capital together or do the decision-making and investment journey together and in the end everyone buys their property. The chances of success are in terms of making the investment and not in terms of the investment itself in my opinion will increase significantly.
What other ways do you see or do to overcome financial constraints?
What other types of partnerships or capital raising are you running?
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