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How To Finance Your Real Estate Project

19 Feb
Collins Okere February 19, 2021 0

Whether it is your first time embarking on a real estate project or not, we understand the difficulty insufficient funds can pose to your project. You might get discouraged when you think of how much you have compared to how much is needed to kick start and conclude the whole project. That worry can be overwhelming, but are you aware real estate development will almost always require outside funding? It might not be practical raising all the funds you need solely, especially when your project is time-bound, so you’ll need to be informed about other alternatives for sourcing funds for a property purchase, planning, construction, and related expenses. Here are different options anyone looking into executing a real estate project can explore.

1. Savings.

The truth is that you need to have saved up some amount of money before embarking on a real estate project. Anyone willing to lend or invest in your project will most likely be curious to know your own level of financial commitment to the project. It is well-known that a property is probably the largest single purchase made by an individual, so you need to prepare financially for it when you desire to embark on this project in the long-term. Usually, there is always a down payment to get the project started that many first-time property buyers/builders are unaware of. This down payment is perhaps the most important part of the property acquisition costs.

The moment you desire to buy a property, you need to check how much savings you have to know to what extent your personal funds can go before anything else. Your savings is always the starting point for raising funds before seeking external financing.

2. Other People’s Money

The idea of saving is great; more especially when your desire to own a property is long-term. However, if your plan is in the short term, your savings alone might not be sufficient to fund this project alone. This will mean you have to source an alternative source of funding. Real estate investors know this and have adapted the use of Other People’s Money to meet and achieve their investment goals. There are several alternative means to source funds available for an individual, which you could leverage depending on how much you have been able to raise and to look to raise.

a. Private Money Lenders
Private money lenders are individuals that have access to capital which they wish to invest. Such lenders are not affiliated with any financial institution and bank and therefore deal with borrowers directly. Since private lenders do not have as much ‘red tape’ (regulations) as traditional lenders, the financing process is much faster and stress-free.

b. Peer-to-Peer Loan
Crowdfunding is becoming increasingly popular as a strategy to raise money for real estate investing. According to Allied Market Research, the global peer-to-peer lending market is likely to hit over $558,910 million by 2027. This unconventional funding method is, therefore, worth considering when buying a property for investment. This micro-lending enables individuals to obtain loans directly from other individuals, cutting out the financial institution as the middleman.

Though the concept of peer-to-peer is familiar, the organizations pioneering its progress in Nigeria are fairly new. These organizations partner with individuals who act as investors on the back end while packaging these loans for those in need (Read more). You can visit any lender’s website to know about the specific requirement to obtain a loan from them.

c. National Housing Fund Loan
Through the Federal Mortgage Bank of Nigeria, anyone can get access to the National Housing Fund Loan. This loan is for Nigerians in all sectors of the economy, which contribute to the fund. An individual can get a maximum of a 15-million-naira loan when they meet the requirements for the loan. With a monthly contribution of 2.5% of your basic monthly income for 6 months, you qualify to access a bank loan. Click here o know more about this loan and how to access it.

The interesting part of this is that we can help you facilitate the loan.

3. Joint Venture

Landowners who do not have the financial capacity to build on their land can partner with a real estate company to build on the land. There must be an agreement between the two parties involved in how the housing units’ sharing will be done when the house is completed. Although this method is not common in Nigeria, REFin Homes Limited is one of Nigeria’s leading real estate companies that offer such partnerships. You can schedule a call to know more about this offer and how you can maximize it when you click here and fill the form.

Raising capital for real estate deals is not impossible as you might think at the outset. The most important thing when finding ways to raise capital for real estate is to know what lenders want and give it to them. This will greatly enhance your chances of securing the financing that you require for your property investment goals.

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