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Research Outline

Prepared for Jeffrey F. | Delivered October 21, 2019

RE Development Capital Raising Best Practices

Goals

To understand best practices for raising equity for real estate development projects.

Early Findings

  • A primary "rule" of raising RE capital is to invest in yourself. Investors will want to see a personal stake in the project.
  • Real estate developments must have a project plan. This includes specific requirements and needs, robust capital estimates, investments needed and profit expectations.
  • There are four primary sources for capital for RE development: private/hard money lenders, self-directed accounts, private placement memorandums and wholesaling.
  •  Soft skills required to attract capital are seasoned experience, team cooperation, passion, tenacity, flexibility and knowledge. Furthermore, one should emphasize the opportunity that investing brings.
  • When approaching private money lenders, the most common source of RE capital, FortuneBuilders advises following the "six Ps": "Protect their capital , Promise realistic returns , Prove your potential , Procure a great deal , Provide your track record and Promote relationship building."
  • Some developers choose to use a third party to assist them in raising capital, such as RealtyShares.
  •  Crowdfunding is also a major source of real estate capital these days. One must first decide whether they want debt or equity funding.