Funding & Investors
Investors and funding for real estate projects exist in two separate yet interconnected forms. First, there is the institutional investor. The typical institutional investor is a bank such as a mutual fund or a large pension or mutual insurance company. They usually have minimum investments requirements but often provide seed money for the formation of a real estate project or other type of realty investment.
Second, there are individual investors. These are people such as families, individuals, groups or cities looking to invest in real estate for any number of reasons. These investors typically make larger investments and spread the risk over a wider area than institutional investors. In addition, these individuals are usually not tied to one institution but may be connected to many.
There are some investment companies that handle both sources of funding and act as intermediaries between investors and lenders. One type of company is the Real Estate Investment Trust, also known as an REIT. This company is established as an independent entity and owns its own funding sources. This company normally does not provide loans to anyone else but rather acts as a kind of broker for buying and selling of properties. In exchange for fees paid to the trust manager, the investor receives shares of ownership in the company’s real estate holdings.
Most investors who seek funding require some type of assurance that they will be able to purchase and hold a piece of property for an agreed period of time. This requirement is most often related to the project being traded. Most investors also seek out a source of regular income. This income can come in the form of rental income from a building or from any number of projects held throughout the year. Some investors choose to operate several properties at a time in order to earn extra money.
There are a variety of investment companies, brokers and institutions that provide funding to investors. Some of these companies work with investors on a one-time basis while other funding sources allow investors to participate in multiple projects. Investors can obtain funding by searching the Internet, approaching other investors or banks, contacting real estate professionals or obtaining a referral from a professional real estate agent.
Investors can find listings of companies that offer these funds online. There are also dozens of publications focused solely on this topic. These publications contain a list of companies and their current offerings as well as a description of what investors can expect from these companies. Investors should do their research thoroughly before accepting a specific company offering. A reputable fund manager should be able to explain the process of obtaining capital and what the potential benefits are.