How to Raise Money From Friends & Family for Real Estate Investing

Investing in real estate is a great way to grow your wealth. Property tends to appreciate in value over time and has the potential to show great returns through rental income and future resale profits. 

Research the area you want to purchase property and ask yourself questions like:  - What is the asking price versus selling price of other properties in the neighborhood? - What is the average monthly rental income or vacation rental income for similar properties in the area?  - Has the population increased in recent years? If so, why? 

Prepare an Investment Plan

Once you’ve done your research and analysis with useful apps, put together an investment plan for yourself. This way when you start approaching your network, you can answer their questions and show you have a fully baked idea.

Rehearse Your Pitch

Although you do not want to come off as too contrived when pitching your friends and family, it is still a good idea to repeat your business idea out loud. This exercise can help you build confidence and shake off any nerves before you approach potential lenders.

Lay Out Potential for ROI

Demonstrate that you’ve thought through all the details and have accounted for things that could reduce your return on investment. For instance, you might consider purchasing a home warranty in case anything goes wrong on the property and you don’t want to risk paying for every repair yourself.

Discuss Funding Options

Once you have someone signed up and willing to provide you with funding, make sure you understand the terms attached to that funding. You have a few different routes to take:

→ Gifts

If a family member or friend “gifts” you money, that means you do not have to pay it back. You also can avoid paying taxes on gifted money. Currently, an individual can gift up to $15,000 tax-free per year, but they can also utilize the lifetime gift tax exemption worth $11.58 million. 

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