Can Transactional Funding & Real Estate Crowdfunding Benefit Each Other?

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on May 18 in BestTransactionFunding

Can transactional funding lenders and crowdfunding campaigns be used together for even greater results?

The debates over alternative and hard money lenders and crowdfunding portals bumping heads are increasing. Some have posed that crowdfunding can offer cheaper money. Others recognize that successful crowdfunding campaigns can cost a lot of money, and can be extremely time intensive, not to mention slow to fund. Some debate whether one of these capital sources will replace the other.

Could they actually work together? If harmony between these funding options possible? Could both transactional funding and crowd funded capital be used in the same deals?

There are a number of obvious differences between these two types of borrowing. Transactional funding lenders can sometimes charge higher rates in exchange for faster service and ease of obtaining cash, depending on the individual scenario. In contrast crowdfunding can offer the advantages of having many different parties involved in your project (some may be hard money lenders too). But expect to spend 10% to 30% of the funding goal on marketing, and keep in mind that it can take months to secure finances through this channel.

The truth is that there is not one answer to the transactional funding versus crowdfunding question. That’s like asking if food or drink is better. You probably need both. You’ll need or want each at different times depending on the situation and timing.

Perhaps one of the best blended strategies for investors in this arena is making an acquisition quickly with transactional funding, and then once the real estate is controlled – paying off that loan with funds from the crowd. Investors can also augment hard money they receive by raising the down payment from the crowd, or raising additional funds to make improvements from the crowd. Or crowdfunding campaigns can be used to improve a surrounding area; to aid in revitalization and elevating property values. How about using hard money to cash out the crowd and return their capital?

 

The options are endless. Perhaps these strategies and tactics are what more of the media should be focusing on to actually serve real estate investors well.

Authored by Best Transaction Funding BestTransactionFunding.com is the leading source of flash funding and hard money loans for real estate investors in America. Get a quote, and fund your next deal fast…

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