Explore Funding Options for Your Real Estate Career
If you are considering a career in real estate, chances are that you’ve given some thought to how you’re going to finance it. Most real estate agents are independent contractors that depend on commissions for income. This isn’t the easiest industry to get into, so it may take some time before you really start seeing income rolling in.
Typical commercial real estate (CRE) startup costs vary by state and the arrangement you have in place with a broker. Upfront costs typically include the following:
Membership to an association
Continuing ed training
Software to keep your customer base organized
If you don’t have the spare funding to cover these CRE startup costs and cover your budget for six months, you could fail before you even get started. However, there are several options when it comes to funding your commercial real estate business.
8 Ways to Fund Your Real Estate Career
Below, we will take a brief look at the ways that you can fund your CRE startup costs.
Maintain Your Income
If you are working somewhere, do not go turn in your notice right away. You’ll want to give it some time to get your business up and running. Keep your job so you can keep your income.
Tap into Savings
This is the easiest way to pay for your CRE startup costs. It may take longer to save, but it also means that you will not have to go into debt or give up control.
Liquidate Assets That are Valuable
If you have any assets that have any value, you might want to be open to selling those to get the cash you need for your CRE startup. Though you might be tempted to tap into your retirement accounts, be aware of the early withdrawal penalties or fees charged if you’re under the age of 59 1/2.
Consider a HELOC or Home Equity Loan
If you don’t have any other options, you might consider a HELOC or home equity loan, but be advised, they usually require you have at least 20% equity in your home.
Borrow from Loved Ones
Sometimes, small business owners will borrow from loved ones to get up and running, but this isn’t always the best option. They may offer flexible terms for repayment, but it can put your relationship in jeopardy.
Get a Business Loan
Many banks offer loans for starting up a new business. You will likely be required to have a business plan, collateral, and good credit. If you don’t have the best credit, you might consider going to the SBA and applying for a loan.
Get a Partner
Finally, if you think a partner might be beneficial in your CRE business, consider having them come on and finance the venture.
When you are starting a real estate business, CRE startup costs can get quite expensive, so you will need a funding source to get started. Consider these 7 options to help. When you are ready to get started, call Summit Commercial Capital and we’ll guide you through the process.