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Investor's Guide to Raising Capital for Portsmouth Multifamily Real Estate

Investor's Guide to Raising Capital for Portsmouth Multifamily Real Estate

If you're planning to make a long-term multi-family rental investment, Portsmouth is an excellent place to start. Reasonable property rates, high rental income, and a growing population of around 95,097 are some of the potential reasons for investing in multi-family rentals in Portsmouth.

The multi-family rental investment provides many benefits such as a steady cash flow, a rich real estate portfolio, high appreciation rates, and tax breaks. However, the biggest concern is how to raise money for such investments.

Here are the best ways to raise capital for Portsmouth multi-family real estate.

  • Mortgages

Several mortgages are available for investors planning to buy multi-dwelling properties. If you have a good credit score, you can apply for a mortgage for such rentals from a bank. You can even ask for a mortgage from a credit union or mortgage lender. The maximum amount for multi-family housing is around $510 300 to $ 981,700.

Banks typically approve mortgages for multi-family housing if you can pay monthly installments, don't have pending debts, have a steady cash flow, and have a high credit score. Once you start hiring tenants, you can earn a stable rental income through which you can pay installments. Here, you have to pay a minimum 20% down payment.

  • FHA Loans

The Federal Housing Administration (FHA) loan is another great way for raising capital for multi-unit housing. The Federal Housing Administration has designed this to facilitate financing for those who cannot afford traditional housing loans. These are insured for low or middle-class borrowers. 

The FHA loan policy aims to develop housing standards and offer mutual mortgage insurance. Investors can occupy one unit in the property and rent other units to generate rental income.

  • Equity Shares

Equity shares are funded by the owners for the initial real estate investments. Though your property is mortgaged, you still own a specific percentage of it. This is called your equity share. Equity-share investors differ from private money lenders. Here, you offer a portion of equity shares to raise funds for a down payment while purchasing multi-family units. This is an effective strategy that attracts investors and provides a chance to generate short-term and long-term cash flow.

  • House Hacking

House hacking implies renting a portion of your property as a short-term rental. If you can't handle property expenses, you can follow this strategy to pay your mortgage installments. You can rent a spare bedroom or a shared space with your guests. However, it is essential to refer to local ordinances on short-term rentals to implement this strategy in your neighborhood.

  • Crowdfunding For Multi-Family Homes

Crowdfunding is an effective strategy to get capital for multi-family investments. You can raise money online by asking investors to pay a small amount as capital. There are several websites like GoFundMe and Kickstarter devoted to crowdfunding.

Make sure the funding network is reliable and trusted before posting your request. You have to convince investors about the profit you will make. However, there are unique risks involved in crowdfunding. You might suffer significant losses if the project you have invested in doesn't work as planned.

  • Hard Money Loans

There are individuals or small organizations that provide hard money loans to borrowers based on the market value of the property instead of the borrower's credit scores. However, the interest rate or origination fees of these loans are much higher than traditional mortgages.

  • Your Personal Network

diverse cheerful colleagues talking

Lastly, you can always ask your friends and relatives to help with property investments. However, this should preferably be the last resort for money should not ruin your relations. If you are confident about your plan's expected outcome or profit, using your network is a good idea. It allows you to share your investment ideas more openly with your acquaintances.

Other ways to raise capital for multi-dwelling units are P2P loans, wholesale, and self-directed IRA accounts. Capitalizing for real estate investment involves risks. It is always better to adopt a robust strategy. Hiring a property management company can help raise funds, loan applications, and the appropriate property selection.

Doud Realty Services is one of the renowned, most trusted property management companies in Portsmouth. Our highly trained managers can help you with in-depth market research, a clear plan, and a well-thought-out buying process to help your multi-family rental purchase in Portsmouth successful.

Contact us at Doud Realty Services for more assistance in this regard.