Financing Real Estate - How To Find Venture Capital

Financing real estate can be very confusing in terms of what lenders require. Lending practices get tighter or are less restrictive depending on what part of the economy cycle we are in. Recently we heard much talk about the sub prime mortgage crisis that is sweeping the world. As these sub prime mortgages begin to default, banking will significantly tighten lending policies, not just for sub prime applicants, but for all lending generally.

This was mainly due to a deregulation on lending procedures, allowing non banking officers to get involved in the lending process. These brokers did what they could to get loans for people that really couldn't afford it, in an effort to make more income. This is what led to the difficulty we are having now.

The good news, is there will always be venture capital available for people with a good deal. If you have secured a good real estate deal and lack the required financial credentials to pull it off yourself, you can turn to the private market where venture capital can be found. Lawyers and investment groups are good places to start finding venture capital benefactors.

Typically, venture capital is not cheap, and they secure the title on the deal you have, so they get paid first no matter what. This is not necessarily unreasonable. If you have found an exceptionally good deal, there should be no problem getting venture capitalists interested. The main thing to remember is to know how to present your feasibility study correctly and make sure you do not exaggerate in any way. All facts will need to be able to be independently verified, so don't offer evidence or opinion without it being checkable. For venture capitalists to take you seriously, you will need to make sure all your T's are crossed and I's dotted. Also, you will need to find a generic non-disclosure and non competition document that you will need to get the entity or individual to sign before they get to see your presentation. This way they may not talk about your project to anyone and they may not swoop in and try and take the deal from under you.