Equity financing is a great way for investors to raise capital for large property investments. Equity financing involves raising funds from external sources, such as friends and family, venture capitalists, or angel investors. The investor then gives these external sources a percentage of ownership in the company or asset being purchased with the funds raised. This type of financing can be beneficial in that it allows an investor to purchase larger properties without having to come up with all of the money upfront. It also allows them to benefit from the expertise and knowledge of their equity partners who may have more experience investing in real estate than they do.
Types of Equity Financing
First, it’s important to understand the different types of equity financing. The most common type is venture capital funding. This involves a third party investing in exchange for ownership shares and a potential return on their investment – generally over several years. Angel investors are another source of equity financing, with the investor providing funds in exchange for either a stake in the company or asset, or a percentage of profits.
The Benefits of Equity Financing for Investment Properties
When it comes to large property investments, equity financing can be an attractive option for investors who do not have the means to make all the necessary payments upfront. This type of financing allows them to purchase larger properties without having to invest all of their own resources into the purchase. In addition, equity financing can also be beneficial from a tax standpoint. Many investors are able to deduct the costs associated with their equity partners over time, meaning they will ultimately save money on taxes in the long run.
Understand the Risks
Finally, it’s important to remember that while equity financing can be a great way to purchase larger properties without having to invest all of your own resources upfront, there are still risks involved that must be considered. Equity financing can involve large amounts of money, so it’s important to understand the terms and conditions that come with these investments and to work only with reputable equity partners. Contact Artis Commercial Capital today to learn about our equity financing for large and high-net worth property investments.