Here's how you can secure funding for your Commercial Real Estate projects.

To secure funding, whether it be equity or debt, for your real estate deals, you must begin with the end in mind. Create an in-depth business plan that outlines various costs and projections such as Capex, reserves, projected operational expenses, etc. This will act as your roadmap, showing potential investors and lenders exactly how their money will be used and what returns to expect. In your budget, also be sure to include a budget that accounts for all potential circumstances. By getting ahead of any unforeseen costs, you can significantly mitigate risk to protect and grow your capital.

As an institutional real estate investor focused on affordable housing, exploring all available funding options is critical. The landscape for capital in this sector is diverse, with a high number of alternative sources to tap into. Most deals demand creative financing, often requiring a mix of traditional loans, tax credit equity, government grants, subordinate soft loans, or other types of gap funding. The ability to structure deals creatively isn’t just an advantage—it’s a necessity. Those investors and developers who can think outside the box and leverage these alternative debt and equity sources gain a significant edge, more so than in other asset classes.

Every funding option has its pros and cons. So, choosing the right option will be dependent on your plan. For example, my firm typically buys and holds properties for 7 years, executing a value-add plan in the first 2 and looks to stabilize the property to sell off to the next buyer. For this, we use agency debt. Something with a fixed rate, solid LTV and low prepayment penalty. This allows us to maximize returns, while lowering our risk because we know exactly what our debt service will look like due to the fixed rate.

When exploring financing options, it's essential to understand those specific to your CRE asset class. This will help you align your financing with your investment objectives. For example, you may need a short-term bridge loan for a fix-and-flip project, but a long-term mortgage with predictable payments for properties you plan to hold for a longer time to secure a coherent income stream. Each financing option you choose must make sense for the operations, cash flow patterns, and risk profiles of the property. For instance, retail spaces often have fluctuating cash flows, while industrial warehouses tend to have more stable and predictable ones, leading to the possibility of requiring different loan structures.

It is not what you know but who you know. In the present arduous climate of capital raising, conventional value-add transactions are insufficient. A distinctive and unparalleled offering is crucial to even alluring outside capital. I do not waste my time on public listings. I need an asymmetrical sourcing advantage to procure a minimum of 10%+ discount to marketed deals. Pocket listings are my largest source of deal flow. Social media is a valuable tool for making connections and facilitating capital introduction. It requires skillful use to expand networks effectively in capital engagement. But it is just a starting point. You need to build from there and differentiate yourself.

From my experience, being able to add value for others, be generous with your knowledge & time, and maintain authenticity are keys for building professional relationships. When you genuinely help others and build relationships based on trust and mutual benefit, it often comes back to you in ways you can’t predict. Whether it’s a lead on deal, piece of advice, a useful introduction, or a collaborative opportunity, these gestures pay big dividends over time. Authenticity and generosity aren’t just good practices—they’re strategic advantages that can set you apart in CRE.

There is a reason for the old cliche "network is net worth", especially in the real estate business. By cultivating and nurturing a strong network, you will gain access to people and things that may not be offered to competitors in the industry. Everything comes down to relationships and those with the most extensive networks typically get the best funding terms as well as the best off-market opportunities that all investors are looking for. In order to develop strong relationships, first seek to add value and it will typically be reciprocated.

Navigating the financial landscape of commercial real estate can be challenging, but with the right strategies, you can secure the funding needed to turn your projects into reality. Building a strong relationship with Lender can be helpful but not everything. Your banker can only go so far based on the regs he must follow. His knowledge of the banking industry will help him advise you in creative ways to secure funding. Establish and nurture relationships with your preferred bank if you already have one. If not, you want to establish and nurture relationships with banks, private lenders, and financial institutions. Having a network of reliable funding sources can streamline the process and provide access to better terms and conditions.

In order to get others confident in your deals, you must first show that you are competent. This starts with presenting the required data with a clear understanding off all of it and how it impacts investors, lenders, etc. Be sure to have a professional looking presentation with in-depth information on how you plan to execute the projected returns, with specific data points to back it up.

Be prepared, know your numbers inside and out. Present strongly and communicate your highlight points clearly and concisely. Prepare for due diligence, be ready for thorough scrutiny of your financials, project details, and business operations. Ensure that all documentation is accurate and readily available, this will help expedite the funding process and build trust with potential funders.

In Affordable Housing, understanding the terms is especially important because each deal is unique & often complex. A misunderstood provision or overlooked regulation can quickly turn a great opportunity into a terrible one. Taking the time to thoroughly understand the terms & becoming a knowledgeable resource in the complexities of Affordable Housing is not just about avoiding pitfalls—being able to navigate complexity, whether in a deal structure, agreement or program is a significant competitive advantage.

Develop a comprehensive business plan before approaching lenders. A well-structured business plan is crucial for attracting investors and lenders. Clearly outline your project’s objectives, market analysis, financial projections, and risk management strategies. A detailed plan demonstrates professionalism and reduces perceived risk. Lenders and investors want to feel comfortable and confident that you know what you're doing and most likely have done this before.