Whether you are an experienced or beginner real estate investor, joining a real estate investment club is a great way of growing your career or business. Depending on the type of club you join, you can build wealth fast without all the financial risk, work, or stress involved in investing in real estate on your own.
What Is a Real Estate Investment Group?
This is simply a forum that brings together investors, real estate professionals, and industry experts. A real estate investment group is made up of experienced investors, new investors, or a mixture of both. People join such clubs mainly to acquire knowledge and experience about real estate investing.
Generally, investment groups operate in two ways; independent investments and group investments. Independent investing is where an individual investor buys property on their own. With group investments, members pool their money to invest in real estate. The great thing about the latter option is that you can invest your money passively and let other professionals handle the business operations.
When it comes to membership, there are no legal minimums or limits to the number of people required to launch an investment club. Most clubs are legal entities with elected officials and written investing guidelines that members must follow. To join an investing club, you might have to pay an annual or monthly membership fee.
The Pros and Cons of Real Estate Investment Groups
Before you join a real estate investment club, you need to weigh all the pros and cons. This will help you make an informed decision.
Benefits of Joining a Real Estate Investment Group
- Networking – One of the main advantages of joining a real estate investment club is the opportunity to network. Most clubs have physical or virtual meetings at least once a month. You can network with other investors, as well as professionals like accountants, contractors, brokers, real estate agents, accountants, realtors, or attorneys in your area. This real estate network will be very valuable when you want to find investment properties for sale.
Related: The Secrets of Effective Real Estate Networking
- Real estate education – There is usually a guest speaker at every real estate investment club meeting. Topics covered could be rental market analysis, rental property analysis, traditional vs Airbnb investments, or how to close real estate deals. Besides learning from the guest speakers, you can also glean a lot from the collective knowledge of other members. Such an education will help you make better decisions as a real estate investor.
- The pooling of financial resources – As an individual real estate investor, you might not have enough resources to invest in listed or off market properties. Being part of real estate partnerships provides an opportunity to pool money with other investors and invest in income properties that you couldn’t access on your own.
Related: How to Form Real Estate Property Partnerships
- Real-world experience – If you are a beginner real estate investor, being part of a club provides an opportunity to gain actual experience. You will get the chance to interact with people who are successfully closing real estate deals in your area. Through such engagements, you will learn what to do and what not to do when buying or selling investment properties. Gaining such experience will save you lots of time and money as a real estate investor.
Related: 5 Perks of Being in a Real Estate Investing Club
Downsides of Joining a Real Estate Investment Group
- Scams – Joining a reputable real estate investment club can greatly boost your business. However, there are many stories of investors that have lost millions of dollars in fraudulent clubs. It is therefore very crucial to do your due diligence before joining a club. Do thorough research on the group and its management team. How long have they been in existence? Who is the leader? What kind of properties do they invest in? What are people saying about the club? Are there any suits or claims involving misuse of funds? If you come across any red flags, simply walk away and don’t look back.
- Lack of liquidity – Once you’ve contributed money for purchasing assets, getting it back could be a challenge. Your cash might be tied up for years, and in the end, yield a very small return on investment. Therefore, before joining the group, find out what the process of leaving entails.
- Personality conflicts – Since members of an investment club have different personalities, they are likely to clash in their opinions. As a result, coming to an agreement about important issues might be difficult. This could mean losing potential investment opportunities along the way.
- High membership costs – Besides the annual membership fee, some investment clubs require their members to invest a lot of money or purchase expensive courses when joining. Such costs will end up eating into your profits and cash flow.
How to Find a Real Estate Investment Group to Join
Have you decided that joining a real estate investment club is right for you? How do you go about finding a genuine real estate investment club?
You could simply Google your state or city’s name and the words ‘real estate investment club’ or ‘real estate investing group’. You could also check on MeetUp.com or LinkedIn to see if there are any real estate clubs in your area.
Alternatively, look for the local chapter of the National Real Estate Investors Association (NREIA). The focus of this nonprofit trade association is to educate and protect its members.
How Does a Real Estate Investment Club Operate?
Before you start your own real estate investing club, it is crucial that you understand how it operates. Generally, there are two ways a real estate investors club operates: group investments and independent investments.
As for the group investments, they come in the form of real estate syndication. Essentially, members pool their financial resources to invest in properties. What’s great about this option is that it lets beginner investors invest their money passively while having real estate professionals taking care of the business.
Investing independently, on the other hand, is obviously when a real estate investor engages in self-directed investing. He/she buys an investment property and operates it on his/her own.
Now that you know a little about the real estate investing Group, let’s take a look at how to start your own investment club.
Starting a Real Estate Investment Group
Do Research
Forming a real estate investment club requires that you do some proper research on the matter. Find out how it operates in full detail. Moreover, see if you have the means to establish one. Also, take a look at the environment around you; see if it is a good idea to form one in your local area.
Set a Plan
Planning a real estate investing club means that you need to take some factors into account. So, when you are setting your plan, think of the following:
- Why are you starting a real estate investment club? What do you want to accomplish with it? Find out how can a real estate investing club help you become a successful real estate investor.
- Do you want it to be for-profit or a non-profit organization?
- How many members do you want to bring in? Is it 20 people? Or do you not have any limitations on the number of members?
- What services could you offer that are different from other real estate investors clubs?
- How much do you intend on charging for membership fees?
Basically, the answers to these questions should form you a great plan. Therefore, make sure you have clear goals and objectives. However, what is more important is to stick with the plan. If anything needs modifications, make sure you check the possibilities first and then apply necessary modifications.
Get a Sense of a Real Estate Investors Club
A great way to learn how to start a real estate investment club is to attend other clubs’ events. Of course, you won’t be able to attend all kinds of events, but make sure you attend as many public events as possible. Not only that but also attend events held by different clubs to learn what makes each of them so special.
Consultation
Before starting to form your own real estate club, it is a good idea to consult with professionals. Check with an attorney and find out what regulations rule such societies. You should also check with a financial expert to study the possibilities as well as the financial requirements. This step will help you understand the costs that come with a real estate investing club. Finally, you should consult with real estate experts on how to operate the real estate part of the club.
Gather Members
Gathering the members might be the most challenging aspect of starting a real estate investment club. However, there are a variety of ways you can do it. First, you can do that by joining or forming a real estate investment network. Such networks usually have so many members from all different backgrounds. It will help you gather as many members as possible. Another way is to start with an online real estate investment club. We all know how fast you can reach out to people online. You can use social media or even create a real estate website of your own. There are no limitations to the ways you can attract members to your real estate investment club.
Set Your Bylaws
Bylaws are very important at this stage. It is also crucial that you set them at a very early stage of your club’s establishment. The club’s bylaws are a great way for commitment and discipline amongst the members. Also, you should distribute the roles of the members. There should be the president, the vice president as well as other positions. So make sure everybody agrees with these people before you get started.
Choose a Place
Real estate investment club members have meetings on a regular basis. It could be on a weekly, monthly or even quarterly basis. However, you will need a space for such occasions. So, there are a few factors you should consider when choosing a place for your club:
- Make sure it has a professional setting. These are business meetings and members need to feel the significance of what they are doing.
- Make sure it fits the number of members you have. You do not want it too small or too large. A small space, obviously, won’t fit the number of members you have. A large space, however, is too much if you are intending on having a limited number of members. Also, it will cost you more money, so why bother?!
- The place you choose for your club should be in a decent location. This means you cannot rent a place that is by the highway because it could get too loud at times. However, a place that is in a quiet area would be a good choice for business matters.
Marketing
One important step of how to start a real estate investment club is marketing. Proper marketing can take you a long way towards the success of the real estate club. When you first start, you need exposure. Therefore, a good strategy would include social media, a blog, and an official website.
Keep Your Members Engaged
Finally, in order for your real estate investors club to succeed, you must keep your members engaged. You can fulfill that in various ways:
- Create a newsletter that is sent automatically to their emails. Have all the updates and newest regulations. It should also include summaries of the club’s meetings.
- Hold events in which you bring in speakers. They could be anything from public speakers specialized in self-development or even real estate experts. Such activities are great to keep up the variety and interest of members.
Conclusion
Joining a good real estate investment club can be a game-changer for your business. If you cannot find a local real estate investment club that is a good fit for you, consider starting your own. Consult real estate professionals to find out what is required to start a real estate investment group. Attend other clubs’ events to get a feel of how they work. Create roles, set bylaws, and recruit members. Once you have enough members, hold meetings on a quarterly, monthly, or even weekly basis. With enough research and a good plan, you are sure to succeed.