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If you're a real estate investor, real estate agent, or real estate professional, it may be worthwhile to join a real estate investment club to help further your business or investing career. These clubs can be a great place to learn and network with other real estate entrepreneurs, and for many, they have been a key factor in growing their business. However, not all investment groups are considered equal.
If you're considering joining a real estate investment club, this article will put forth the pros and cons as well as provide a few key elements to look for in a worthwhile club. This will help you determine whether joining would be right for your business.
The purpose of a real estate investing club
The purpose of a real estate investing club is to bring investors, real estate industry experts, and real estate professionals together to network, learn, and do business. Many real estate clubs focus solely on networking, bringing like-minded people together in an effort to do business, but some add a component of education to their investment group, offering a seminar, class, or meeting on various investing topics and strategies.
A real estate investment group may have a wide variety of industry professionals, including:
- Contractors or service professionals, like plumbers, roofers, electricians, or handymen.
- Wealthy but non-accredited investors.
- People experienced in or new to real estate investing.
There is no minimum to the number of members required to start an investment club, and groups can range from private partnerships to nationally accredited real estate investment associations called REIAs. The group can designate the type of investing they will focus on, which could include commercial real estate, crowdfunded real estate, rental properties, single-family homes, passive income in real estate, or a more broad focus of real estate investing in general. Some groups will be free to join while others will charge an annual membership fee, which is typically a few hundred dollars or less.
Pros and Cons of joining a real estate investing club
I personally joined my local real estate investors association (REIA) immediately once I made the decision I wanted to start investing in real estate, and it was by far the best choice I ever made.
Fortunately, my local investment group was a national REIA and was in the top designations for REIAs nationwide. They offered outstanding educational and networking opportunities and had several hundred members at a given time, which grew my network tremendously. I met my accountant, attorney, Realtor, self-directed IRA custodian, and many of my private lenders through this investment group. Over the past decade, this has allowed me to purchase millions of dollars worth of real estate, all while learning new investing strategies.
Unfortunately, not every real estate investment club is considered equal. Many real estate groups are for-profit, and for this reason, many of the speakers or educators featured at their meetings don't provide valuable education opportunities and require you to purchase an expensive course in order to truly learn the investing strategy or technique. There can also be a lot of "tire kickers" or members who attend the meeting but never invest in any property.
Additionally, some real estate investment clubs will focus on real estate crowdfunding, bringing people together for the sole purpose of pooling their money to buy a property. While these types of clubs can still be beneficial to join, it's extremely important to do your due diligence on the investment and the group leader, or the person in charge of the investment and funds.
I personally know several people who joined a real estate club like this, invested in property, and later discovered it was a fraudulent investment. They lost tens of thousands and sometimes even hundreds of thousands of dollars by investing with someone they believed ran a reputable investment group and was an experienced investor they could trust.
|Pros of Joining an Investment Club||Cons of Joining an Investment Club|
• Networking with fellow professionals in the real estate industry.
• Advertising your service or business.
• Opportunity to learn about new or different investing strategies.
• Possibility of partnering on an investment property.
• Can have annual membership fees.
• May not have many members or productive networking opportunities.
• May not be a reputable club.
• May not provide useful or worthy educational opportunities, requiring you to buy expensive courses or invest with them in order to learn.
How to find a quality real estate investment club
The National Real Estate Investors Association (NREIA) is a nationally regulated nonprofit trade association that has local chapters throughout the country. Their focus is on protecting and educating their members, and it can be a great group to join if you have one in your area.
If you don't have a local REIA to join, try searching for your city or state's name and the words "real estate investing association" or "real estate investment group" to see whether there are any private groups. You can also look on LinkedIn, BiggerPockets, or Meetup.com to see whether there are any virtual real estate investing groups that hold meetings online and discuss topics related to your investment area.
If you find a group, attend a meeting to get a feel for the association, the leaders, and the investment club.
The meeting should:
- Provide valuable education about investing from experienced investors. Selling courses is very common and one way the group makes money beyond membership fees. Don't flee just because they may be selling. Instead, determine whether the information and networking they provide as they sell are worthwhile enough to join.
- Have good networking opportunities with a variety of qualified real estate entrepreneurs and businesses.
The meeting shouldn't:
- Be a pitch fest where they are clearly focused on you purchasing a product or investing in their company or group.
- Be you and a few other inexperienced investors who are new to the business. The group should have at least a handful of people who have done deals and are successful to some degree investing in real estate.
I truly do attribute a large portion of my success in real estate investing to my REIA, but I know the value of an investment group is largely attributed to the experience and number of its members, the merit of the leadership, and the focus and principles of the leadership and group.
If you're considering joining a real estate investing club, remember that meeting someone at a local REIA or real estate club meeting doesn't necessarily mean you'll want to do business with them.
Do your due diligence on the club, investor, group leader, or company before doing any business there. You can find out this information by ordering a background check or for free through a quick internet search on the company, group, or person.
Look into their experience and history to see whether they have any claims or suits involving malpractice or misuse of business funds. To do so, you can search public records or on the property appraiser's website to confirm they own the properties they claim.
Only you can determine whether joining a real estate investing club is the right choice for you. Look at what clubs are in your local area, and do your homework on the group. Attend a meeting, and see if it's the right fit for you. If there isn't a reputable club to join in your area, consider creating your own investment group. Just make sure you're prepared to take on the task.
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