A new trend in the real estate investment industry is investment clubs or groups. Real estate investment clubs are groups of like minded investors that pool their resources in order to purchase the same investment. Is joining an investment club for you? Read over this article and make the decision for yourself.
Benefits of joining a investment group or club:
The benefits of joining an investment group or club can be as basic as you get to meet like minded investors from all over the world to more mainstream reasons like getting discounts on investments because of purchasing in bulk. Here are just a few reasons investors often choose to form groups or clubs:
1. More Information: The more investors you have in a group the more knowledge comes into the group. This knowledge can help you stay away from bad developers or management companies i. e. one of the investors bought from the developers a few years ago and wasn’t happy or someone is using that management company for another property and has to wait months to get paid.
2. More Negotiating Power: If you are part of a investor group you can demand certain benefits from the developer that you couldn’t get otherwise. You can demand money back at closing other times you can even take a few percent at the top. This is the main reason why investors start these clubs or groups.
3. More Choices: The more investors you have in your group the more projects you’ll group will find. If you have 100 investors in your group chances are you’ll have many more developments to choose from then if you had 10 investors. Most investors that join a club usually do much due diligence on their own and find projects that they feel are a cut above the rest.
4. Free Stuff: Many times developers will actually offer free incentives to real estate investment groups or clubs to spark their interest in their development. These perks can range from anything from free cruises or free stay at the resorts to free airfare and a bonus week at another resort owned by the developer. Everyone loves free stuff and believe or not this tactic still works.
Drawbacks of investment groups or clubs:
1. Conflicting Interests: One of the major drawbacks of investment groups is the fact that you have to go with whatever the group wants to go with. You may feel very strongly about an investment development but you have to convince the others why, if you don’t you may find that you’re investing in a project that you know isn’t up to par with the other development.
2. Delay in Investments: You may want to invest in a property in the next month but your group or club wants to wait until three months to send out the cash. Many times investors want to move at their own pace but because they have to wait for the whole group to concur it can become a much more timely process. If anyone has ever went on vacation with a large group of people then you know exactly what I’m talking about.
So if you’re going to ask “Should I join a investment real estate club or group?" Read the following article carefully and weigh what’s important to you. If you feel you have the knowledge and experience to go out on your own and you want 100% control then maybe a real estate club or group isn’t for you. Then again if you like the idea of lower prices with bigger potential returns at the price of waiting on decisions of others then maybe joining a club or group would be a smart move.
Whether you chose to go solo or with a group remember to find a good brokerage that has your best intentions in mind. Many times Investment real estate brokerages sell property based on their bottom line and tend to push the developments that pay more first before smaller commission. Brokerages have their fingers on the pulse of the industry and the right ones know about exclusive preconstruction projects that would be very hard for the average investor to find.
Have a question about real estate investment clubs or groups? Visit my website for more information on the subject.
Goldberg Executive Realty Group Mark Goldberg Phone: 1-866-247-2259 E-mail: GoldbergRealtyGroup@cfl.rr.com http://www.investrealestate101.com