Real estate investment clubs represent an excellent opportunity for a novice investor to get started in real estate. These clubs also offer savvy investors the opportunity to meet other investors and raise capital for larger deals. Before joining a real estate club, however, investors should understand the key factors that make a real estate investment club successful.
Real Estate Investment Club Strategies
Investors should consider each clubs strategy before committing their time and resources. Multifamily and single family housing investments present the easiest path to entering the real estate market. Most clubs will focus their attention on these asset classes. Novice investors should look for clubs that focus on these product types and that cater to the basic strategies of real estate investing.
In contrast, investors looking for office, industrial or retail investments should look for a more developed club. Some of these clubs might require an entry fee, but it will be worth it to connect with other investors, who may have potential investment properties or capital to invest.
Real Estate Investment Club Membership
Like the investment strategy, investors interested in real estate clubs should critically evaluate the membership. Novice investors should gravitate towards clubs with a good mix of new and veteran investors. Be wary of new clubs with all novice investors. Too many times, this turns out to be a case of “the blind leading the blind.” Many veteran investors have no problem sharing their skills and information with people new to real estate investing.
Savvy investors should look for clubs focused on deal pitching and investing. While training can be helpful, investors that have been in the business for several years need more help locating capital and deals than they do calculating cap rates. Training is helpful, but the value of getting a number of smart real estate investors together is market knowledge and raising capital.
Real Estate Investment Club Fees
Most real estate clubs charge members fees for a variety of services. These fees can range from a $20 – $1000+. While the dollar value is important, it is more important to understand what a member receives for those fees. Investors should first consider what they need and have time to use. It’s great if a club offers classes three times a week, but if an investor can never attend, then it’s simply not worth joining the club. Other clubs bring in famous real estate speakers and throw lavish parties in order for their membership to network.
Regardless of the dollar value, like any investment, the investor has to decide if the fees offer a value. For novice investors, classes and networking is very important. For more savvy investors, it might be more important that the club bring in market professionals (legal, accounting, etc.)
Real estate investment clubs can be a great way for investors to get to know their market and other investors. Before joining a club, investors should take stock of what they need and what the club has to offer them. Once in the club, investors should maximize the value of their investment by attending all the meetings, networking and suggesting ways the club can improve.