Real Estate Investment Clubs Fully Explained: First Time Investors Benefit From Joining a Money Group

The news of foreclosures looming and sellers desperate to walk away brings on news of despair and sadness for many. This news also brings out many first time real estate investors. These new buyers are interested in dabbling in the art of investing and do not know where to begin. The Real Estate Investment Club is exactly the right place for these brand new buyers.

Many would be investors have lost thousands of dollars investing in properties that were presumed to be a good ideal. Up front they seem to be a wonderful chance at making money, but then the reality sets in. Too many times Realtors, anxious to have a sale, will leave out many of the details concerning a rental property. After the deal closes the Realtor is no where to be found.

The Real Estate Investment Club not only invests the money to buy new properties, they also have lectures presented by knowledgeable mentors. They teach all the members when to buy and how to buy and keep a profit.

Pros and Cons of The Real Estate Investment Clubs

As sure as there are benefits, there are also disadvantages too. According to Business Week, the investor should be aware of the pitfalls of such a club. Buying properties in today’s market can be a detriment to the new investor if he is not prepared to hang on for many years to come.

The goal of the investment club is to buy rentals and keep them and not resell. Their money is made strictly from the money received monthly. A good investment club that is run properly can provide income for the new investor for years to come.

The initial investment in a Real Estate Investment Club is very minimal. The association dues are between $200-350 normally. This money is used to pay the secretary and the rent on the building provided for the meetings. The goal is to have no out of pocket money for the association or Real Estate Investment Club.

What to Look for in a Real Estate Investment Club

When looking to choose a Real Estate Investment Club, the new investor should look for certain qualities of a club. These are some of the questions that should be asked:

  • How many members are in the club?
  • How often does the mentor or guru give lectures?
  • How much is the yearly dues?
  • Do the members have to participate in each sale?
  • Who manages the properties?
  • Do the members have to participate in management, maintenance or bookkeeping?
  • How does each member get paid?

Normally a club will hire a management team to handle all the properties and each member is paid monthly after all debts are paid, but it is best to check thoroughly all the details. In most clubs, each member is given a territory to work. This territory could amount to an entire county or in the case of a large county; the county would be split up into sections.

The member therefore can submit properties for purchase that they have located. The club will vote on the purchase or not agree to the purchase. Each club will decide on the compensation paid to the member bringing in the best weekly deal.

First Time Investors Benefit From Joining a Money Group

In a normal million dollar deal, the buyer would have to pay at least 20% down. This would amount to $200,000. In an investment club with 200 members, this amount would equal only $1000. So each member has a minimal down payment and low risk involved in the property. Each member benefits from joining the money group with the profits they acquire.

The first time investors have low down payments, minimal closing cost and low risk involved in being part of a large money group. With multiple purchases, the chances of losing out big time are minimal. Keep in mind that a low down payment also means a low monthly allowance from the property. The rents are also divided by 200 members.

There are thousands of Real Estate Investment Clubs located all over the world. Each club has its benefits and disadvantages. It is always good to interview several clubs in your area before joining one particular club. The normal investor will join for a few years and then branch out on their own.