By: M. Scavuzzo
While easier than most think, investing in real estate can be very profitable if done correctly. Unfortunately, most individuals lack the capital necessary to make a significant investment on their own and can be daunting for someone who knows little about real estate investment. Just as there are investment clubs for equities, there are also investment groups for those who want to build and invest in real estate. The purpose of these groups is to get a number of investors together who can pool their resources and knowledge to invest in real estate. I always recommend that in any group an Architect and General Contractor be part of the group at the very least. This is where most of the planning is done and where the best ideas flow from.
Step 1 The internet is a good place to research and learn about real estate investment groups. However, most groups online ultimately want you to join and may not provide enough information until after a commitment is made. And, while most of these are legitimate you should research them before you make any type of commitment. Attending meetings for these groups is a good way to get a feel on how they operate. It’s also helpful to have some first-hand knowledge about real estate and building before opting to start your own. This is why having proven knowledge in the group is essential.
Step 2 Be familiar with the relevant laws of your state before starting a real estate investment club. You and your group will need to know how real estate transactions are handled so you won’t lose money on your deals. It’s always helpful to find at least one member who understands these laws. In fact, members who have specialized knowledge such as accounting, law, finance and real estate can be beneficial for the group.
Step 3 Many real estate investment clubs hold regular meetings, at least once a month. These meetings are used to make key decisions for the group. The group can elect officers such as president, vice president, treasurer and secretary to preside over meetings and manage the group. Additionally, committees can be formed that perform special tasks such as scouting out potential property investments. Meetings can be held in person or as teleconference over the internet if many of the members are not local.
Step 4 Monthly correspondence in the form of a newsletter is a good idea and can be sent out to members to keep them up to date on current events as well as when the next meeting will take place. It’s also a good idea to invite professionals such as real estate planners, realtors and brokers, financial planners and tax specialists to speak at meetings to share their experiences and educate the members of the group or even to get ideas for new investments.
Step 5 Deciding how much money to invest can be tricky. It is often best to start out small and work your way up to larger investments. The more members you have the less money each will need to invest. On the other hand, the more members you have the harder it would be to come to unanimous decisions. When starting a real estate investment club, write up bylaws that everyone agrees to. Be sure to include how decisions will be made and what power the president has, if any, to resolve disputes or override decisions. We have always recommended to our investors to invest in one project at a time.
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