Friday, November 05, 2004

Real Estate Investment Clubs Provide Good Training Ground

If you’re nervous about taking that real estate investment plunge on your own, you may want to consider finding a team of experienced investors you can learn from in your area. Real estate investment clubs are located all over the country. I’ve listed some web sites below where you can look up clubs in your area, but first let me provide you with a couple of safeguards about how you should approach a club.

1 – Make sure the people attending the investment club are actually investors. Sometimes you can attend a club where everyone attending, except for a few people, are all wannabes. I belonged to a writer’s club like this once. It was exciting for about two meetings. That’s about how long it took me to realize I was the most experience writer there. I needed a club of strictly published authors and writers to learn from. Instead, each meeting would end with people surrounding me asking how to sell articles, columns and books. You want a club full of bona fide investors who hold property and are always on the search for new investment opportunities.

2 – Investigate whether the club is there to inform on investing, or inform on books and tapes about investing. Some clubs are nothing more than a forum for the organizer to sell his or her programs for hundreds of dollars a pop. You only get a taste of investing tips, not the real deal.

3 – Watch out for sharks. It’s sad to admit, but there are some “investors” in our community who believe they should never have to use their own money to get into a transaction. Instead, they prey on those who are excited and naïve about the real estate investment process, but who may have some cash set aside to begin investing.

The line goes something like this: “I’ll find the deal, we’ll use your investment cash, then we’ll split the proceeds 50/50. Besides, you wouldn’t find the deal without me and I’m going to guide you through the process.” The challenge with this scenario is that you lose half the profit from the rental income, as well. It’s not a relationship I would always be against; however, there are plenty of experienced investors who would be willing to share their expertise with you without taking part of your first transaction.

There are just too many potential problems with this type of relationship. More can go wrong than right:

Your new investor friend could have credit problems and could be using your credit to buy properties
Being half owner and the “more experienced” investor, he or she could force you to sell property too soon or too late, causing you to lose potential profit
You lose control of the decision-making process.
By being party to the transaction, the investor is now tied to the profit of the investment and may not be as objective in the decision-making process.

4 - Before partnering with anyone, investigate them.
Are they licensed to practice real estate (though you don’t need a license, it’s good to know.)
If they’re licensed, have they had any complaints registered against them through the real estate commission.
Ask him or her for references from other investors. What you want to here is: “Ask anyone here about me.”

Just be careful in working with someone that you’ve never met before your first visit. Drop by the investment club several times before linking up with someone.

I had two Realtors in one of my training sessions - brand new to the business – who informed me they were going to be partners. When I inquired on how long they had known each other, they told me they had just met that week. I suggested they try working on their own to start and then determine if they wanted to partner up with someone who, quite frankly, they knew nothing about. A few weeks later, I saw one of them and asked how it was going…she informed me that she had no idea where her new partner was – it seemed he had dropped off the planet. Be careful. Be informed and have fun.

Here are a list of web sites with links to real estate club lists:

www.REIClub.com
www.CREonline.com
www.RealEstatePromo.com
www.TheCreativeInvestor.com
www.RealEstateLink.net (includes Canada)

As you’re researching, you may want to search at your favorite search engine for “real estate investment club” with your state attached. Not all clubs are listed in the lists above.

2 comments:

marie antoinette said...

Anthony,
I was very excited to see your name in print and I just ordered your book! I hope you will autograph it for me!

marie antoinette said...

Take 2: Anthony, I am having a terrible time blogging you! I'm searching for an email address but this will have to do. Happy New Year and please email me so I can say hello properly! I'm so glad to find you again! I was wondering what you were up to. How is Corrine (please forgive bad spelling) ?
Mary
m.anthony@longandfoster.com