Real estate is one of the best investments anyone can make. As the old saying goes, God isn’t making any more land. Broadly speaking, real estate tends to not only hold its value, but to go up in value over time. It’s a great way to build wealth to pass on to children, too.
However, it can be difficult to learn the ropes of real estate investment. First-time landlords may not know how to vet tenants effectively. They can often lose months of rent due to cleaning up messes or waiting to evict non-paying tenants. Cheap properties available to young investors can also be problematic. Properties bought at auction, for example, may be tied up in legal proceedings.
Forming an investment club can be a great alternative. When people pool their money and experiences, they’re able to make better decisions for the long term. With a larger pool of money, it’s possible to take on some fringe or difficult properties, along with more desirable ones.
Real estate clubs also benefit from the experience of all their members. Clubs may include professionals like lawyers, accountants and salespeople, who each bring different skills to the table. Before the internet, when real estate clubs operated on a face to face basis, assembling a good roster could be difficult. Now, thanks to the internet, forming an investment club is much easier. There are crowdfunding options, and options like REIT funds. The crowdfunding platform stREITwise is revolutionizing the way investors get into REITs.
Finally, a real estate investment club can be organized along a variety of different lines. People can pool their money to buy rental properties. They can pick funds or REITs to put money into. Most real estate investment groups do charge fees, but starting one of your own can eliminate or mitigate those costs.
Real estate is one of the most sound investments anyone can make, but going it alone can still be a bumpy ride. Forming a real estate group means minimizing exposure to risk, and benefitting from the experience of others in the group. There’s always demand for real estate on both the residential and commercial side. It’s a strong, stable field and one where even modest investments can really pay off.