There's strength in numbers.
This is the basic premise behind joining an investment group, and there's a fair bit of wisdom in that statement.
Property investment clubs exist to pool the resources of multiple investors into projects of mutual interest. They also provide an opportunity to talk to like-minded investors, and to share experiences, opportunities and tips. Think of it like this - when you find a property that isn't right for you, but would be right for someone else in the club, you're doing them a favor; most clubs are promoted on mutual benefit.
Property investment clubs work by sharing information sources. Information and experience that one person brings to the club, lots of other people can benefit from. What one person learns the hard way, the rest of the club learns how to avoid.
Investment groups also aggregate negotiating power and purchasing power, by providing a venue where investors can pool their capital to a mutually beneficial project.
If you do join a club don’t use it just to be led into their projects. Use the experience of your club partners to gather information about neighborhoods, about builders, and about funding sources. A good investment group will help you generate a portfolio of developments to choose from and a well known group with a string of successful projects behind it can be used as a powerful source of negotiation.
This isn't to say a property investment club is the be-all and end-all. Investment groups carry a lot of inertia as organisations. A group of people reaching a consensus on a decision cannot make decisions with the same agility as an investor working on his own. This manifests itself in divided objectives, and often times in purchase delays as everyone wants to dip their oar into the water and offer direction.
Not all investment groups are good for all investors. Ask each property investment group you're considering what their charter is, and what type of property investments they're looking to work on. Be it commercial, retail, residential or construction related, most investor business groups focus on one or two things and do them well.
There are good reasons to join an investment group, but be on the lookout for some signs that an
investment group has turned into a "private market" for some members to sell goods and services to other members, or to funnel business to certain builders and contractors. It usually starts out with good intentions, but "I stopped showing up because someone was always trying to sell me something" is the number one reason why people stop going to investor club meetings.
Before joining a group do your research, find out what the group was founded to do, and how it does it. What's the makeup of its membership? Are these people you'll respect, and like? Ask to look over the minutes of the last couple of sessions of the club, or ask if you can go to the first couple of meetings before you pay any kinds of dues or membership fee. You should expect that a club of this sort is a place to mingle, to talk to other investors, and to swap information in a friendly manner.
The club should have a bulletin that you can look at, and you should be able to trade information there about properties that interest you, vendors, contractors and the like. Don't turn a club down just because it's got ties to a vendor or contractor - that's one way to keep costs down, but in that situation do be aware that you're going to be getting information that may be skewed in favor of the sponsor.
If you do decide to join an investment club, historically, they've proven to be a strong competitive advantage when compared to the independents. They provide a forum for sharing knowledge, a way for investors to leverage their resources and can give you sound advice as you're starting out in property investing.
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