How to Join a Real Estate Investment Group: Pros & Cons

CEO Khai Intela
You know the saying "strength in numbers." Well, that's the fundamental objective of starting or joining a real estate investment group (REIG). While it may seem intimidating at first, joining a real estate investment group...

You know the saying "strength in numbers." Well, that's the fundamental objective of starting or joining a real estate investment group (REIG). While it may seem intimidating at first, joining a real estate investment group is actually quite simple. The challenge lies in choosing the right group to join. Luckily, this guide will help you navigate the factors involved in making that decision.

What is a Real Estate Investment Group?

A real estate investment group is a legal entity formed by a group of private investors who pool their money, knowledge, and time to invest in real estate properties that generate income. These groups come in different forms and can invest in various real estate ventures that offer different channels for profit.

Real estate investment groups can choose to buy, renovate, sell, or finance properties to generate profits. They can also engage in apartment buildings, rental properties, commercial buildings, mortgage lending, or property management. Unlike real estate investment trusts (REITs), REIGs are not affected by stock market performance.

In a typical scenario, the REIG will buy or build a set of buildings, usually apartments, and invite investors to join the group by purchasing one or more units. The REIG then manages all the units, including maintenance and tenant finding, in exchange for a percentage of the monthly rent.

One advantage of joining a real estate investment group is the opportunity to collaborate with people who have different areas of expertise, including real estate professionals, investment analysts, lawyers, and contractors. This diversity enhances the overall knowledge and experience of the group.

Commercial Real Estate Investment Groups vs Residential Real Estate Investment Groups

The main difference between commercial REIGs and residential REIGs lies in the type of real estate and the revenue channels. Residential REIGs generate income from individual tenants renting properties they live in, while commercial REIGs generate income from businesses renting commercial properties.

commercial real estate investment Caption: Commercial Real Estate Investment

How to Join a Real Estate Investment Group

Joining a real estate investing group is possible for any individual investor. The main requirement is investing money into the property. There are groups for various demographics, including retired individuals, college students, wealthy businessmen, and those interested in specific types of real estate or geographic areas.

When searching for the best real estate investment group for you, it's important to find a group with like-minded members. Here are some questions to consider during your due diligence:

  1. What is the investment strategy of the group? Are they focused on quick returns or long-term passive income?
  2. What historical data supports their projected returns?
  3. How are the returns distributed to club members and what are the revenue channels?
  4. Is the group's risk tolerance aligned with yours?
  5. What is the process for withdrawing your funds?
  6. What is the structure of the real estate investment group? Are there specific responsibilities for each member?
  7. Does the group provide education and networking opportunities? Are there experienced investors to learn from?
  8. What are the club dues?

Find Local Real Estate Investment Clubs Near You

If you're searching for a local REI club, start with organizations like The National Real Estate Investors Association. Networking platforms like LinkedIn can also help you find people in your existing network who are interested in real estate or already belong to a local investment group.

Pros of Local Property Investment Groups:

  • Investing in your local community
  • Accessible properties
  • More intimate club meetings that can expand both personal and professional networks

Cons of Local Property Investment Groups:

  • Limited pool of potential investors and experts
  • Higher initial investment in smaller groups
  • Higher risk due to lack of geographic portfolio diversity

To find the best local real estate investment groups, explore associations like the Broward Real Estate Association and Central Florida Real Estate Investors. Additionally, platforms like LinkedIn and social media can connect you with like-minded South Florida real estate investors.

Join a National Real Estate Investment Group

Joining a national real estate investment group offers access to a larger pool of professionals and a more diversified investment portfolio. However, it may be challenging to align with members from different parts of the country, and virtual meetings can feel impersonal.

When searching for the best national real estate investment groups, it's important to avoid scams or for-profit companies posing as investment groups. The National Real Estate Investors Association is a reliable resource for monthly meetings, educational resources, and networking events.

Another option is real estate crowdfunding. Platforms like School of Whales allow you to invest in commercial real estate projects that positively impact the community. With crowdfunding, you can invest with as little as $500 and gain direct access to properties for hard hat tours. This option offers the benefits of real estate investing without the time commitment required by joining an REIG.

Start a Real Estate Investment Club Yourself

Starting your own real estate investment club provides the freedom to define the investment thesis according to your objectives and risk tolerance, set the monthly dues, and choose members who align with your desired community culture. However, it requires a significant time commitment, carries legal responsibilities, and involves a steep learning curve for inexperienced investors.

To start a real estate investment club, consider the following tips:

  • Research existing clubs to learn about their purpose and structure.
  • Attend meetings to gather ideas for what to emulate and what to do differently.
  • Consider the benefits offered to members, both financially and educationally.
  • Connect with potential members on professional networking platforms like LinkedIn or social media platforms.
  • Define the investment thesis and mission of your group.
  • Establish a website, social media accounts, or use local publications to promote your club.
  • Determine whether your club will be for-profit or not-for-profit and comply with legal requirements.
  • Establish effective forms of communication, such as in-person meetings or virtual sessions.

While starting your own real estate investment group is a significant undertaking, it can be rewarding and profitable. Leveraging the expertise of others is a key advantage of REIGs, so consider partnering with an industry veteran who already knows how to form a real estate investment club.

Key Takeaways

The real estate market can feel overwhelming, but collaborating with others in a real estate investment group can make it more manageable. When searching for the right group, ask questions and be aware of for-profit companies disguised as investment groups. The best real estate investment groups aim to facilitate knowledge exchange and leverage diverse expertise.

If joining an REIG isn't for you, consider real estate crowdfunding as an alternative. Platforms like School of Whales allow you to reap the benefits of real estate investing without the time commitment required by joining an REIG.

Whether you choose crowdfunding, a national investment network, or a local investment club, these options provide opportunities to own real estate without taking on the burden alone.

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