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Mired in a stagnant stock market and disillusioned by other
going-nowhere savings instruments, thousands of frustrated
personal investors are deciding it's time to "get real"
and join the club: the real estate investment club.
Though not a new concept, the once-arcane real estate club seems
to be heading mainstream these days, and in land-office volume.
At year-end 2004, Covington, Ky.-based National
Real Estate Investors Association, which provides services
and information to clubs, had 20,000-plus affiliated members
in 175 nonprofit real estate clubs, nearly doubling the previous
year's club total. And those tallies account only for about
one fourth of all U.S. real-estate investment clubs, the NREIA
estimates.
Unlike stock-investment clubs, real estate clubs
don't pool participants' resources to make buys. Instead,
they equip members with the tools to make their own informed
decisions, offering education and networking events that include
speakers, expos and seminars, spotlighting such topics as
"Foreclosure opportunities" and "Rehabbing
properties."
Members pay up to $200 annually to join these
mostly nonprofit groups, which conduct roundtables and educational
events at such varied venues as eateries, churches, hotel
ballrooms, title companies and school classrooms. The clubs
range in size from the 1,500-plus-member Georgia Real Estate
Investors Association in Atlanta, which host functions almost
daily, to a booth full of folks who meet monthly over coffee
at the local coffee shop.
David Dweck, president of the Deerfield Beach-based
Boca Real Estate Investment Club, says his organization has
grown to 400 members from only a handful when he founded it
in the mid-1990s. "We have found that there is a real
need for investors to find new resources and do some out-of-the-box
thinking," he says.
About 35 percent of the Boca Raton club's
members are full-time investors, 25 percent are part-timers,
and the balance comprises "newbies and wanna-be's,"
Dweck says. Some of the more aggressive members reap sizable
yields from investments while some overly timid ones will
never invest a dime, he says.
Dweck says good real estate investment clubs
should have a low-pressure, collegial culture that motivates
and stimulates veteran investors, while keeping new recruits
from making costly freshman mistakes. "If you're just
starting out, you definitely need some means of education
before you jump in and get hurt."
Clubs also should help keep members abreast
of legislative issues. When HUD recently changed regulations
for "flipping" by demanding longer-term ownership
of its homes before resale, "we went out of our way to
make sure our members were on top of that," Dweck says.
Real estate clubs also can bring together separate,
yet compatible, factions to share experiences and form partnerships.
J.P. Vaughan, co-founder and publisher of Creative Real Estate
Online, a real-estate resource site based in Carson City,
Nev., that lists more than 300 such real-estate investment
clubs, says clubs often bring together what they call "finders
and funders." Vaughan explains, "The funders are
the people who don't have time to look for a good deal, but
have money, while the finders are willing to find the deal,
but don't have the money,"
They also will put participants in touch
with peer-endorsed professionals and contractors, Vaughan
says. "For example, they can make it easier for you to
find a reliable real estate attorney, a good mortgage broker
or an investor-friendly title company that will consent to
do simultaneous closings," she says. Such vendor groups
often become members themselves or serve as sponsors to help
subsidize club activities.
Vaughan says she's listed "a proliferation"
of new real estate investment clubs over the last few years,
especially smaller ones.
Baltimore businessman Charles Parish says
he runs and funds his Maryland Real Estate Exchange Network
as a "loss-leader" to help promote his quarter-century-old
Investors United Real Estate School, as well as his real-estate
auction company. The Baltimore-based club has an open-membership
policy with no annual dues, and little or no charge for once-a-month
networking sessions at a local hotel, which always includes
a speaker and food.
"We get about 200 people a month -- including
30 to 35 new faces," he says. "Some are executives
in expensive suits and others arrive in pickup trucks wearing
bib overalls. It's funny, because it's often those guys in
the overalls who seem to have the money."
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