A property investment club is a group of investors who come together and pool assets in order to invest in real estate. Many people are drawn to property investment clubs due to the high cost of real estate. In these groups, individual investors can combine their money with like-minded individuals and invest in high-dollar properties that guarantee a return on the initial investment.
There are two main draws to undertaking investment partnerships in this manner. A property investment club will often educate its members on the finer points of real estate investment. Since securities laws and rules governing the field are always changing, not to mention the fact that the market is in constant flux, it is vital that potential investors are up to date on the latest information. They also learn how to distinguish a good investment from a bad investment, and they are taught how to correctly, lawfully, and sensibly invest their hard-earned money.
The other appeal of a property investment club is the added level of security and capital that comes with joining forces — and dollars — with others in the same position. Members can accumulate large amounts of money much more quickly than they could on their own. These extra resources allow members to invest in more financially sound, better quality properties that will initiate a faster and more significant return on the investment and subsequent profit.
One of the more hidden perks to being a member of a property investment club is the club organization's access to discounts. Because members are prepared to invest their money in bulk property investments, as opposed to one person investing his or her own money, property discounts are fairy commonplace. With this lower overhead, members have an unexpected surplus of cash at their disposal.
Not all property investment clubs are created equal, however. Potential investors are advised to thoroughly research possible groups. Unfortunately, many clubs are scams, charging exorbitant "membership fees" and making exaggerated claims about their success. By its very nature, property investment is a risky business, so investors need to wisely choose where they invest their capital. Consulting with financial advisers, talking to trusted friends and colleagues, and interviewing active members of a potential club are ideal ways for an investor to conduct a comprehensive background check.
Another important consideration for those new to joining or thinking of joining a property investment club is to not get caught up in the group mentality. If an investor is pressured by other members into putting their money into a questionable property under the guise of profitable membership interests, the investor should proceed with caution. Given the inherent risk of investment, a member should be absolutely certain they are entering into a deal with which they can be comfortable.
