A real estate investment group can be the best – or worst – move you ever make. Getting involved with the right group can open you investing horizons to dazzling profits. Getting into the wrong one can turn into an investment hell.
First, look for one whose members offer a complimentary range of abilities. Ideally, there should be a good business type – full of ideas, connections and business savvy. There should be a numbers person like an accountant, who is happy to crunch numbers and put a sharp pencil to budgets. A real estate person, like an agent or Realtor, is valuable for connections in the industry, as well as for finding and marketing properties.
Perhaps the most important person works the finance. Either they have their own money or they are a mortgage broker and can easily and quickly arrange financing that makes sense.
Finally, especially for groups involved in rehabbing – a person with a solid background as a contractor or building inspector needs to be available, either under contract or as an official member of the group, to vet the physical side of the investment properties. There should also be solid contacts, either as members or secondary contacts, for real estate attorneys and property managers.
The key people in the group need to be able to work together. They don’t necessarily need to like each other, but there has to be a good business relationship where people are willing to listen to each other. A healthy give and take, and a willingness to take constructive criticism, is key.
One thing often overlooked is there needs to be a good working agreement between the members of the group. Many groups start with just the barest idea of organization. Then once problems develop, “turf wars” raise their head, which can cause problems and wasted time and money while they are worked out.
The best groups have a solid knowledge of what different people do on each transaction. Each member does what they do best. However, that also means the group is only as strong as the weakest link. if one member continually slacks off and doesn’t accomplish what needs to be done, all suffer.
Finally, it is a great idea to have a mix of experienced investors who know the ropes, along with eager newcomers who bring energy and fresh perspective to the table. As always, in a real estate investment group it is the mixture of strengths working together that creates profits for all. Look for a group that fits this profile, and you’ll be on your way.