What to look for in a Real Estate Investment Group

Real investment groups can offer the benefits of experience, discounts, and shared or elected management.  However, of all of the things that a real estate investment group can offer, the most important thing you should look for is trust.  Without trust, your real estate investment group is dead in the water.

In a real estate investment group, you trust other people with your money and they trust you with theirs.  There can be no “grey lines” or no set allegiances.  Everybody must be willing and able to risk the same amount of money as everybody else, or be willing to provide a service to the group (such as management).  Side deals, selfish greed, and other individual mentalities will destroy an investment group.  As such, before you make any decisions on the credentials of the group at issue, you have to ask yourself, “can I trust these people.”  If the answer is “no,” walk away.

Although trust is arguably the most important factor to consider before joining a real estate investment group, there are other considerations.  Experience and an investment plan are two of the most important considerations after trust.

Experience cuts both ways.  You do not want to create a group with a people who know absolutely nothing about real estate.  However, you may want to form a group with individuals that are highly educated in real estate but have never invested.  There will be more risk if the individuals in the group have never invested.  However, due to this fact, you may have more of a voice in the operations.

The investment plan is critical because it will be a measure of your expectations with the group.  If the group has a conservative investment strategy, you should expect small, consistent gains.  However, if the group has an aggressive strategy you may be able to expect larger, faster gains, but may also have the prospect of heavy losses.

Remember, trust is the most important thing to look for in a real estate investment group.  If you can trust the people in the group, you can proceed to analyze other factors before joining and investing with those people.  Other important factors to consider are the experience of the group and the investment plan of the group.  Experience can cut both ways, so make your decision as appropriate to your financial situation.  Finally, make sure your investment strategy meshes with that of the group.  If your investment plan is different from that of the investment group, you may not want to join that group as conflict may arise.