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Less well-off people can overcome this problem by joining forces. They could form a group that pools funds together, invests in promising property, and share the returns from their investments. Or they may just leverage each other’s knowledge to find potentially lucrative opportunities that they could take advantage of on their own. If you find this idea attractive, you’ll want to know how to start such a club. Here are eight steps you can take to do just that:
Learn All You Can about Real EstateStudy the local real estate industry and the property market. Understand how these domains function—the key factors driving them, their growth and stagnancy cycles, and what niches have the best returns. The more knowledgeable you are about the industry, the better your investment decisions will be.
Examine Other ClubsYou want to set up a real estate investment club. Why not join an existing one to learn how they operate? Pay attention to how they are structured, the way they’re run, their goals and guiding principles, and the interaction between their leadership and the other club members. This will give you a good idea of what a real estate investment group looks like on the inside, and will prepare you to manage a similar organization.
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Find Out What Laws Govern Investment ClubsYou will want to know what laws pertain to investment groups like the one you’re setting up so that you don’t incur the costs that come with falling afoul of them. Depending on the nature and function of your club, you may be required to register it with local or regional authorities. To get expert guidance, speak with a legal practitioner who is familiar with this matter.
Draw Up Governing RulesIf your organization is going to function in an orderly and efficient manner, it’ll need to be governed by rules. This is something you’ll pick up from other investment clubs if you’ve observed them (as we recommended earlier). The bylaws you and other founding members draw up should spell out how the group will be run, the rights and duties of its managers and other members, how resources should be pooled and invested, and how returns should be distributed, among other issues.
Attract MembersAt first glance, this may seem like the most challenging step of all. But while this is often true, there are many ways to surmount the hurdle of getting people to join your club. One would be to begin by inviting family, friends, and their contacts, and allowing them to spread the word about what you’re doing. You can take your marketing online too. Be present on social media, and set up a website. You can also run adverts on social networks (e.g. Facebook) and search engine results pages (e.g. Google). This will make your real estate investment club visible to a large number of persons, many of whom may be eager to join it.
Get OrganizedYour group needs to have some sort of structure that allows it to function efficiently. This may mean that you’ll have to select (or elect) a leader to run it. Positions you could create include president, vice president, secretary, chief investment officer, etc. Again, the form that the group takes will depend on what it exists to do. If it’s just a forum for sharing ideas and opportunities, it may not need several roles. Whatever shape it takes should be in line with the dictates of its bylaws.
Set Up a Collection AccountIf your real estate investment club will be directly investing in property, it should have a collection account which receives payments from its members. This will enable them to easily contribute their funds for investment and organizational operations purposes.
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Provide ValueIt’s important that you hold meetings with your club members regularly—perhaps weekly, monthly or quarterly. Such meetings should be occasions for them to share their thoughts and observations, and ask questions about their investments and real estate investing in general. You can also email them weekly newsletters covering these themes, and invite speakers to talk to them about strategies for building wealth. They will appreciate the fact that they’re getting all this value from you. Featured Image Source: Fortune Builders
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