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Answer:
Dear
BuyandHolder,
Well
-- your thinking is certainly on the cutting edge
-- according to the National Real Estate Investors
Association (NREIA) the number of clubs has gone up
dramatically in the last two or three years. This
rise appears to parallel the dramatic increase in
real estate prices, especially in certain parts of
the country.
But
before you decide whether or not to become actively
involved in a club, here are some points to consider.
(1)
The increase in real estate clubs is directly related
to the fact that many people believe property prices
will only go up.
Rising
prices are not an absolute. They could go down. So,
bear in mind you will be taking a risk of some sort
if you elect to invest in real estate.
(2)
If you decide to go ahead, you should develop
an expertise, a focus. You don't want to be all over
the place. There are basically three approaches:
Rehabilitation.
This involves fixing up a property and then selling
it, hopefully at a sizeable profit.
Being
a Landlord. In other words, buying property in
order to rent it out for income.
Going
Wholesale. Finding property that's available at
a deep discount and then flipping it quickly -- for
a profit.
What
Clubs Do
Real
estate clubs are essentially about education and contacts.
Unlike investment clubs, they generally do not pool
members' money in order to purchase property. Instead,
their primary focus is an educational one -- to learn
about real estate investing.
The
typical club costs $50 to $200 a year to join. Most
are structured as non-profits or trade organizations
and meet on a weekly basis, with expert speakers giving
advice on such topics as insurance, selecting the
right piece of property, knowing when to buy and when
to sell, how much to spend on a rehab, investing in
foreclosures, going to contract.
Members
often get discounts on paints and other supplies as
well as access to contractors and local professionals,
such as attorneys, appraisers, bankers and other lenders.
$Tip:
You want to avoid joining a club that promotes a self-proclaimed
real estate guru -- someone promoting his or her books,
seminars or CDs. Instead, pick a club that focuses
on the topic or topics in which you are interested
and then attend at least one meeting before joining.
To
find the names of clubs in your area, go to: www.nationalreia.com.
Bottom
Line
I
recommend that you also consider another way to invest
in real estate and that is through carefully selected
Real Estate Investment Trusts, commonly known as REITs.
These stocks, which trade on the various exchanges,
generally have high yields and the properties held
in the trusts are professionally managed. Some focus
on mortgages, others on rental properties, shopping
centers, storage units, nursing homes, rehab centers,
long-term care housing and even parking places.
Although
the properties held in these trusts are managed by
experts, not all REITs are equally sound. For more
information, check out our previous column on the
topic by clicking HERE.
Good
luck!
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