Beyond Know How

People get together to discuss investing in property often through collective bulk purchases of property from developers before the new projects the developer has been working on are released for sale to the general public.  Property Investment clubs were created to allow the members to come together to thoroughly discuss each investment before anything is purchased.  New members are often initiated into the club to help strengthen the negotiating position of the club.  Members can choose whether they want to invest in single or multiple properties.   These clubs offer its members a place to network, learn from others who have more experience in negotiating and purchasing real estate.  Property investment club members are  usually professionals such as brokers, realtors, lawyers accountants and so on even license contractors.

Without a shadow of any doubt, the mere presence of the word “club” within the term investment club is enough to seriously confuse the actual function of the body which in turn means that people develop the wrong idea about them. The problem is that how to start an investment club is the easy part and as a direct result of that easiness, it seems that all and sundry want to get involved and there is more than a few people who seem to regard such clubs as little more than a social gathering.

The actual process of establishing your investment club will require you to satisfy certain conditions such as the drafting of a investment club constitution which is a legally binding document which will quite clearly specify and outline the rights, obligations and remedies available for all the members. The constitution will be the document which is referred to during all times of dispute and uncertainty and therefore it is imperative that it is well-drafted and ratified by all of the members.

However, please be advised that the creation and drafting of such a document is not merely intended to be “good housekeeping” i.e. intended to ensure that rules are stated and protocols obeyed. All banks and stock brokerage firms will want to have a copy of the Articles of Incorporation or the Partnership Agreement and will simply refuse point blank to trade with you until you provide them with the information.

Once the financial account has been duly founded and established , it is time for your club to begin in earnest, because by satisfying this procedural requirement your club can then actually fulfil its raison d’être: to invest the finances of the club members for the mutual enrichment of all.

However, it is vital that you also clearly define and agree upon the other policies and protocols that need to be carried out things such as the minimum contribution that each of the members will be required to invest. Be cautious about setting this figure too high because if you do, then you will run the very real risk of alienating members in the long run who may end up drifting away rather than keep up such a draconian level of investment.

The rules of admission and qualifications required for membership should also be carefully considered and carefully drafted in order to ensure that only reliable and steadfast members will join.   This is very important because whilst how to start an investment club is fairly straightforward, keeping it as a profitable venture is a different story altogether.