FAIRFIELD-SUISUN, CALIFORNIA

Business and Real Estate

Real estate investment clubs for fun and profit, with luck

Kimberly and Edward Rushing’s fledgling real estate investment venture got off to a rocky start.

Seven years ago, at the height of the housing market, the young couple bought a home they intended to fix up and flip in San Bernardino County.

“As soon as we bought it,” Kimberly Rushing said, “the market crashed.”

They realized, however, that there was an upside to a down market. They began attending events at real estate investment clubs. Listening to speakers and meeting mentors and potential partners, they learned the nuts and bolts of property investing and formed long-lasting connections.

“It was everything,” said Kimberly Rushing, 29, who runs the couple’s real estate investments while her husband is deployed as a Marine captain in Afghanistan. “Neither of us could have done it without the clubs.”

With the housing market improving and the prevalence of social media, real estate investment clubs are proliferating. Events, typically held once a month, attract a variety of professionals, including accountants, tax lawyers, real estate agents and a mix of old-time and newbie property investors, flippers and landlords alike.

For a small fee at the door that costs less than a couple of cocktails, the evening includes a social hour, an economics and housing market update, a quick plug from a sponsor or two, the featured speakers, then more networking later.

Many clubs, like those the Rushings have attended, focus on education and networking, rather than pooling members’ money for the club to invest.

Other clubs, however, are set up to promote a particular investment program or product. There, prices can run into thousands of dollars, and attendees might be pressured to sign up for other, more expensive courses.

“Is the interest of the club to educate, or is the interest of the club to sell you?” said Joshua Dorkin, who founded the popular investment site BiggerPockets.com and is an outspoken critic of expensive seminars.

“My advice to somebody who’s looking to go to a club: Be aware that any event you go to, there’s very likely going to be somebody there who might be pitching you,” he said. “No. 1 is always leave your wallet at home. There’s no easy way to make money in real estate. There’s no ‘get rich quick.’ ”

Investors attending recent meetings of such clubs said the events have offered them a chance to learn from experienced speakers, meet lenders or eventual partners and pick up everything from tax tips to referrals for roofers.

“Old-time landlords and newbies need to talk to each other,” said Steve Dexter of Laguna Beach as he waited for an Orange County investors association meeting in Costa Mesa to begin one evening in March.

Although experienced investors have money to spend, Dexter said, “Old-timers don’t want to go out there and tear up the landscape looking for deals.”

Dexter, who buys and rents properties, says the so-called get-rich real estate gurus don’t adequately explain how difficult being a landlord can be. He’s written books instructing property owners on how to do it better.

Dorkin encourages new investors to seek out local mentors.

“Do what you can to connect with them and befriend them. Volunteer your time and energy to work with them,” he said. “I liken it to the old blacksmithing days. You want to be an apprentice to a guy in your neighborhood who you know knows his business.”

Some clubs have colorful names or gimmicks. One new club, Lady Landlords of Orange County, also welcomes men. But founder Jasmine Willois said that after a former stint as a stockbroker for a Wall Street “boys club,” she wanted to create an organization that would be particularly appealing to women.

Her club is an outgrowth of her Real Lady Landlords of San Diego, a concept she’s hoping to take across the country.

“We don’t push programs; we push education and networking,” Willois said. “We’ll show you how to get involved without spending $30,000.”

Willois, who said she couldn’t afford to start out buying homes in San Diego, invests in properties in Indianapolis, and teaches others how to find investment markets outside their backyards.

“You don’t have to fight over deals with these big millionaires to get into this game,” she said.

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HOW TO VET REAL ESTATE INVESTMENT CLUBS

Before you attend a real estate investment club or seminar, and especially if there’s a chance that you could wind up spending a significant amount of money, know what to expect. Some questions to ask:

—Does the meeting draw speakers with a variety of backgrounds, or is it devoted to pitching a particular program?

—What are the credentials of the recent/upcoming speakers?

—How much time is allotted for networking?

—Are there opportunities to ask questions?

—What does it all cost? If there’s a tiered system, what do I get at each level?

—Be wary of promotions that claim you can make big money fast; there’s no risk; the deal is a sure thing; you can earn a lot by working part time at home; you’ll be coached to success every step of the way; or if you don’t buy right now, you’ll lose out.

SOURCES: BiggerPockets.com; Federal Trade Commission

Mcclatchy-Tribune News Service

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