Group Real Estate Investing Tips – Before you Invest with a Real Estate Group Do These 8 Key Things

Why group real estate investing? History has proven again and again that the people who thrive are the ones who work together. Have you ever considered the power of working together to invest with a group?

If you haven’t, I’m going to enlighten you as to a number of reasons why you should consider investing in a group, and explain a few of the many benefits of group investing.

Group real estate investing can maximize financial leverage.

What do I mean by this?

Think about what happens when you put ten percent down, or $ 30,000 cash, on a single family house and you receive a loan for ninety percent of the purchase price of $ 300,000…in effect you just leveraged your money TEN times to control an asset worth (if you bought right that is) at least TEN times the money you used to control it.

That $ 270,000 loan, the other ninety percent of the money used to own the property, was OPM- or “other people’s money”. Maybe you got it from a bank, or a mortgage lender, maybe even from a private lender, or even the seller of the property itself gave you that loan you used to finance ninety percent of the purchase price.

Doesn’t matter, because no matter where the money came from you didn’t need to have the entire purchase price to get control of the property (and enjoy the benefits of investing and real estate ownership)…did you?

Regardless, it’s nice to own a small house with a value of 10 times what you had to invest cash in order to get that ownership.

And for most people, they feel comfortable being on the line for that 90% of the purchase price in the form of the debt against the property. After all, it’s considered “normal” to owe on a house, and a $ 270,000 mortgage doesn’t even buy close to as much of a house as it did 10 years ago in many places of the country.

Besides, they think that since real estate goes up in value over time the fact that they’re personally guaranteeing the loan of $ 270,000 isn’t a huge concern for many people.

But what if you could do that on steroids?

What if you could gain ownership in a $ 3 million property or a $ 30 million property?

If the purchase price percentage numbers were the same, would you want to personally guarantee a loan for 10 times that- or $ 2.7 Million? What about $ 27 Million?

What if you could you raise a down payment for these deals (just say we’re assuming the same 10% we used earlier)?

For many people, those last two loan examples are out of their comfort zone.

Even if they had or could raise the amount of money required to control the property.

It wouldn’t matter WHAT the property was worth, or how much more than $ 27 Million it was worth, signing on the dotted line for $ 27 Million is just not something they’d be comfortable doing.

And yet many of these are the kinds of deals that provide the BEST dollar-for-dollar returns…so how does the average investor get some of that money? Without shouldering the huge debt service themselves?

Well, it’s often possible when you invest with a group in real estate.

For example, you can leverage the resources of other people, other investors-not just banks and mortgage companies. This can be a major plus because now it is not you alone who is responsible for the entire purchase price or perhaps, not even be on the line for the debt attached to the purchase.

Investing in a group can give you access to investments that might be so large in scale as to be out of reach for you alone. Many millionaire fortunes have been built by investing with groups- not only in real estate.

But let’s stick to real estate for the purposes of this article. Group real estate investing, especially, has proven over time to be very lucrative.

There’s a lot of information you need before deciding to pursue investing with a group in real estate…whether you’re looking to invest in real estate with a group that’s already investing or whether you intend to start your own real estate investing group- in which case the scope of this article is much, much too small to adequately prepare you but will point you in the right direction.

Here are some simple tips that will guide you in your decision-making before you invest with a real estate group:

1. Know the entity/business structure the investing group uses, and make sure it’s conducive to a group

2. Transparency is key- financials should be disclosed to all investors in the group

3. Your money is only as protected as it says in the legal documents

4. Determine liquidity (can investors sell out, or transfer their piece of the investment?) before investing

5. Be aware of investing government regulations (especially SEC)

6. Learn the right questions to ask

7. Hire the right experts, professionals, and advisors- attorneys, accountants, managers

8. Don’t invest unless you are comfortable with the risk/reward ratio

I hope these tips have empowered you to think about the benefits of investing in real estate with a group. If so, you will have taken an important mental step into a brighter and more prosperous future.

In fact, the majority of all millionaires at one point formed an alliance with other people of the same vision to ensure their success.

Perhaps it is time you did, too?