Wealth Through Real Estate: How investment clubs work
Real estate is one of the surest ways for individuals to change their financial destiny. For one thing, property usually appreciates in value. With real estate you can create cash flow through rent. Real estate assets often give you leverage, allowing you to borrow more money than the value of the property you’re buying. Moreover, there are significant tax breaks for owning property. And you don’t have to be a landlord to buy and sell houses.
“The average guy can have minimal means and accumulate real estate assets worth millions of dollars,” says Wesley Barney, a former New York Fire Department inspector who now owns 17 properties. “Real estate is the last hurrah for the average person who works to get into a business. Everything else is much harder.”
Unfortunately, most of us have never been taught how to invest in real estate.
In this week’s column, we’ll explore what are called real estate investors’ associations—gatherings of people from all walks of life who meet to network and learn how to buy and sell property. Many of these groups belong to the National Real Estate Investors Association, based in Pittsburgh (NAREIA, 888-762-7342, www.nationalreia.com). Recently, NAREIA announced a 60-hour course for novice and experienced investors designed to help them increase their knowledge and obtain a certificate as professional housing providers.
Most metro areas have at least one real estate investors’ association. One hundred or more persons, such as home owners, contractors, mortgage brokers and real estate sales agents, usually attend the monthly meetings. These investors come to hear national experts lecture on topics such as buying and rehabilitating property, how to sell homes with lease-purchase options, or how to get banks to sell them distressed property for less than the mortgage price. In the New York area, African-Americans operate two real estate investors’ associations with multicultural memberships. Barney is president of the Ultimate Investors Real Estate Club Inc., New York City (718-424-7583, http://wbultimateinvestors.net), and Alvin and Marlene Lambert run the Greater Westchester Real Estate Investors Association in New Rochelle (917-449-2009, www.gwreia.com). Membership in each group costs $125 a year.
There is also a Garden State Real Estate Investors Association (201-862-1443, www.gsreia.com) and a Long Island Real Estate Investors Association (718-232-4948).
On the fourth Thursday of any month, the crowd at Ultimate Investors includes African-Americans, Hasidic Jews, Latinos, Southeast Asians and Caribbean Americans. On occasion, Barney has taken members on trips to Florida and Kansas City to buy property at tax sales and foreclosure auctions. He says the average member of Ultimate Investors has completed between one and 10 deals, but notes that some members “have not overcome the fear” and have not done any deals. “Contrary to what you might hear, real estate is not a get-rich-quick scheme,” he warns.
Yves Richard, president of Covenant Home Buyers LLC in Long Island (516-316-3363) and a certified public accountant who also prepares tax returns for real estate investors, joined Ultimate Investors three and a half years ago. Since then, she has bought 10 houses, usually by sharing mortgages with members from the club. As a numbers cruncher, she’s very clear about what she expects. “There’s no reason to invest where you’re not getting at least a $10,000 or $15,000 profit,” she says.
The Lamberts praise Barney for helping them start GWREIA a year ago. The group, which meets on the fourth Tuesday of every month, has 75 members. “People are bringing deals to investors who have money or credit or experience,” Alvin Lambert says. “If you have no funds, you can start by finding deals and wholesaling properties. At the real estate investor clubs, you have people with money looking for deals, and you have people with deals looking for money,” Barney says.
Tony Chapelle is a private investor who buys homes. He may be reached by e-mail at TonyChapelle@hotmail.com, or by calling 212-534-7195.