Real estate investment groups can be good because it will enable a pool of investors, which may lack the financial ability to invest on their own, to invest in a property. Of course, your potential profits are reduced, but some profit is better than no profit. Additionally, once you make enough money from your investment group, you may be able to invest in some properties on your own. Alternatively, as the profitability of your investment group grows, you may be able to invest in larger, more expensive properties and thus, increase your potential profitability.
The best way to start a real estate investment group is simply to start one. However, you must bring something to the table. You simply cannot be the “idea guy.” You have to be willing and be able to invest a certain amount of money into a real estate investment group. If you have the ability and desire, the next step is to find other investors with like-minded goals and ambitions.
Finding an investment group, however, is easier said than done. You have to find a group of like-minded individuals with the ability to invest. Try to find individuals who have similar goals and investing styles. You do not want to form a group where half of the investors are conservative while the other half is aggressive. This will inevitably lead to conflict. Conflict is not good for profitability.
Trust is the single, most important characteristic that each investor must possess. You must trust the other investors in the group. You trust them with your money and they trust you with theirs. As such, trust is key to continued and long term profitability.
The best place to start may be with friends. Generally, you can trust your friends and know their investment plans. The only caveat with investing with friends is that your personal relationship may interfere with a business decision. Your friendship could be affected or even ruined if somebody has to make a tough business decision. Keep this in mind if you want to start an investment group with friends.
Outside of your friends, see if there is an established real estate investment group in your area. See if they are seeking new members or if you can get some referrals for other people that may be interested in investing in a real estate investment group. At the very least you should be able to get some information from this group on where to find other interested individuals.
Remember, you have to trust the other investors. If there is no trust, there will not be any success. Friends may be a good place to start, but you have to remember that your relationship may be affected or even ruined if a tough business decision needs to be made. Established groups may be another avenue to explore. At the least, you may get some referrals out of the group.