Posted on: Friday, May 27, 2005
Interest in real estate clubs builds
By Adam Shell
USA Today
In the latest sign that Americans are gushing about the moneymaking potential of investing in condos, center hall colonials and corner lots, the number of real estate investment clubs has grown fourfold since 2002.
There are now 177 clubs, up from 44 at the end of 2002, says the nonprofit National Real Estate Investors Association. Rebecca McLean, executive director of NREIA, says that if clubs not affiliated with her group are included, there are closer to 500 groups nationwide.
The burgeoning club scene devoted to making money in real estate has come amid a housing boom. In hot markets, such as California and New York City, prices have jumped more than 100 percent in five years.
The combination of soaring prices and a growing belief that real estate prices only go up has some economists worried that a bubble might be forming in overheated markets.
"The explosion of real estate groups is symptomatic of the shift of our exuberance from the stock market to the housing market," says Robert Shiller, a Yale economist and author of "Irrational Exuberance," whose recently published second edition warns of a housing bubble.
McLean said the nonprofit NREIA provides education, networking and legislative support to real estate investors. The NREIA has clubs in 36 states and receives 250,000 monthly visits to its Web site. "We are not like stock market clubs whose members use pooled dollars to buy stocks," she says. The main goal is to share investment strategies.
A new club was recently born in one of the nation's most overheated housing markets: Los Angeles. Scott Whaley, president of the Los Angeles Real Wealth Investors Association, said more than 100 people attended the first meeting last month, and 400 more have joined. Members, Whaley says, are taught strategies, such as:
• "Rehabbing," or fixing up properties and selling at a profit. • "Landlording," or buying properties for rental purposes. • "Wholesaling," or buying inventory at steep discounts and flipping them quickly at a profit.
