Creating Wealth “Pooling Investment Resources”

Creating Wealth By Bill Rodriguez, Loan Consultant Cherry Creek Mortgage Company 303-877-6323 

            Thank you for joining me for this month’s edition of Creating Wealth. Last month I talked about some of the ins and outs of prohibited and non-prohibited transactions in relation to the rules and regulations that govern Self-Directed IRAs. This month I am going to discuss wealth creation through the pooling of investment capital as a means to:

1.) Establish a network of investors. 2.) Add value to a newly formed investor community by: a.) Creating a lower point of entry for potential investors with limited capital. b.) Providing hands on educational opportunities for newer investors. c.) Diversifying the risk on investment opportunities. In short this month’s article will be dedicated to exploring this approach to building business as a real estate professional.

Creating Your Niche: 

In previous articles I have discussed the benefits of creating a network of investors in order to build momentum in your real estate career. Typically this market segment is characterized by a higher quality of buyer who buys more frequently. Whether you are just starting out or looking to reinvent your real estate career, having a network of investors is, in my humble opinion, a must. But how does one go about attracting investors, you ask? In addition to being able to find a good deal, one of the easiest ways to attract investors is to create a seminar platform that educates potential investors on the variety of subjects associated with real estate investment and its potential pitfalls. There is an enormous number of people conducting seminars on how to invest in real estate. I have attended my fair share and have found that the seminar portion of this platform has turned into a commodity business in and of itself. The focus tends to be more on selling the audience on the next 6 week intensive training, DVD package or book rather than providing solutions to real world problems. This has created a real opportunity in the marketplace for more of a high touch, hands-on approach that allows potential investors to pool capital, expertise and diversify the risk on investment. My suggestion is to create your own investment club or mastermind group.

Build It and They Will Come: 

Potential investors trying to navigate the marketplace may find it exceedingly difficult these days. On one side you have the seminar gurus touting high risk, no money down options for acquiring real estate. On the other side you have the media threatening the impending doom of the bottom dropping out of the real estate market and the dubbed “Colorado foreclosure problem.” Not to mention the upset in the Subprime/Alt-A world that is threatening to pull all high LTV and low doc loans out of the market. Investors see the opportunity of a buyer’s market and the surplus of homes for sale, but they are hesitant to tie up $30,000 or more of their liquid cash. Herein lies your opportunity to turn the potential pitfalls into opportunities for your would-be clients by providing them the safe environment they need to grow in their knowledge of the real estate game. By putting together an investment group, you become the field person that does the due diligence on the quality of an investment opportunity. You can educate your clients on the different approaches to real estate investment from buy and hold to fix and flips to development. The merits of each opportunity can be explored without risk. The value of the educational aspects of this platform is reinforced with each deal that gets brought to the table. Instead of being fearful of the marketplace and allowing fear and ambiguity to keep them in the dark, you may find that your members really start getting engaged and bringing periodicals for discussion. Creating a club or a masterminds group like this creates a forum for people to explore different investment approaches and opportunities while simultaneously finding their own path to Creating Wealth. The group will eventually take on a life of its own.

I Get Buy With a Little Help From My Friends: 

One of the aspects that I really enjoy about the investment club/mastermind approach is that mentorship for new investors occurs naturally. New investors typically don’t have large pools of liquid funds available and the risk tolerance is usually lower than your seasoned veteran. But when you pool investment and intellectual capital, you create more opportunity for everyone.  Risk diversity is also another benefit from this approach because in this case you have incorporated broader intellectual capital which provides a level of comfort and education to your less seasoned investors while tying up less liquid cash that can then be leveraged for other investment opportunities. When these endeavors are wrapped up and completed successfully, you have given your newer investors the confidence and operating cash to potentially go out on their own.

An example of this is one that my girlfriend and partner in the mortgage business has created with a realtor partner of hers and a handful of women investors inBoulder.  As a group they are pooling resources and expertise to invest small amounts of money in a number of buy and hold investment properties in Boulder County. She and the realtor bring a certain level of expertise that the other women appreciate and draw on.  Some of the other women are seasoned investors who enjoy pooling resources to diversify their portfolio and others are new investors who have wanted to invest but were hesitant to go it alone.  By working together, they are able to invest in more properties, diversify their risk and share ideas, knowledge, resources and opportunities.  Everyone wins.

Need more information? Feel free to contact me at any time @ brodriguez@ccmc-net.com or (303)-877-6323. You can also access information online @ www.investtaxfree.wordpress.com.