Restate investment clubs, on the surface they would be a no-brainer home run to attend, right? You got likeminded people coming together to share ideas and network and inspire. What better could there be for our industry? There are rock-climbing clubs. There are softball leagues and surfing clubs and fishing clubs, so shouldn’t there be real estate investing clubs? In this video, I am going to take you behind the scenes because there’s a lot more to this. Unlike rock-climbing, with real estate investing there’s competition, there’s business, there’s money involved, and that can change everything.i
Finding a Local Club
Real quick, if you want to find out about a club that might be available in your geographic region, go to FreedomMentor.com, go to the Resources tab, and then click on Club Locator. I’ve had this tool available for a very long time, and we try to compile and keep accurate information on all of the different clubs that are available out there. If any information is not completely accurate, just make a comment and it’ll get updated. If you’re outside of the United States, I’m sorry, we don’t know the clubs outside of this country, so this is just for those in the United States.
Is it For Profit?
When you are going to investigate or go to your next club meeting, I want you to ask the first question of, Is it for-profit? Is it for-profit or non-profit? One of the things that we show in our club locator is which ones are non-profit, because those that are non-profit are ultimately going to have less of an ulterior motive to somehow profit from you. If it’s non-profit, then ultimately, the hope is the club is just trying to bring people together to share ideas, network, and inspire.
What you need to look at is the number of, we’re going to call them guest speakers, or we could really call them traveling salespeople, and that is not derogatory. I’m not being negative, but oftentimes these clubs are going to have people that come and sell their courses. Real quick, if they charge $800 or $1,000, half of that money goes back to the club, half of it goes to the speaker.
If it’s a non-profit and they’re collecting that kind of money, then hopefully it’s because they’re trying to make sure they can pay the light bill and the cost to have that venue once a month, because it’s not free to be able to get all those people in a room together with the chairs and everything else. If it’s a for-profit, then you know that if they have a whole bunch of these traveling salespeople pulling through, that obviously they’re trying to make money by selling those courses that those people bring in.
Now real quick on these people, I can’t tell you whether or not their information is accurate because I just don’t know who’s showing up that week, but if they’re traveling week in, week out, selling whatever it is that they’re selling, you can be rest assured that that is not necessarily the role model you have for your own investing life, because you’re looking for freedom. You’re not looking for the prison of living out of hotel rooms and going from city to city selling stuff.
This right here can be of some value to clubs because they need the money to pay the light bills and whatnot, but ultimately, you have to be aware that if they’re up there selling their course, that number one, the club’s getting half the money, and number two, you hope that the information they’re sharing is accurate, but you don’t always know that. Sometimes it can be because it’s a for-profit club and they’re looking to make a bunch of money.
I’m going to call this the pink elephant in the room. Okay, so this is what they don’t talk about, and it’s this, that the big elephant in the room at investor club meetings is the following, that people are primarily competitors of themselves. The pink elephant is that these people are competitors.
Previously, I mentioned rock-climbing as a club. All right, now, if you are part of a rock-climbing club and everyone is going to go scale the north face of El Capitan without any ropes, well, who cares about competition, right? You’re all just trying to get to the top, and if everybody gets to the top, great. With real estate investing, there is this thing called competition. I know that some people get upset with me about this, because they say that I have a scarcity mindset. No. I have a clear understanding of this business, and that clear understanding is this. There are very few great deals. Do you agree with me? There are very few home runs, deals where the seller just wants to get rid of their home and just let you take it over and you make a bunch of money.
Most Successful Investors are Not Club Members
Those are rare, and so the majority of people in the room are all after those deals. That means that competition is the pink elephant, and by at least explaining that, now we can begin to frame how you can optimize your experience. I’ve got news for you. The most successful real estate investors in most communities, in most parts of the country, do not attend these meetings at all. They’re not even there. Why? Because they know it’s a room full of competitors, and they know if they’re in that room, there’s the potential they could actually slip up and say something that they shouldn’t that could give their competitors an edge.
If you’re going to attend these, you need to understand that if they’re competitors, you need to be a good listener and spend a lot less time talking about what you’re doing. I know that doesn’t necessarily jive with the idea that if this was this Utopian club, we’d all share ideas and we’d all rise to the top together, but it doesn’t work that way in the real world. You have to be a great listener and do a lot less talking about what you know and what you’re doing. That’s a little bit of a challenge for a lot of people, because there’s this quid pro quo feeling where somebody shares with you a good idea, you have to share something back with them. You have to resist that temptation.
Another thing you can do which is extremely productive at these events is networking, not with other investors, but with vendors. A vendor in my description would be a hard money lender, a mortgage broker, a title company, a closing attorney, an eviction attorney. These kinds of people, what I call vendors, they will be in the room, and what a great way to connect with them. As opposed to over the phone, you can literally see them in person and you can get to know them, and that can be incredibly helpful. I know for me, when I first got started, I found my first hard money lender at a real estate investment club meeting. His name was Rich, of all things, and he was terrific. If he’s reading this, Rich, you’re the man. Thanks for helping me on my first couple of deals.
Buyers are Not at These Meetings
Being a good listener means that you’re not giving away information, but you’re learning about things. Being a good networker means that you are targeting certain people, not other investors, but other vendors in the room. Now some people have brought up ideas like, “Well, Phil, at these meetings, there’s a lot of other people. They’re not necessarily competitors. They could be people that want to buy my house that I’m trying to flip to them.”
This is something that you need to know. The best buyers of deals you want to flip are not at these meetings. They’re just out there in the business world. They’ve got cash. They’ve got contractors. They are a contractor. You don’t want to flip to people in the room because they tend to be slightly smarter, if you will, or willing to pay less than everyone else. In fact, I think it gives people a false sense of the investor buying market when you only try to put a flyer at one of these club meetings and you don’t get the property out there on the general market, because these competitors, they tend to be smart. They don’t want to pay as much as the other people out there.
In addition to being a good listener and networking, there are these little events that they do that some clubs do a great job with, things like rehab tours where you get to drive around and look at other people’s rehab. That’s pretty cool. You can learn some great tips about different materials they’ve used and how they’ve gotten around certain difficult challenges. I think some of those events are great. Those can be a great benefit to you as well.
Certainly, just the inspiration of being in the room and seeing that there’s a lot of other people that are making money can be great, but I caution you there, in that a lot of people that tell you how successful they are on a local level are probably BS-ing you. This is for the guys that are listening, but you’ve heard the phrase that a true player never tells. If you ever heard that before, just think about it for a moment. Sorry, ladies, if I just offended you.
They are Your Competition
The reality is the people that are doing the most deals are not running their mouth about how many deals they did last week because they want to continue being successful. Some of the most successful people in the room are quite quiet and reserved. They’re good listeners. They’re smart enough to know that loose lips sink ships and the spouting whale gets the first harpoon.
It can be inspiring knowing there are people in your community doing the business, and I want to touch on that lastly, and that is, human beings, they are predispositioned to be social. They’re just like magnets and want to come together. You have a natural inclination to go connect with other people, partly because you might be scared and you want to make sure you’re doing the right thing and you’re not the only one in the entire area doing it, or maybe it’s just because you want to pick up some new friends and have some new social experiences.
I want to be careful in recommending that because sometimes the people you meet there that you, quote, “become friends with,” they may not become a competitor. They might become an enemy. You may try to do a deal with them and it goes terribly wrong, so be very careful of that. Be very careful, and this is where you can get bamboozled. I don’t know if there’s room. You can see it down here. Be very careful about anybody asking you for your money for a real estate deal.
Now paying for information from, say, a traveling salesman, that’s different. You’re trying to educate yourself so you can do your own deals, but when someone is looking for your money to go partner and do a deal be very cautious, because they don’t need your money if they’re successful. If they’re successful, they shouldn’t need your money.
If anything, you want to keep your money for your own deals. That’s one of the big ways people get bamboozled at local real estate investment clubs. There are sharks in those waters. I know firsthand. I have seen it over and over again. Everyone at those club meetings is not these wonderful, honest, trustworthy people. This is not a kumbaya session. This is real business, real money, real competition. You have to be shrewd. Your wits have to be about you, and you have to make good decisions with everything that comes out of your mouth.