UGANDA, Kampala | Real Muloodi News | Investment in real estate is an extremely popular investment option in Uganda. It is a way to get passive income and stable cash flows.
Real estate investment can take several forms, to include property development, such as purchasing land, subdividing it into smaller plots and selling them individually for a profit, home building, flipping houses, owning and renting property, or buying pieces of land at a lower price and then selling them at a future date when the prices have gone up.
If done right, real estate investing can be lucrative. However for many Ugandans, having enough capital to invest in real estate may be a challenge. It is expensive to get started, then you need knowledge of how to manage your investment, such as dealing with rent, maintenance and taxes.
Therefore, real estate investment clubs are one way of easing the stress in achieving your financial goals. Real estate investment clubs involve individuals who want to come together and form a group to invest specifically in real estate. Members pool their finances together and invest it in a particular property together, or purchase land to develop for commercial, industrial, or residential purposes. Such groups allow you to learn from one another, share the risks and enjoy the investment returns.
Real estate investment groups have pros and cons, and it is essential to study them whether you are a first-time investor or have been investing for a long time, writes Tim Lenke, investment expert for The Balance.
All you need to know about Investment Clubs
- Anyone can join an investment club as long as they can invest their own money. Clubs are diverse, ranging from clubs for students to retired men and women.
- These clubs typically comprise 5–10 people with similar investment goals–there are no legal limits to the number of members, or the minimum investment amount.
- Investment clubs, as informal groups, are often organised as partnerships.
- Real estate investment groups focus only on investing in real estate. Other investment clubs have different objectives, such as value investing.
- Members form a legal entity, ensuring each member is a joint owner. The name of the group goes on the deed if they buy or sell.
- Most real estate investing clubs have operating rules and election offices.
- Each member gets a specific job assigned, such as taxes or record keeping.
- Members meet regularly in person or online and vote on properties.
- Clubs require a membership fee and additional fees monthly.
Benefits of Real Estate Investment Clubs
- Members can pool together their resources and access various properties, such as homes or commercial real estate. More resources also allow members to outsource the maintenance of properties they invest in.
- Real estate club members meet regularly and learn from each other. They usually invite knowledgeable guest speakers to meetings so members can learn about the basics of real estate.
- Apart from learning from each other, members also share investment risks and invest more at once since they get money from their pool savings.
Disadvantages of Real Estate Investment Clubs
- Lack of flexibility for individual members: If a member wants to withdraw their funds, they will need to find someone from the group to buy them out.
- Emotional issues may hinder members in making excellent decisions, e.g., not hurting any other members’ feelings.
- Membership fees are usually charged and then deducted from the returns.
Members should bear in mind that real estate as a whole is a relatively illiquid asset. Projects can take a while to execute and to pay off. So, whenever you think real estate, you almost always have to think of it as a long-term investment.
Finally, it is also essential to ensure that you join a club with similar goals. For example, you don’t want to be part of a club with young people who have an aggressive investment strategy or a club that is frequently buying and selling, if you prefer to hold on to a property.
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