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Big Discounts With Property Investment Clubs?


A stagnant stock market, low interest rates and booming property prices over recent years have lead to more and more personal investors deciding to join property investment clubs.

Property investment clubs are organisations that either buy property in volume and resell it to their members at discount prices or negotiate the purchase of large numbers of properties from developers, again ensuring discounted prices. Clients can often expect to make savings of up to 25% of the property's market value.

Additional services from property investment clubs vary, with some offering financial and legal assistance, along with local property market research. Volume purchases can enable discounts on mortgages, solicitors, letting and estate agents fees.

For the personal investor with limited property investment experience, these organisations offer an easier entry into the market and the opportunity to generate significant equity from the original savings. For example a property valued at 100,000 could be purchased for 75,000. Selling that property at market value would generate a profit of 25,000 minus fees.

Club fees

Property investment clubs tend to make their money either by charging an acquisition fee of around 2 or 3% per property purchased or they charge members an annual membership and take an agency fee from the developer.

Choosing an investment club

As with any investment, buyers should do their homework before deciding to invest and ensure they are dealing with a reputable organisation.

A large amount of property offered by clubs is off-plan. This is where you buy a property before it has been built and hope that by getting in early you secure a bargain before selling at profit when the property is ready for market.

This practice works best when house prices are rising, but when the market is slower, you run the risk of the property dropping in value and by the time it is built, it could be worth less than you paid for it.

There have also been a few cases of unscrupulous organisations selling off-plan property, with no intention of developing it.

Again proper research will help to ensure you choose a reputable company. Be prepared to ask questions about the potential sale value, rental value, quality of the workmanship and the company' credentials. A good club will be able to provide you with this sort of information.

It is also worth trying to get in touch with other club members, particularly those who have already purchased properties, to find out about their experiences.

Setting up your own club

In addition to professional investment clubs, many friends, families and colleagues are beginning to set up their own syndicates, then pooling resources to secure bulk discounts and spread their risk. Often a small number of individuals within the syndicate will act as asset managers, researching the market to find the best opportunities and advising others within the group.

Don Suter is Managing Editor of the UK Property Portal (http://www.ukpropertyportal.co.uk), an online directory and magazine for UK property sales, rental, surveyors, mortgages, conveyancing, property insurance, removals, news, investment and development


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