Club shares experience

Investing: For $15, the novice gets supper and a network of mentors who are wise in the ways of real estate.

June 18, 2000|By Charles Belfoure | Charles Belfoure,SPECIAL TO THE SUN

Before joining the club, Jim Rider was a babe in the woods when it came to buying property.

"I always made too big of a down payment and walked away from the settlement with my pockets empty," he remembered.

After eight years in the club, he buys real estate with very little down and he's the one who gets a check at settlement. "It's certainly made me more proficient at making wise financial decisions," Rider said with a laugh.

You could buy books and tapes and learn real estate investing on your own. Or you could do what Rider does: Come to the VFW hall on Harford Road the third Tuesday of each month and get connected to a network of real estate investors and professionals who are happy to show you the ropes.

The Real Estate Investment Club of Baltimore Inc. is a nonprofit organization for people who want to share ideas and learn about real estate investing. On Tuesday, Paul Cooper of Alex Cooper Auctioneers Inc. will lecture on buying real estate using the auction method.

"It's really a self-help club for real estate investors," said Rider, treasurer of the REIC. The club consists not only of veterans who own dozens of properties, but people looking for help and advice in making their first investment.

"I always wanted to own property since I was a kid playing Monopoly. So six years ago I joined and a couple of guys took me under their wing; now I own quite a few properties," said George Fair, a past president of the club. "It's an invaluable resource, you couldn't learn this in school," he said.

The majority of the members have full-time jobs and do real estate investing on the side. But some have made the transition to full-time real estate investing.

Fair buys rental properties in Baltimore and holds them for the income and the tax advantages. Some members don't want to be landlords so they buy houses, fix them up, then sell them. Most own rowhouses, but a few have apartment houses and single-family detached homes in the Baltimore metropolitan area.

Buffet and networking

You're considered a member of the club each time you pay $15 to attend the monthly meeting, which starts with a buffet supper at 7 p.m., followed by a guest speaker.

"There're so many topics that we cover," said Ken Sanner, the club president. Past speakers have talked about screening tenants, the intricacies of Section 8 - a rent subsidy program - owner- financed mortgages and notes, property management and creative marketing strategies. Because so many members are landlords, there's always an annual update about lead paint regulations and property tax laws.

But networking is really the foundation of the club. A portion of the meeting is devoted to "For the Good of the Club," where members stand up and tell of properties they have for sale or are looking to buy, as well as real estate-related services or tips they have to offer. An investor can meet lenders, attorneys, Realtors and other professionals during this segment. Because many members buy properties that need rehab work, the building trades - electricians, roofers, window suppliers and plumbers - are also well represented.

Some of the most valuable information is gained after the meeting.

"It's the best part of the evening. The best information comes from talking with one another," Fair said.

Whether it's how to handle a troublesome tenant or finance an acquisition, this is the time when a novice finds out from the veterans how they'd handle a particular situation.

"We trade war stories so the new investor learns from the old," said Joe Newberger, a member since 1993 who owns rowhouses in the city. "If we don't have an answer to a guy's problem, we steer him to someone who does," he added.

"The whole idea is not to learn from mistakes, but from the wisdom of others," Rider said.

REIC members pride themselves on their real-world experience and don't sugarcoat answers when someone is considering becoming a landlord.

"We explain the pluses and minuses of owning rentals," Newberger said. Screening tenants is critical for success, they tell prospective landlords. The issue of property management is discussed. There are a few members who rely on management companies to run their properties, but most look after their own.

"They [management companies] can't do as good a job as yourself," said Joe DiMaggio, a member of the club since 1980.

The adage that the three most important factors in real estate are location, location, and location carries great weight with REIC. "We're always talking about what locations are good to buy into and what neighborhoods are changing," Newberger said.

Aside from the income and tax benefits, investors buy real estate on the expectation that their property will appreciate in value. If you buy in the wrong neighborhood, that won't usually happen, members said.

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