A few weeks ago I was supposed to go to September's IC (Investor's Club) meeting. I elected to stay at home and let Damon go there to take notes. We met up at the Chinese buffet the very next week for our monthly exchange of ideas.
Damon said the meeting focused on crowd funding. It's basically like Kickstarter or that show Shark Tank, where investors pool their monies together to fund projects they believe can yield a good return. In real estate terms, it's investing in properties or property purchases... almost like being a financier or a mortgage holder. The issue I have, and the reason why I didn't bother going to the meeting, is that I don't like investing with people. And I definitely don't like investing with people I don't know. And it's not just because I can't stand the sight of them.
Damon was all set to invest $5000 in the guest speaker's crowd funding LLC, so I asked him some basic questions and got some stupid answers. He said the guest speaker's LLC was based in North Carolina, and invests in North Carolina property purchases. Strike one, two, and three right there. I asked him why the hell he would invest in a company that handles property all the way in North Carolina. He didn't have an answer. I reminded him that it's NEVER a good idea to invest in properties or locations that are far away. Maybe when he has $5000 to throw away he can take a risk like that, but with only one property under his belt, it just doesn't make sense. I remember a quote from Seymour Durst that warned against investing in properties that weren't within 15-30 minutes away. Sam (formerly known as Sha) said the same, but it's more credible when a billionaire said it. So I don't think Damon will be doing crowd funding anytime soon. But he is moving forward with a plan that I'm very interested in.
Damon plans to purchase a cheap property through the Vacancy Bank program in Smalltown. It's basically a program that gets distressed houses from the city and sells them to investors who are bound by contract to make the repairs needed to rent it out. He found a place for $15,000 and is going forward with the purchase soon. I like the idea but, as I said before, the neighborhoods for those properties are usually god awful. But I'm gonna keep an open mind and I told Damon that I'll help him renovate it (no money involved, just free labor here and there). If it actually works out, then maybe I'll have a blueprint for future investments. If it doesn't work out... well... let's just say I'm glad he's going first.
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