The investment club model

Flipper/Rehabber · Philadelphia · Member since 2024 · 42 posts · 20 votes

9mo

You’re thinking about this the right way. The “investment club” model can be a great bridge between REITs and owning directly, as long as the structure, operators, and incentives are clear. Many groups start informally through trusted networks before formalizing deals.

Happy to connect and share what I’ve seen work (and what to watch out for)—feel free to DM me.

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Mike Arias

Member since 2022 · 31 posts · 14 votes

9mo

Quote from @Robert Hewitt:

Hello All,

I am new to this, and I am looking to invest in a rental property for 2026. I have been going through and reading a bunch of what everyone has been posting on this forum and there is a lot of useful information being posted. I have done a few REIT investments working with bigger companies who pool Accredited and Non-Accredited funds from investors to purchase the bigger investments. I like having this type of option as a beginner because it helps me learn the process and feel comfortable knowing I am working with professionals leading the way. Although I would love to purchase my own property to begin building my portfolio, I still feel more comfortable working with other investors who know more than me.

I saw in one of the posts that "The investment club model" is growing, and I would love to know more about getting involved with other investors to pool funds together to purchase properties. If anyone could share some insight or tell me where to search I would much appreciate it.

Thank you,

I will be joining one (Spark Rental) myself this year. Its $5,000 minimum per investment plus a membership fee ($59/month). I will try it out and see but use this mostly for retirement (I am actually diverting retirement money to this). I am also looking to buy an actual investment property myself this year. Basically I can start building a portfolio. Brian Davis who is one of the co-owners regularly posts articles in BP.

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Jeff Roth

Real Estate Consultant · Ann Arbor, MI · Member since 2022 · 464 posts · 254 votes

9mo

Hi Robert from Manchester, New Hampshire-

Congratulations on having invested in real estate REITs and you like working with other investors and knowing there are professionals leading the way.

You say you are also interested in purchasing your own properties and building your portfolio.

We work with investors around the country to do just that. Usually we help them build their own portfolios but we do also have opportunities for investors to invest in larger projects with other investors.

The Midwest and Michigan specifically offers a high quality of life and affordable living compared to many other markets nationally.

We have an experienced team to help you invest in short-term rentals, mid-term rentals, long-term rentals, and commercial real estate. We love to come alongside investors of all means and experience from beginners to high-net-worth investors and help them build their wealth and portfolios.

To Your Success!

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Stuart UdisPro Member

Attorney · Philadelphia · Member since 2018 · 2k+ posts · 3k+ votes

9mo

Curious how the investment club model complies with SEC requirements for the sale of securities.

[email protected]

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Dan Ikon

Rental Property Investor · Member since 2025 · 85 posts · 35 votes

9mo

I'd recommend finding a short-term rental property and investing in it just yourself. If you need more funds - find financing or LP (passive investing partner), but you should be the principal partner. This way you get all the benefits of STR loophole.

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Stuart UdisPro Member

Attorney · Philadelphia · Member since 2018 · 2k+ posts · 3k+ votes

9mo

@Dan Ikon It seems that many who focus on taking advantage of the STR loophole place most of their emphasis on offsetting their W2 income and very little to no emphasis on the fundamentals of the underlying real estate. I hear from a ton of people who got sucked in by tax strategists and are now stuck with poorly performing real estate. The irony is they bought the STR's to reduce their W2 tax burden but are now using their W2 to keep the properties up and running.

[email protected]

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Chris SeveneyBusiness Member
Moderator
Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
9mo
Quote from @Stuart Udis:

@Dan Ikon It seems that many who focus on taking advantage of the STR loophole place most of their emphasis on offsetting their W2 income and very little to no emphasis on the fundamentals of the underlying real estate. I hear from a ton of people who got sucked in by tax strategists and are now stuck with poorly performing real estate. The irony is they bought the STR's to reduce their W2 tax burden but are now using their W2 to keep the properties up and running.

I was just talking with someone about this as so many focus on "tax savings" and they end up losing money on the deals (and owing some of that money back)
Back to original post, I am curious as I am not familiar enough with how they operate and what exemptions are and are not available for these types of clubs, but we see stock investing clubs so there has to be some exemption that they can get past.
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Dan Ikon
Rental Property Investor · Member since 2025 · 85 posts · 35 votes
9mo
Quote from @Stuart Udis:

@Dan Ikon It seems that many who focus on taking advantage of the STR loophole place most of their emphasis on offsetting their W2 income and very little to no emphasis on the fundamentals of the underlying real estate. I hear from a ton of people who got sucked in by tax strategists and are now stuck with poorly performing real estate. The irony is they bought the STR's to reduce their W2 tax burden but are now using their W2 to keep the properties up and running.
Stuart you are absolutely right, but that’s exactly what I emphasize. The successful RE investment strategy should base on three pillars- a value appreciation, operating income, and tax advantage. My point is in today’s market the tax advantage brings most benefits
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Stuart UdisPro Member

Attorney · Philadelphia · Member since 2018 · 2k+ posts · 3k+ votes

9mo

Stocks are not private offerings, and no exemptions apply. With investment clubs that pool capital to invest in real estate or other private businesses, the underlying investment must rely on an exemption, typically Rule 506(c) if all members are accredited. Realistically, however, it is hard to imagine clubs pooling only a few thousand dollars per person being composed entirely of accredited investors. In those cases, the underlying investments would more logically fall under Regulation A, which I find difficult to believe. Maybe the investment club itself is Reg A and then as a result can pool capital with greater discretion without worrying whether the individual investors are accredited and then deploy? This still leaves the underlying investment having to meet an exemption. Your guess is as good as mine. There are members of Spark Co-Investing Club who regularly post. They likely have the answer.

[email protected]

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Patrick Roberts
Lender · Charleston, SC · Member since 2019 · 1k+ posts · 1k+ votes
9mo
Quote from @Stuart Udis:

Stocks are not private offerings, and no exemptions apply. With investment clubs that pool capital to invest in real estate or other private businesses, the underlying investment must rely on an exemption, typically Rule 506(c) if all members are accredited. Realistically, however, it is hard to imagine clubs pooling only a few thousand dollars per person being composed entirely of accredited investors. In those cases, the underlying investments would more logically fall under Regulation A, which I find difficult to believe. Maybe the investment club itself is Reg A and then as a result can pool capital with greater discretion without worrying whether the individual investors are accredited and then deploy? This still leaves the underlying investment having to meet an exemption. Your guess is as good as mine. There are members of Spark Co-Investing Club who regularly post. They likely have the answer.

I just took a quick glance at their website because I've never heard of this and was curious. It's a 506b
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Chris SeveneyBusiness Member
Moderator
Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
9mo
@Stuart Udis I do not think an investment club model would be allowed under a regulation A+ offering. The offering circular and how it would be written I think would be very problematic to meet the guidelines. I also would not see how it would be very profitable because a regulation A+ offering is very expensive. Full disclosure this is coming from firsthand experience as we have completed one regulation A+ offering in our working on our second
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Patrick Roberts
Lender · Charleston, SC · Member since 2019 · 1k+ posts · 1k+ votes
9mo
Quote from @Chris Seveney:

@Stuart Udis I do not think an investment club model would be allowed under a regulation A+ offering. The offering circular and how it would be written I think would be very problematic to meet the guidelines. I also would not see how it would be very profitable because a regulation A+ offering is very expensive. Full disclosure this is coming from firsthand experience as we have completed one regulation A+ offering in our working on our second

Ive heard Reg A offerings run into the several-hundred thousand range from start to finish. Is that accurate?
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Drew SygitBusiness Member

Property Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes

9mo

@Robert Hewitt you may want to speak with @Denise Supplee @ Sparks about this.

[email protected]248-209-6824

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Michael S.

Huntsville, AL · Member since 2018 · 577 posts · 864 votes

9mo

@Robert Hewitt - be very careful that all your proceeds are not eaten up by management and operational fees. I looked at these investment clubs a while ago more for curiousity, and didn't see a path to a tangible return that exceeded my high yield savings account, but my savings account has more liquidity and doesn't involve the risk of working with other humans I do not know nor can adequately vet.

I'd recommend you save up your funds and consider partnering with someone you know and trust (does not have to be family) who also is interested in real estate investing, make an LLC, and buy your first property that way. That's what I did starting in 2017, and have no regrets whatsoever, and have continued this model with other business partners since then. The key is trust and transparency with whomever you partner with in the REI endeavor. Good luck.

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Stuart UdisPro Member

Attorney · Philadelphia · Member since 2018 · 2k+ posts · 3k+ votes

9mo

@Patrick Roberts From my understanding 506b requires an existing relationship and no advertisements or solicitations. That model allows non accredited investors but difficult to build an investor/member base without the ability to advertise. There must be a lot of restrictions on website content as well.

[email protected]

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Patrick Roberts
Lender · Charleston, SC · Member since 2019 · 1k+ posts · 1k+ votes
9mo
Quote from @Stuart Udis:

@Patrick Roberts From my understanding 506b requires an existing relationship and no advertisements or solicitations. That model allows non accredited investors but difficult to build an investor/member base without the ability to advertise. There must be a lot of restrictions on website content as well.

Yeah, from looking at the website, my guess is that theyre pushing the limit on that rule. They were very clearly advertising for new investors, but they list their exemption as 506(b) in the FAQs.
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Stuart UdisPro Member

Attorney · Philadelphia · Member since 2018 · 2k+ posts · 3k+ votes

9mo

@Chris Seveney Good points. I was thinking about this primarily in the context of involving non-accredited investors, which I assume is what most investor club models rely on. I hadn’t fully considered the overhead involved, though. A 506b didn’t seem like a good fit because of the solicitation restrictions, which is why my thinking initially shifted toward Reg A.

[email protected]

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Chris SeveneyBusiness Member
Moderator
Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
9mo
Quote from @Stuart Udis:

@Chris Seveney Good points. I was thinking about this primarily in the context of involving non-accredited investors, which I assume is what most investor club models rely on. I hadn’t fully considered the overhead involved, though. A 506b didn’t seem like a good fit because of the solicitation restrictions, which is why my thinking initially shifted toward Reg A.

I agree, the 506b is an avenue that would be more in line. One way I can see them getting around the regulations is if people pay to join the club and are charged a fee to learn investing, and the club for its members (after they are members) has investment options people can invest in as the club. That way they get to know the people and have a relationship then open up it to them. I can see that as a way that may "play in the gray" but seems like it would pass the sniff test (but I am not an attorney).
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Mike Arias
Member since 2022 · 31 posts · 14 votes
9mo
Quote from @Chris Seveney:

Quote from @Stuart Udis:

@Chris Seveney Good points. I was thinking about this primarily in the context of involving non-accredited investors, which I assume is what most investor club models rely on. I hadn’t fully considered the overhead involved, though. A 506b didn’t seem like a good fit because of the solicitation restrictions, which is why my thinking initially shifted toward Reg A.

I agree, the 506b is an avenue that would be more in line. One way I can see them getting around the regulations is if people pay to join the club and are charged a fee to learn investing, and the club for its members (after they are members) has investment options people can invest in as the club. That way they get to know the people and have a relationship then open up it to them. I can see that as a way that may "play in the gray" but seems like it would pass the sniff test (but I am not an attorney).
Spark does charge a membership fee (monthly or annually) plus a fee for accounting.
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Nicholas L.Pro Member

Flipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes

9mo

@Robert Hewitt

i am not an expert on anything, but very roughly, i like either: high control / lower liquidity in the form of smaller properties i own, or low control / high liquidity in the firm of REITs and index funds. and that's what I do - VTI and VNQ and then my own portfolio that i own.

anything in between - syndications, fractional ownership, clubs - to me is the worst of both worlds because you're giving up both control AND liquidity, UNLESS you are a HNWI or ultra HNWI looking to diversify and can get into things i can't.

if i can get into it, i don't want to invest in it, you know?

hope this helps

happy to dialogue further

nothing to sell / don't champion any niche or market

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G. Brian DavisPro Member

Investor · Hatboro, PA · Member since 2016 · 2k+ posts · 858 votes

3mo

I know this is an old post but throwing my two cents here...Investment clubs for real estate come in a few different flavors, and understanding the differences helps find the right fit.

Local REI clubs are great for networking and deal flow, but quality varies a lot. Some are genuinely educational others are basically a vendor pitch in disguise.

Property co-ownership clubs, members pool capital to buy a specific rental together, usually as a tenancy in common or LLC. You get direct ownership but also direct landlord exposure and the complexity of shared decision making with co owners.

Syndication co-investing clubs members vet passive real estate deals together (multifamily, mobile home parks, industrial, etc.) and invest alongside each other as LP investors. No management responsibilities, and the collective due diligence process reduces the research burden on any individual member. This is the model that tends to work best for people who want truly passive income without the heavy lifting and workload.

The right model depends on what investing with others actually means to you. If you want to build hands-on skills, co-buying a rental with local partners is educational. If you want passive income and are comfortable delegating management entirely, the syndication co-investing club model is worth exploring.

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The investment club model

The investment club model

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