What are Private Investor Clubs, and How Do They Work?
By Charles Schaffer
Private investor clubs are online forums and in-person meeting places where members can find off-platform investment opportunities, discuss their pros and cons, and negotiate better deal terms.
Off-platform investments include multifamily real estate syndications, angel investing, music royalties, life settlements, litigation finance, private equity, and interval funds.
When there is a down market on Wall Street, alternative investments become more attractive to investors. Markets for alternative financial instruments are widely available but more difficult to find than stocks, bonds, and cash investments.
Investor Clubs vs. Investment Clubs
A private investor club is different from a private investment club.
An investment club is one in which people pool small amounts of money to build a stock portfolio. Members can then use the knowledge they gained for their stock investments.
Members of an investor club are experienced, accredited investors. These are high-net-worth individuals looking to protect generational wealth.
The goal of a private investor club is for members to maximize their overall ROI from the collective knowledge and advice of others. If you are a wealthy investor, here are two such clubs to consider if you are looking for more ways to conduct research and network with like-minded alternative investors.
Private Investor Club
One of the largest clubs is the aptly-named Private Investor Club. Retired serial entrepreneur Ian Ippolito runs the club.
Club Membership
The club has over 5,600 members and $12.8+ billion in investible portfolio assets. These numbers equal approximately $2.2 million in investible assets per member.
There is no cost to join the club and no membership fees. However, members can send donations to Ian.
Private Investor Club offers special deals and discounts to members, including reduced minimums and fees.
Asset Classes
Private Investor Club deals with asset classes such as real estate, litigation finance, royalties, private debt, private equity, and venture capital.
The club maintains an extensive due diligence library about their investments. As a result, members do not need to do as much vetting of alternative investments.
Rules
Clubs such as Ian's have strict rules of engagement such that third parties cannot pitch their investments to club members. New members must confirm they have no connection to investment sponsors.
Members have to sign a strict confidentiality agreement. Investors cannot share information outside of the group. Violation of the contract can result in ejection from the club and vigorous litigation.
Example Portfolio
Ian's personal alternative investment and real estate portfolio gives some good insight into the nature of these alternative investments. His conservative core approach got him a 41.32% return from June 2021 through May 2022.
Over this period, non-debt residential and multifamily residential represented almost 75% of his portfolio. In addition, Ian increased his investment in multifamily real estate by 40% over the previous period.
Family Office Club
Family Office Club is headed up by Richard C. Wilson and has over 500 members. The club's sister company is a Registered Investment Advisor (RIA) named Centimillionaire Advisors.
According to LinkedIn, the club has over 2,750 registered family offices. These family offices collectively manage over $1 trillion of assets.
The club has four levels of membership. The entry-level Virtual Charter membership lets members Access 450 investor mandate interviews, pitch deck coaching, and 130 capital raising strategies. The monthly cost is $199. The top-tier Corporate VIP Charter Membership costs $6,750 per year.
Richard also heads up InvestorClub.com, which private investors can join. Asset classes include royalties, profitable companies & cash-flowing real estate. Excluded asset classes are angel investing and venture capital.
There is no cost to join InvestorClub.com, but there is a profit share fee for net realized gains. The club's revenue model is "we make money only when you make money."
506 Investor Group
506 Investor Group is a nationwide community of accredited investors. The club has over 2,700 members and an aggregate net worth of $12.4 billion.
The group refers to itself as “the original online investment group exclusively for accredited investors and qualified purchases.”
The group’s mission is to share deal flow and due diligence on alternative investments. All deal flow originates from members, who consist of doctors, lawyers, engineers, business executives, full-time investors, and other professions.
Those who want to join the group need to fill in a simple online form, agree to the terms of service & privacy policy, and then participate in a 15-minute Introductory call so that the group can determine whether they are a fit.
A private investor club is worth considering if you are an accredited investor looking for lesser-known ways to diversify your portfolio and generate more passive income.
Over the years of helping investors in real estate and solar tax investing, I often enjoy discussing general investing practices and examples of success. I, too, learn from others and encourage everyone to look at these clubs to see if they will help you expand their knowledge in alternative investing.
Charles Schaffer
President and Founder, SDC Capital Ventures
Charles has founded and operated several development companies over his 35+ year history to pursue his passion for Alternative Investing where he believes outsized returns can be achieved without a corresponding increase in risk. Under Charles' leadership, SDC has developed and financed over $80 million of commercial real estate and renewable energy projects.
Please contact us if you are interested in starting or expanding your multifamily real estate investments.
