Secrets of Successful Investment Clubs


three months of operation.

GRIG’s other investments are flourishing as well. The Market Investment team has more than $164,000 invested in an array of securities. And GRIG’s Real Estate team invests with private investors who purchase single-family, multifamily, and commercial properties with the goal of generating a monthly cash flow of $5,000. Between 2003 and 2004, the team invested in about 15 short-term deals that averaged a 100% annualized return. “Money attracts ideas,” says Tatem. “We get a lot of people coming to us with opportunities instead of us seeking opportunities.” That truly is a sign of success.

OMGEN L.L.C.
Financial empowerment has been the main focus of the members of OMGEN L.L.C. since the club was founded in 1997. With a portfolio of 70% in real estate, the investment club boasts a $31,000 cash return over nine years.

The group owns and collects rental income from two properties; a four-bedroom home in Stockton, California, that it purchased for $150,000 in cash in 1999, and a $230,000 four-bedroom home in Merced, California, an affluent area near the University of California. The Stockton home is now valued at $350,000 and the Merced home has appreciated to $387,000. The group then entered into a partnership with Red Leaf, a black-owned, Oakland-based real estate investment company that buys, refurbishes, builds, and sells properties. OMGEN owns a 15% stake in the business it purchased for $50,000 in 2000.

The club began as two groups o
f 42 parishioners from local churches who had received instructions on investing and building wealth from a nonprofit organization called Power Learning System. OMGEN co-founder Larry Childress says the groups, originally called Omni and Genesis, banded together, with members making initial investments of $1,000 each and minimum monthly contributions of $50. Members are also committed to investing an additional $1,000 each year.

With Omni and Genesis merged, OMGEN’s other co-founder, Chester Hutchinson, says they started looking at investments at the height of the dot-com frenzy leading up to the tech wreck of 2000. The organization’s stock strategy was to buy companies that could yield the highest returns for its membership. Tech stocks were hot, so OMGEN aggressively bought shares of technology companies such as IBM, Cisco Systems, America Online, and Amazon.com to achieve higher gains over a short period of time. The club was riding high until the market softened and tech stocks declined. OMGEN quickly liquidated much of its portfolio before absorbing substantial losses.

To diversify its assets and avert another stock scare, OMGEN used the earnings it protected by selling securities to pursue real estate investments through a separate company, OMGEN II L.L.C. “We started the L.L.C. comprised of those members who believed that real estate was a good investment and a way to diversify our portfolio,” says Childress. Members who disapproved of real estate investments soon left the organization and today all members of OMGEN are invested in the real estate portfolio.

OMGEN members credit its advisory board’s ability to make sound investment deals with much of its success. Hutchinson says the group has


×