Social networks have taken the Internet by storm. Acquaintances who have not seen one another for years stay up-to-date on one another’s lives through the photos and stories posted on MySpace and Facebook, and new friendships can even be made via groups and message boards. Now imagine if these tools were not just used for social purposes, but also to educate investors and connect them with one another.
Sites such as BiggerPockets, The Flipping Pad and the Black Widow Network are bringing social network functionality to the world of real estate investment. Investors may want to consider the benefits that such networks can offer, whether they are new to real estate investing or are full-time investors who have been making deals for years.
BiggerPockets.com was founded in August 2004. “I looked around and there were a bunch of sites that…were pretty useful, but I felt these sites’ primary purpose wasn’t to assist people in their education. Their purpose, I felt, was to sell stuff,” Joshua Dorkin, founder and CEO of BiggerPockets, said. “The idea came to me [to] create a site where people don’t really have to worry that the main focus is going to be some sort of sales pitch; let’s create a site where people can…learn, network and make deals.”
Fear often stops new investors from taking the proverbial plunge. A lack of knowledge coupled with a fear of failure can be the death knell for uncertain newbies. Or, if they decide to soldier on without thoroughly educating themselves or knowing where to go for help, it can spell financial disaster. But new investors who join a real estate investment social networking site have access to insights from seasoned investors and can even meet potential investment partners to help them along the way.
“We encourage our new investors to formulate a plan and set goals and figure out how they’re going to be successful,” Dorkin said. “If they don’t, frankly, the members on the site will chew them up and spit them out. Some folks find that intimidating, but most people actually find it to be really helpful that some of the vetted members will speak honestly and let people know if they’re getting in over their heads.”
In return for offering up their insights, experienced investors get the opportunity to network and potentially make deals through connections made on these sites. Sometimes potential deals may be directly listed, or investors may ultimately find good deals through the people with which they network. The Flipping Pad includes a property listing for investors looking to flip their properties. There are 127 properties—dubbed “pads” for the purposes of the site—listed as of this writing. Members of the Black Widow Network can customize their investment preferences and receive deal-related e-mails tailored specifically for them.
Investor social networks can also help keep investors informed about potential scams and assist with dealing with these situations or avoiding them completely. When a company in Atlanta known as Pinnacle perpetrated a massive real estate Ponzi scheme—a type of illegal pyramid scheme named for Charles Ponzi—BiggerPockets became a place where people who had been scammed by Pinnacle could virtually gather, share their stories and keep up-to-date with what was happening in the case. The site is being used to keep victims of the scheme informed on when they will get their money back.
“There’s 1,548 posts on this one discussion [about Pinnacle]. It’s been viewed over 300,000 times. That’s just one conversation,” Dorkin said.
Memberships with such sites are often free of charge, which gives them a leg-up on other educational options, such as seminars and classes. “I just see how much money people pay to get into real estate and learn about it, and our motto’s always been why charge if we can make money other ways?” Dorkin said. Memberships with both The Flipping Pad and BiggerPockets are completely free to members. In the case of BiggerPockets, the site primarily recoups its money through ads.
The Black Widow Network’s memberships are free as well, but the site also offers a paid membership option that provides paying members—called “Black Widows”—with extra features. These include access to additional networks such as the Service Provider Network and the Contractor/Vender Network. Specific fee information for the Black Widow membership was not listed.