Real Estate Club Deal: How to Invest?

Real estate investing isn’t limited to directly purchasing a property or buying shares in an SCPI. There is a third option—less well-known to the general public but used by savvy investors—known as a real estate club deal. This arrangement allows a small group of people to co-invest in a specific asset—such as a real estate transaction, an income-producing property, or a renovation project—while sharing both the risks and the potential returns. However, this investment vehicle deserves to be thoroughly understood before being considered.

What is a real estate club deal?

The Principle of Limited Co-Investment

A real estate club deal is a restricted collective investment arrangement in which a limited number of private investors join forces to jointly finance the acquisition or development of a specific real estate asset. Unlike traditional real estate crowdfunding, which can bring together hundreds or thousands of participants around a single project, a club deal operates more like a closed circle. A small group of qualified investors comes together around a specifically identified opportunity.

The asset in question is central to the arrangement and may be:

• an investment property
• a plot of land
• a real estate development project
• a renovation…

Each investor enters into the transaction with full knowledge of the facts, having received detailed information about the project, its location, its financial terms, and the associated risks.

Legal Structure: SAS or Dedicated SCI

The legal structure of a club deal most often involves the creation of an entity specifically for the transaction. Two forms are commonly used.

• The simplified joint-stock company (SAS) is often chosen for its flexibility, as it offers considerable freedom in drafting the articles of incorporation and defining governance rules. A shareholders’ agreement supplements the articles of incorporation to outline the rights and obligations of each investor: terms for joining and exiting the company, profit distribution, decision-making mechanisms, preemptive rights in the event of a sale of shares, and so on.
• The real estate investment company (SCI), which is less commonly used, offers an attractive alternative for family-based arrangements or when the investment’s tax structure warrants it. It is more rigid in terms of governance, but offers advantages for wealth transfer.

The Governance and Internal Operations of a Club Deal

Governance is one of the factors that distinguishes a club deal from other forms of collective investment. Each partner has a say in major decisions: selecting the manager, approving financial statements, validating key milestones in the transaction, deciding on divestitures, and so on. 

The rules governing voting and quorum are set forth in the articles of incorporation and the shareholders’ agreement. Certain decisions may require unanimity or a qualified majority, such as early disposition of assets, taking out an additional loan, or a change in the project’s direction.

Terms and Conditions for Access to the Club Deal

An entry ticket that grants access only to experienced investors

Real estate club deals differ from crowdfunding in that they have a significantly higher minimum investment. While a crowdfunding platform may accept investments of a few hundred euros, a club deal generally requires a minimum investment of several tens of thousands of euros. This amount can even be higher, depending on the size of the transaction and the number of partners.

This high threshold, far from being an arbitrary barrier, reflects the very nature of the investment structure. Each investor represents a significant portion of the structure, which justifies a higher level of information and involvement. It also reflects a different risk profile, one that the investor must be able to assume without jeopardizing his or her overall financial situation.

The club deal is therefore primarily intended for investors:

• who already have accumulated assets;
• capable of tying up funds for several years;
• ...and aren't put off by a higher level of risk than that associated with traditional investments.

Numerous fees that are more complex than those associated with a direct investment

The costs associated with a club deal generally include: 

• structuring fees (related to the creation of the dedicated entity and to legal and tax advice);
• day-to-day management fees (manager's compensation);
• sometimes a performance fee based on the capital gain realized upon exit. 

These fees must be clearly presented and compared to the expected return on the investment. They are an important factor in the decision-making process: a club deal that is well-structured by an experienced manager justifies its fees through the quality of its asset selection and the rigor of its monitoring.

A short-term investment horizon and very limited liquidity

The investment horizon for a real estate club deal is generally between 3 and 7 years, depending on the nature of the transaction, but it can extend up to 10 or even 15 years. For example, a real estate development project (build-to-sell) typically has a shorter timeframe than a transaction involving the acquisition, renovation, and resale of an existing building.

Throughout this period, funds are tied up. This is a fundamental point to keep in mind before making any decision: the liquidity of the shares is very limited, if not nonexistent, while the investment is active . There is no organized secondary market for easily selling these shares, unlike with an SCPI or shares in listed funds. Exits primarily occur upon the sale of the asset at the transaction’s scheduled maturity date.

Some agreements do, however, include early exit clauses, but these require the consent of the other partners or the fulfillment of strictly defined conditions. The investor must therefore consider his or her investment to be tied up for the duration of the transaction.

Club deals, SCPIs, and direct investments: What are the differences?

Club Deal vs. SCPI: Exclusivity vs. Diversification

A comparison with an SCPI (real estate investment trust) is inevitable, as both are forms of collective real estate investment. However, an SCPI operates as an open-end or semi-open-end fund managed by a licensed management company. It brings together thousands of investors and holds a diversified portfolio of real estate assets. Liquidity is relatively higher, minimum investment amounts are lower, and management is fully delegated. On the other hand, investors have no say in asset selection or investment strategy.

A club deal, on the other hand, involves a single, clearly identified asset. The investor knows exactly what they are investing in, with whom, and under what terms, with shared governance. The potential for capital appreciation upon resale may be greater, but the risk is also concentrated on a single project and not spread across multiple assets, as is the case with an SCPI.

Risk Profile and Real Estate Appreciation Potential

A real estate club deal carries a higher level of risk than a well-diversified direct real estate investment. The concentration on a single project means that if the transaction encounters difficulties (construction delays, a drop in sales prices, the failure of a key party, etc.), the impact is direct and fully borne by the investors.

Asset diversification is therefore essential: a club deal should account for only a fraction of an investor’s total portfolio, alongside more liquid and less concentrated assets.

On the other hand, this higher risk profile is theoretically associated with higher potential returns than a traditional real estate investment, particularly through development or asset enhancement projects.

Why Invest in a Club Deal with Raizers?

Raizers selects and structures real estate investment opportunities, presenting them in an educational and context-rich manner. Each investment opportunity offered on the platform is analyzed in advance by wealth management experts, who assess the project’s soundness, the quality of the parties involved, market conditions, and the potential for returns.

This rigorous selection process is at the heart of Raizers’ approach: investors do not have to conduct due diligence themselves, but instead gain access to pre-screened opportunities, presented with all the information needed to make an informed decision. The platform draws on a community of more than 50,000 registered investors and has raised more than 445 million euros since its inception.

Investing in club deals through Raizers is part of a strategy for asset diversification: alongside other asset classes (euro-denominated funds, unit-linked funds, ETFs, etc.), it provides exposure to private real estate with a distinct return potential.

Sources:

https://lessecretsdelimmo.fr/investissement-immobilier/club-deal-immobilier/