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Using Real Estate To Add $150K+ To Your Net Worth
Each, And Every Year ~ By Chris Anderson, Ph.D.

October 29 , 2006

Notice To All Mastermind Members

Remember, Nov. 2 is our Mastermind Training Session Called:

Investing By The Numbers:  How To Analyze A Project From Your Desk

November 2, 2006 @ 9 PM EST

email:  info@getpreconstructiondeals.com if you need to sign up.

Boy, does the title of this article sound like a great, late night infomercial or what... Can't you just see images of fancy cars, people laying on the beach, expensive homes, and all the other ways these promoters try to get you to sign up for their 3 easy payments. 

Now, what about a steady get wealthy program for the rest of us?  Suppose I could show you a method to:

  • Increase your net worth by $150,000+ each year;

  • Take on minimal risk;

  • Spend only a few hours per week; and

  • Increase your rate of wealth production over time.

Would you be interested?   Probably the answer is HECK YES!!!!   But are you really interested?   I will let you be the judge.

First, let me state that what I am about to discuss is really geared for those individuals that have some disposable income and good credit; i.e., the bulk of middle to middle/upper class America.  If you have poor credit or are strapped for cash, then I suggest you solve those issues first and then consider implementing this strategy.

Next, let me also state that what I am about to suggest is as exciting as watching corn grow in Nebraska...  However, what any professional investor will tell you is that if your investing is exciting and really get's your blood pumping, then you are doing it wrong!!  Instead, what you want is a clear game plan on how to succeed and grow and when an opportunity fits your game plan, you immediately pounce and make it happen.  

So what if I could show you some exotic opportunity that had the following characteristics:

· $16,058 Cash Required To Purchase;

· Expected Gain In 5 Years:  $83,000

· Initial Due Diligence Time:   15 Hrs

· Hours Per Year:                     20 Hrs

· Very Low-Risk

Now, suppose I gave you the opportunity to do this investment twice, thus making the expected gain $166,000, in 5 years.

Now, suppose that you planned to invest this way once every year.   That means during Year 1, you would need $32,000 in cash and in Year 2, you would need that amount as well.   However, after Year 2, you were now able to recover your original cash inputs and reinvest it for years, 3, 4, 5, ....   What you have just created now is a perpetual wealth building machine.

Sound Good?

When presented this way, most people would agree that this sounds good.  But, in reality, we know that MOST PEOPLE WILL WALK AWAY FROM THIS OPPORTUNITY .  So, suppose I presented such an opportunity to somebody not used to investing.  Let's see how a typical conversation would go.

New Investor:    Sounds interesting but how do I know it will do what you say?

Chris: You don't.. Nobody can predict the future but you can look at hard numbers to see if the assumptions make sense to you.  Even though this is not a guarantee, it is LIKELY to occur or may be even better than predicted.

New Investor:    But this takes a lot of time to look into and understand. 

Chris: Realistically, we all have some extra time available and in reality, to analyze just a few (1-5) deals a year is not hard.  But let's put this in dollars and cents terms.  From above, it appears that we could make $166,000 for about 150 Hrs total work.. Or $1,106/Hr.  That is not "bad grits" as we say here in the south.

New Investor:    But I don't get this money for 5 YEARS!!! 

Chris: That should not impact you at all.  You are accumulating wealth for the long term, not looking for a quick income to now take a vacation in the islands.  If I can do something today that pays me well down the road, I have no issue with that.

New Investor:    I thought real estate investors made big money very quickly.  This does not seem like very much to me. 

Chris: Yes, SOME people make $100's of thousands of dollars in short periods of time. However, these days, these opportunities are rare and risky.  Why not do something that is no brainer, that pays you handsomely in a predictable manner.

Also, suppose you did this and increased your retirement by $166,000 (with 150 Hrs total effort).  Now, look at your current retirement accounts and ask yourself, how long did you work to accumulate those?

New Investor:    But there is a chance I could lose money..

Chris: Yes, that is true.   But what investors do is they look at the FACTS to decide if it is highly unlikely to lose money.  If it appears like a low risk, no brainer investment, then they move forward quickly.   I will let you in on a secret..  Out of all the investments I have done, I have lost money on only 1 over the years.. I actually lost $3,000 on this transaction.   While that might be terrible for some, compared to what I have made via investing, it is a drop in the ocean. 

But Those Opportunities Rarely Exist!

I hate to tell you but that is not true.  These opportunities exist all the time but they are not typically in the form of some super, sexy investment.   Usually much more run of the mill.

Let me give you an example...  We recently finished out a project in Marble Falls, Texas.  We presented this project in our normal fashion but now I am going to give you a different, behind the scenes look; unfortunately, because of securities laws, we cannot give this kind of view when we are offering a project.

First, a disclaimer:

Any analysis presented below is for educational and illustrative purposes only.  The assumptions presented here are OUR OPINIONS ONLY and may not actually occur in the future.  Any investment in real estate contains inherent risks and anybody considering investing in real estate should consult their advisor.

Listed in the table below is many of our assumptions that we used in our model.  The biggest assumptions that impact the final outcome are the appreciation, future rents, and rental escalation.  For a number of the reasons presented in our original release information, we strongly believe that this area is going to do nothing but continue to appreciate, especially for this price category.  In addition, there is a method in place where we can sell these units as individual condo's rather than duplexes; we believe this will provide a substantial appreciation boost. 

Rent Escalation

4%

Appreciation

7%

Exit Expense

4%

Rate

7.25%

Initial Discount

7.00%

% Down

10%

Debt Service

$       13,607

Close

3%

Ins

$         1,100

Taxes

$         4,540

Manage

$         2,160

Maintenance

$         2,400

$      10,200

Income

$       24,000

Appraised

$     208,543

Purchase

$     194,900

Loan Amount

$     187,689

Down Payment

$         7,211

Closing Costs

$         5,847

Initial Carry Costs

$         3,000

Net Dollar In

$       16,058

Let me point out something here..   This project has initially near neutral cash flow and we are only getting a 7% discount.. Although this project was very popular and sold out, most people heard that, yawned, and went on.   At the same time they were yawning, Mike and I were purchasing 4 units.   Let's see why.

When we take OUR ESTIMATES and project them forward, here is what we see.  Will this actually occur?  We don't know but obviously we believe it enough to purchase 4 units.  If we are right, then we believe we just created $335,000 of net worth.   Not bad for signing a few documents.

For many of you, the analysis below may look a bit Greek but hopefully you can follow the primary gist.  On Nov. 2, inside the Mastermind Group, Mike and I are teaching a course so that our members will be able to do this EASILY for themselves.   When you have this kind of knowledge sitting in front of you, it is much easier to decide when to pull the trigger.

End Of

End Of

End Of

End Of

End Of

Year

Year

Year

Year

Year

1

2

3

4

5

Income

 $     24,000

 $        24,960

 $        25,958

 $        26,997

 $        28,077

Expense

 $      10,200

 $        10,608

 $        11,032

 $        11,473

 $        11,932

NOI

 $      13,800

 $        14,352

 $        14,927

 $        15,524

 $        16,145

After Pur

7.1%

7.4%

7.7%

8.0%

8.3%

Cap Rate

After Debt

 $           193

 $             745

 $          1,319

 $          1,916

 $          2,537

Cash Flow

Value

 $     223,141

 $       238,761

 $       255,474

 $       273,357

 $       292,492

Net Exit

 $     214,215

 $       229,210

 $       245,255

 $       262,423

 $       280,793

Loan Pay

 $     187,689

 $       187,689

 $       187,689

 $       187,689

 $       187,689

Equity

 $      35,452

 $        51,072

 $        67,785

 $        85,669

 $       104,804

Dollar In

 $      16,058

 $        16,058

 $        16,058

 $        16,058

 $        16,058

Resell Prof

 $      10,468

 $        25,463

 $        41,508

 $        58,676

 $        77,046

Accum CF

 $           193

 $             938

 $          2,257

 $          4,173

 $          6,710

Net Gain

 $      10,661

 $        26,401

 $        43,765

 $        62,849

 $        83,756

Cash On

66.4%

164.4%

272.5%

391.4%

521.6%

Cash

IRR

66.4%

62.6%

55.0%

48.9%

44.1%


How Do You Do This?

If you are like many in America right now, you are probably thinking that now is a good time to get serious about your future financial picture.  Hopefully, what I have laid out for you in this article is one easily implemented method to achieve a substantial, and steady growth in net worth. 

Let me now address a common question that I get related to this topic... Chris, what do you suggest that a busy person does to best join in and come up to speed in the shortest amount of time.  We'll, here is my list of what I would suggest:

1. Join Mastermind Group

2. Attend Mastermind Training Session Nov. 2 For Investing By The Numbers and future training sessions.

3. Get To Know Us.. We Like Investing With People That We Know..  Schedule An Appointment To Meet With One Of Our Team.

4. Start Getting Early Due Diligence Info In The Mastermind Group and Get A Head Of The Pack.. If you are ahead & you know us, then you can ask questions in advance.

Hopefully that provides a reasonably simple solution for you to implement.

About The Author

Dr. Chris Anderson is the founder of one of the largest preconstruction groups on the internet today and is referenced in many venues including the New York Times and USA Today. Get access to wholesale property investments today.

Note:  This article may be copied for use on other websites under the following conditions:

  1. It is not altered in any way.

  2. The about the author is included

  3. The http://www.GetPreConstructionDeals.com hyperlink remains intact.


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