Investing By The Numbers, Part 2 ~ By Chris Anderson, Ph.D.

November 30, 2006

Table Of Contents

Learn About Our 2007 Investor Tour

Investing By The Numbers, Part 2

How Our Changes Will Greatly Benefit You!

Our Educational Course

As we now recover from the long holiday and consuming way too much turkey and stuffing, real estate investor minds come back to the plans that they will be making for 2007. Having talked to many investors during our recent appearance in NYC, I have discovered that many people have been in active in 2006 but are really planning on gearing up in 2007. Why? It seems to be a combination of a strong believe among experts and novices alike that 2008 will be the return of solid real estate market conditions and thus 2007 is a great year to pick up good values. Quite frankly, we concur.

In addition to the normal New Year's resolutions that you make, I highly encourage you to add one more to your list that you will actually keep... LEARN TO BECOME A GOOD INVESTOR. During the time that our web site has been in existence, I have met many clients and investors who are all very bright and I know that they do some complicated things in their day job like surgery, education, law, etc., etc. What surprises me however is that many people feel that investing is rocket science. Having been a scientist and actually worked on a rocket, trust me when I tell you that investing is far, far from rocket science on the complexity scale. Most of real estate investing is just good old common sense that once you see it, you feel kind of silly for thinking that it was so complicated.

One of the common themes among many professional people I meet is that they are just too busy to learn what is needed. They go on to tell us that all they want to do is find somebody they trust and then take their advice... Kind of like I don't want to learn medicine if I have a threatening ailment. While I agree with that for many things in life, for important issues like your health, your family's financial future, your children's education, etc., I believe a much healthier approach is to find a provider that you trust but learn enough to get comfortable with what they tell you. That way you have a much stronger conviction when you make a decision other than "gee, this doctor recommends this approach" or "wow, I will buy this property because Dr. Anderson sounded really excited". . I hate to be the bearer of bad news but for both those decisions, you will wake up one morning a few months down the road going "did I make the right choice?" If you understand why you made that choice, then that thought will rapidly disappear and not be a hurdle. On the other hand, if you don't understand why you made that choice, you are in for some mental roller coasters.

As part of our push in 2007 to create a small, but extremely well educated investor community, let me now get off my soapbox and describe the next piece of investing by the numbers. What You Need To Know In our last article, we described the four key parameters that any real estate investor needs to know to evaluate a project. Just as a reminder, they are Purchase Equity. Annual Appreciation (%) Annual Cashflow Special Tax Situations In our live workshop in NYC, we recently covered how you can sit at your desktop and get this information. For our projects, we provide this information to you but I believe it is really good to see one time how to actually do that and that it makes sense. Then, when you are looking at a property where information has been provided to you, then you can always go back and double check any piece that may not make sense. In late January early February, we will be conducting multi-city tours where you can come out and meet us live and we will teach this content. Please go to this page to tell us the large city that you live next to and give us a contact email if you would like to attend. Calculating Cash On Cash Returns And Yearly Returns One of the standard measures of many investments is what is called cash-on-cash returns. This is just a fancy word that says what % gain do I get for holding an investment. For example, let's say that you plunk down $20,000 in down payment and closing costs on a real estate investment and let's say in 2 years, you get back $65,000 after reselling with all expenses included; i.e., you have a $45,000 net profit. The cash on cash return for this is simply COC(%) = 100%* 45000/20000 = 225% One problem of this measure is that it does not take into account the time-value of money; that is, if I made that in 2 years versus 20 years, it makes a huge difference. So suppose in this example we plunked down $20K, got a simple interest return the first year, and then reinvested that gain with the same interest. Now what interest rate would accomplish this? A little more complicated to calculate but the annual rate of return to produce this is just a little of 80%. To see this, you can do the following: Year 0: $20,000 Year 1: $20000*(1+80.2%) = $36,055 Year 2: $36055*(1+80.2%) = $65,000 If you are still in the mindset of 2004/2005 that you can plunk down $5,000 on something and make $75,000 in 6 months by flipping, then I wish you the best of luck. This is just not realistic except for a few needles in the haystack. On the other hand, if you are comfortable with making 30-40% per year on your money over a 2-5 year time frame, then that is very realistic and can be done with low risk. So when we evaluate potential opportunities, one of the first parameters that we are looking at is this yearly return and we like to see 30%+. As we will discuss next week, this is not the only factor to consider but it is certainly one of the top 3. Hopefully you have enjoyed this topic. I want to encourage you that if you are serious about your investing and really want to kick start 2007, then you definitely want to read the extra info below about how changes at GetPreConstructionDeals.com can benefit you. 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: It is not altered in any way. The about the author is included The http://www.GetPreConstructionDeals.com hyperlink remains intact.

Are You Ready For 2007? - Changes To GetPreConstructionDeals.com

One message that we will continue to reinforce in 2007 is that GetPreConstructionDeals.com is radically changing.  For those that take advantage of the situation, we believe it will be a once in a lifetime opportunity to participate with an elite group of between 500-1000 investors.  Throughout 2007, we will work diligently to really raise the education level of this group so that when we find little heard of opportunities, in emerging markets, then they can see what we see.  For those that chase the next "hot" market pumped by the press, we realize that is a very radically different concept.

Once we establish this core group of investors, then we envision that all the properties found at GetPreConstructionDeals.com will be consumed rapidly by them; i.e., it is going to be very difficult for the outside observer to get access.   During the remainder of this year and early in 2007 with our multi-city tours, we will be collecting these few members and then likely closing the doors.  We will still actively give away free education and training but the true access to our projects will only be to this core group.  If you want to join us and you have the following characteristics, I strongly suggest you set an appointment before this fills.  The cost is absolutely minimal and refundable.. Quite frankly, we don't want your money but we do want you if we believe you will be a strong asset to this group.

Who We Are Looking For:

• Interested in at least 1 project per year with multiple being preferable;
• Solid credit (700+ FICO);
• Enough liquid capital to participate (10's of thousands+);
• Willing to share info with the group as they do their due diligence;
• Willing to participate in on-going education (no cost);
• No Ulterior Motives.. Not looking for commission or something else.

If this describes you, then we welcome you to make an appointment to meet either Kate or Sheri.  Again, not a sales call at all, just a get acquainted and if it appears like a match, they will invite you into the Mastermind Group

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