Getting Started In
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Getting Started In A Pre-construction
Three Steps Towards Success
By Chris Anderson, PhD
Through our website, GetPreConstructionDeals.com, the most common question that
we receive is “How do I get rapidly started in getting a pre-construction
investment”. Realistically, you only need to take three steps on your path from
being a “beginner” pre-construction investing to one that is quite savvy at
finding a very good preconstruction investment.
Mechanics of A
Before you even begin looking for a preconstruction investment, you need a
working knowledge of exactly what is meant by preconstruction investing, why has
preconstruction investing generated returns in excess of 100% per year for many
investors, what is the terminology used. The good news is this is your easiest
step to take.
As an example, in this stage you will learn terms like reservation, hard
contract, assignment of contract, letter of credit, to name a few. Even if you
are new to investing, don’t let that intimidate you. Whenever I teach a class on
this topic, it only takes about 30 to 60 minutes to get everybody up to speed on
this to feel like the understand the mechanics of a pre-construction investment.
So how do you learn the mechanics of being a preconstruction real estate
investor? My suggestion is to take advantage of the free resources available on
the internet. For example, at GetPreConstructionDeals.com we give a way a
30-page pre-construction investment ebook about that will walk you through this
basic terminology and will give you some real world preconstruction investing
examples. Also, if you conduct an internet search on “preconstruction”
“pre-construction investing” “preconstruction condo”, etc., you will find tons
of websites with this type of information readily available. Give yourself an
evening or two and you should be a master.
Becoming a Savvy Investor
Unfortunately, over 80% of new
investors stop after Step 1 and immediately want to look for a “hot”
pre-construction investment. In my opinion, this is a big mistake because they
are lacking what separates the beginning investor from the street-seasoned
investor with 10 pre-construction investments under his belt; the methodology to
RAPIDLY pick “smart investments”
If you did an internet search in Step 1 above, did you notice how many real
estate web sites you found with a preconstruction investment on them? If not,
simply put in the term “Miami preconstruction” in any internet search engine and
you will see the number of results. Here is a test for you. From the internet
searches done above, can you rapidly look at those projects and choose which
ones might be worthy of further investigation? Most people interested in
pre-construction investing become overwhelmed at this point whereas most savvy
investors could sort through most of these in a matter of minutes.
Over the years, in both the stock and the real estate markets, I have had the
opportunity to work with some truly outstanding investors and I have also seen
many, many beginners. When a beginner looks at a pre-construction investment,
they ask the real estate person “How much will I likely make on this
preconstruction investment and should I buy it?” When an experienced investor
looks at the same investment, they first ask THEMSELVES “Is this investment
really low risk and if so, how much money is really at risk?” Then they ask
THEMSELVES “How much money am I likely to make if this pre-construction
investment works?” In their mind, they are trying to determine the amount of
reward, relative to the risk. They know that the person marketing this project
is UNLIKELY to think this way but they know how to ask the right questions to
quickly decide if this project has an acceptable reward-to-risk ratio for
If you are reasonably new to pre-construction investing, or have always counted
on others to make investment decisions for you, how do you perform Step 2?
Simple. You must learn how a savvy investor thinks, how they calculate risk,
what back-up plans they have in place in case the investment does not work, how
they calculate reward, etc. None of this is rocket science or even difficult to
do. If you’re new to preconstruction investing and are trying to do all this on
your own, it can be a daunting task, however. I find that truly savvy investors
are always talking to others, getting their opinions, learning anything they can
to make THEIR OWN decision. They know that every little tidbit they can learn
can literally mean several 10’s of thousands of dollars into their own pockets.
Practically, you need somebody to mentor you that has “been to the dance” many
times before. If you know somebody in that category, buy them lunch, dinner,
movie tickets, whatever and ask if they would look over your shoulder. If you
know several people in this category, better yet. Your lunch bills will be
pricey but your education gained will be priceless.
In addition, learning to think like a savvy investor hunting a good
pre-construction investment, is the reason that we created our original home
study course as well as our more complete live teleseminar course. Many people
don’t have someone to turn to other than maybe the real estate person bringing
them the project. I personally find that most real estate agents/brokers are
fantastic resources for information, however most do not analyze the investment
like I would. If you ever find yourself asking your agent or salesperson if
“they really think you should buy this,” then that is probably a good indication
that you are ill prepared.
No matter how you accomplish it, learn to think like a savvy investor for
YOURSELF; it just is not that hard to do.
Finding A Good
Once you think like a pro in Step
2, you will have just created a problem for yourself: you will probably find
that few pre-construction investments that will fit your objectives. New
investors tend to think this is like the stock market….. When they are ready to
invest, you should just be able to plunk down your money and move forward.
Realistically, in the stock market and the preconstruction market, TRUE
OPPORTUNITIES appear when they are good and ready. When that occurs, and only at
that time, then the savvy investor will pounce with lightning speed. Remember,
for many people, a couple of good preconstruction investments PER YEAR is plenty
and may then more investment returns than they ever dreamed possible.
While this may be hard to imagine right now, after Step 2 you should have a
clear understanding of the type of pre-construction investments that you would
consider. As an example, suppose you end up concluding that you really like
condo/town home projects, not on the beach, and in the southeast. In addition,
you want these investments in some emerging markets but not necessarily those
that have been explosive for a long time. Great! Now start getting on lists of
brokers/developers that bring out those projects. If you can work with a group
of like minded people, all the better because you can share the workload and
also have additional clout because of a higher potential buying power than just
I will caution you however that when you think like a savvy investor, you are
going to want a lot more information than is typically provided by these types
of sources. You will want a true assessment of the local market (other than “boy
has this been hot”), you will want a true assessment of the amount of similar
projects that have been or are going to be offered, and you are going to want to
know a lot about who is buying these projects and why.
Because we like a lot of detail and because we know we have to move very quickly
for good investments, we have always found it better to operate as a group,
rather than one lone person trying to sort this out after work. In addition, we
have found that by pooling together the buying power of a group we can get much
better access to really good investments. It is for these reasons that we at
GetPreConstructionDeals.com have created our “Mastermind Group.”
I hope this has given you an
understanding of the 3 steps needed to become a true preconstruction investor.
Some people will look at this and say that it is too hard, or too time
consuming. Yes it will take some time and some effort. The question that I
always ask them is then “How many hours in your regular job would it take you to
make some of the large $75,000+ returns that some preconstruction investors are
About The Author
Dr. Chris Anderson is the founder of one of the
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.
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