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9 Steps To Making A Fortune In Preconstruction Investing
Pay close attention to the 9 steps to making a fortune in preconstruction investing. Put it this way, if you follow these steps closely, you'll have a hard time not making a lot of money! 1. Make sure your deposit goes into escrow. Never allow the builder to use your investment deposit for costs of construction. This money must go in escrow only so that they can leverage and get the proper loans to do the development. 2. Only make a 10% deposit. Deposit amounts start at 10%, however, they can go up to as much as 30%. Always keep your deposit at 10%. The less you put down, the higher your return. 3. Never invest where investors make up more than 50% of the development. A good amount of investors in a project is good for negotiating. However, too many investors can cause risks at the time of selling. Some investors may choose to sell for less than market, which will affect your profits tremendously. 4. Contract with the builder a flexible purchase price. Just in case, if the property values drop before you sell, you want to pre-negotiate with the developer to lower your actual purchase price if the situation comes into play. This means in a year if your property value goes down, your purchase price with the developer will go down, and your profits will stay the same. 5. Background check the developer. This is extremely important. Check the building history of the developer to make sure they've always been successful. Additionally, you should background check the people in charge of the development to make sure they are fraudulent or have bad histories. 6. Contract with the developer to sell your units before any others in the development. It may sound to good to be true, but you can get the developer to sell your units first! Remember, you're a major part of the reason the development is able to be constructed. 7. Double check that the development is in a strong job market. There are actually many excellent sounding preconstruction investments today. But investors can be blinded to the fact that the development units will take years to sell (such as in parts of Florida), and so the developers give investors amazing deals. Beware though! Make sure it is in an area with a strong job market and the there is not over-development happening. 8. Always make sure the developer gives you a high enough discount so you make a 30% return minimum. Don't confuse preconstruction investing with stocks or other traditional investments. Your profits in preconstruction are much higher than normal. You also have to consider that the project may take 1-3 years, so your annual return lowers as each year passes. 30% return should be the lowest you settle for. 9. Find a investment group to invest with! This is the most important step! Investment groups give you leverage to negotiate with the developer, which will get you everything in the last 7 steps, and mostly important you'll get very high returns. Just make sure the investment group follows all the previous steps. These 9 steps will truly allow you to minimize your risk to be investing smarter than 95% of preconstruction investors across the country. And of course, it will help you make the highest returns. You will surely make a fortune in the next 5 to 10 years by following these steps. Article Directory: http://www.articledashboard.com Mark Aleks is a professional real estate investor and owns the online real estate investment company
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