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Article:
How To Get Started In Preconstruction Investing? by: Chris Anderson, PhD Through our website, GetPreConstructionDeals.com, the most common question that we receive is 'How do I get rapidly started in preconstruction investing'. Realistically, you only need to take three steps on your path from being a 'beginner' preconstruction investor to one that is extremely savvy. MECHANICS OF PRECONSTRUCTION INVESTING Before you even begin investing, 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 in preconstruction real estate investing, etc. 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. 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 ebook about preconstruction investing that will walk you through this basic terminology and will give you some real world preconstruction real estate project examples. Also, if you conduct an internet search on 'preconstruction' 'preconstruction 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. Unfortunately, over 80% of new investors stop after Step 1 and immediately want to look for 'deals'. In my opinion, this is a big mistake because they are lacking what separates the beginning investor from the street-seasoned preconstruction investor; the methodology to RAPIDLY pick 'smart investments' FINDING PRECONSTRUCTION PROJECTS If you did an internet search in Step 1 above, did you notice how many real estate web sites you found with preconstruction investments 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 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 preconstruction investment, they ask the real estate person 'How much will I likely make on this 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 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 THEMSELVES. If you are reasonably new to 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 preconstruction investor 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. GROWING YOUR PORTFOLIO Once you think like a pro in Step '2
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