Why Preconstruction Investing?
Of all the ways to invest in real estate, we have found
pre-construction investing to offer the ultimate benefit to the investor.
This highly specialized method of investing allows our clients to purchase
properties at a discount with maximum potential for appreciation. And, unlike
buying foreclosures, pre-construction allows real estate investors to tap into
an almost unlimited supply of homes being sold at 75-90% of market value. It
is an easy way to “lock in” equity in a property and cash in on the old
investing adage…”buy low and sell high”. Because you will know how much your
property WILL be worth before construction is complete, you’ll have a huge
advantage over others. This form of investing has the potential to be very
lucrative and few investors know about it.
We work with custom builders who are highly respected in their
communities. The process is actually a win-win for all parties involved.
Let’s look at it from each vantage point:
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The Investor:
Gets a property for 75-90% of current value. Then he is able to turn around
and sell it quickly at a slight discount to the public. He wins by making a
higher than normal profit – normally much higher than other forms of
investing. Our process usually has a time line of 7-11 months from start to
finish.
-
The Builder:
Can increase his volume – without increasing his financial liability. Has the
potential to increase his bottom-line, as well as free up his own personal
lines of credit. Simply, he gets to do what he enjoys the most – build! In
this instance, a custom builder will be able to select neutral colors and use
winning floor plans that have sold quickly – without constant personal changes
by the buyers.
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The Conduit
(4sitePartners in this case): Brings all parties together and coordinates the
transaction. They win by making a small fee from each transaction.
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The Subdivision:
Builders are more able to construct homes without the financial limits that
would normally slow them down. Unlike other pre-construction approaches, most
of these homes are sold to an end user and not normally held as a rental.
Builders in subdivisions love this, as the homebuyers do not welcome rentals
in new neighborhoods.
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The Broker:
A real estate broker who is involved in this process can sell many new
properties, and increase his advertising/marketing budget, becoming more
aggressive and competitive in the market. All parties benefit since the
timeliness of the sale produces a pay day sooner for each party.
We all know that builders make A LOT of money – and good
ones earn every bit of it. This is a way for YOU to invest with the builder
and share in their profit! THIS IS ONE OF THE BEST KEPT SECRETS IN REAL
ESTATE INVESTING TODAY!
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Several facets make pre-construction investing highly
attractive:
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No need to research and spend valuable time finding
foreclosures or short sales
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Return on investment is usually vastly superior to the
returns you are getting in the stock or bond market. Returns of 500-1000 are
not uncommon
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Homes are usually sold at 75-90% of appraised value
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Leaves cash available for other investments
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No need to spend valuable time and money fixing up aging
properties
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Homes have the potential to increase in value during the
construction phase
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Much quicker turnaround time vs. a buy-and-hold rental
property
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Creates and generates cash quickly which can be used to
diversify into other long-term investments
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New homes come with warranties
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Invest without becoming a landlord!
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