PRE-CONSTRUCTION INVESTMENTS
For most of my Real Estate coaching career I have been a septic of Pre-Construction investments. Due to the many people who have been burned by these deals that never worked out for them. I personally have never purchased an investment that falls into this category of real estate investing. I have however listened to and have come to understand the problems that have occurred with many deals that went, or already were, bad. In the past months (10 to 12) I have heard of some successful deals and started to wonder why some were good and some were not. I have now completed enough research that I feel comfortable and even excited to give my blessing to pre-construction investments that have been diligently researched. In fact, I now believe that this type of investment lends itself to some investors desires and goals so well these types of investors can enjoy great success at adding cash flow, equity and or lump sums that tend to excite many.
In your reading of that first paragraph, you might have picked up on what I believe is the key to success as a pre-construction investments. Two words are and forever must be used for investors entering into investment that are relying on values of an improved property in some future time. The very title given to these investments indicates there is a timing issue. Although I believe that the success of any real estate investment has a great deal to do with timing, these types of investments are, due to their nature, almost completely reliant on future market appreciation. Therefore, market research and a confident understanding of the market will greatly increase the ability to make the proper decisions as to purchase price and terms of the investment being offered or considered.
Properly researching and understanding the market which a particular investment is being considered is wise with any type of real estate investment. Pre-Construction investments are no different. Learning how to properly research a market and understand it is an absolute must for a investor. However, far too many do not understand this research and don’t take the time to learn how to properly complete this research. I highly suggest that one of the most important tools a real estate investor can have is a strong grasp on market research and understanding. If you don’t have this find out how it is done properly and learn how to do it properly. Then make decisions based upon the information and conclusions made from this research.
Pre-Construction investments can be most easily completed and successful if you will understand the market they are located in and make decisions based upon the data and conclusions you have received and made.
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