Thursday, 26 December 2013

Land, Lot & Home-site Real Estate Investment Strategy: 5 Keys to your Success

Real estate offers enormous potential for those who are willing to take risks. Sure, CD ladders, Stocks and Bond Mutual Funds may be safer, but they also don't offer the potential for a gigantic return on investment. It is well known that real estate is how the majority of America's truly rich have made their fortunes. A little known, wealth building real estate strategy that can truly make you wealthy is investing in pre-development phases. This type of plan will not only produce higher profits, but also enjoys minimal risk when compared to traditional investing. The pre-development strategy can be super-charged by taking advantage of the current "Baby Boomer" phenomenon and pre-construction discount pricing.

Regardless if you are looking for a real estate property for investment purposes, or as a site for a future home; preconstruction investing is proven to offer a safer and higher return on your investment than any other financial instrument available today. Traditional investments (stocks, bonds, etc.) over the past couple of years have seen average returns of 4-8%. In contrast, real estate and land investments have realized cash on cash returns of greater than 200%; with less risk.

If all that were not enough, it gets even better. For those who qualify, only 5% down payment is required instead of the traditional 10%. The bank will put up the remaining 95%. This means double your leverage for even greater return on investment. Here's the best part. Many of the developers of these pre-development land projects will cover the payments on your mortgage for up to two years. You put up virtually nothing, buy at pre-development prices, make no payments while waiting for further price appreciation and then rake in some serious profits when you decide to sell.

5 Keys to your Success

"PreConstruction Land Investing"

1. LOCATION: Think like a baby boomer, target the type of locations and development projects that will appeal to the baby boomer generation seeking vacation property, second homes and retirement locations.

2. EARLY PHASE: Pre-development stage, buy at a pre-construction discount which are commonly offered early on to build projects momentum. This will limit your risk and put you in a position to maximize your profits.

3. LEVERAGE: Put down only 10% and even 5% as a down payment. The bank puts up virtually all the money for you as a mortgage. With 20 to 1 leverage even a modest increase in property prices can mean huge gains.

4. ELIMANATE NEGATIVE CASH FLOW: Focus on pre-development incentives, many developers will offer to make your payments for a period of time along with a price discount. You can enjoy no payments for 18 months while waiting for appreciation.

5. EXIT STRATEGY: Find a developer with an aggressive marketing plan and track record of success. When a developer builds a strong community brand and image, you both will benefit. It will also aid price appreciation as well as you ease and ability to sell. Once the community's infrastructure and amenities are in place the prices will naturally rise. Then once, the last phase release for the development is priced, adjust your property accordingly and sell it.

It's really that simple. Now let's add the POWER of COMPOUNDING!

You don't need the know-how or the time necessary to thoroughly learn the ins and outs of investing in real estate. If you have good credit, money to invest, or retirement accounts sitting idle, chances are a good Realtor who specializes in preconstruction land investment opportunities can assist you with your search.

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