Hello,

In your last lesson we discussed how to get hard contracts with developers and avoid reservation agreements.

This lesson will focus on keeping your investment capital separate from the capital of other buyers.

Deadly Mistake Number 10:
Pooling money with other buyers

When considering pre-construction investing by joining with a group of other investors, most people make the incorrect assumption that if you buy together you must also be pooling your money together. Nothing could be further from the truth.

The most important requirement the developer faces when getting his construction loan is that the 50 percent or so of the units he sold during the pre-sale process are from unique individuals. The bank wants to see a diverse group of buyers. If a group of buyers agreed to take 100 units by pooling money, the bank would look at them as one buyer...and decline the loan.

With individual contracts for each unit, you are able to keep your money in a separate escrow account and help the developer show diversification at the same time.

Having separate purchase contracts for every unit is critical to the success of your leveraged negotiation with each developer. The key is to negotiate as a group, but buy individually.

Once you come to terms with the developer, each member of your group will use the same contract you negotiated together. In this way, you will be able to make all of the decisions related to your unit. You will not have to be concerned with what the other buyers are doing. And most importantly, you won't have any concerns about the split of profits once the project is completed.

As a side note, in order for your group negotiation to be successful, it is critical that your buyers are all in a position to act on short notice once you come to terms with the developer.

In most cases our group can deliver all of the buyers on most projects over the course of two or three weeks. The process by which you select the members of your group will be the most important variable with regard to your groups credibility and negotiating capacity.

Our group requires that partners have the capital liquid and that they execute on as little as 48 hours notice. Of course we also have agreed that the most important protective terms will be part of every deal. Knowing that the key protection is always in place, we can comfortably act quickly by reviewing the purchase agreement and seeing the terms are the same as the sample contract shown to us before we were ever selected as a joint venture partner.

In the next lesson we'll discuss how to get compensation if you are brought to closing by the developer.

Feel free to call me anytime. We don't sell any products or seminar tickets. We're a private investment group committed to education and partnership. Our purpose is to provide you with a comprehensive education so you can properly invest in what we believe to be the greatest opportunity anywhere for intelligent investors...pre-construction real estate.

Respectfully,


(847)793-0146
Joint Venture Partner
Senior Executive Advisor, BPV
Founder, PreConstructionSecrets.com
President, Freedom By Design, Inc.

P.S. To regain access to your 12 page report and the pre-construction audio explaining the details of our investing club, simply click here.

P.P.S. If you are a real estate developer or know developers who are looking for project funding, please give me a call. Our buying club may be interested in acquiring a large percentage of your pre-construction units.

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