Hello,

In your last lesson we discussed how you can profit from pre-construction without ever actually taking possession of the property when it is completed.

This lesson will focus on protecting yourself from long timeline delays.

Deadly Mistake Number 8:
Giving developers open-ended timelines
for starting & completing construction

Real estate developments are notorious for delays. If you are building a home or involved in any aspect of development you can count on the timelines not being met. It's just the nature of the business.

There are many reasons why developers will be unable to keep up with expected timelines. The developers may have trouble acquiring all of the needed pre-sales. The permitting process can be delayed by local government. Lenders may take more time than expected to approve the construction financing. Subcontractors may not keep their commitments or can be delayed for other unexpected reasons.

If you are investing, you can count on delays. But you don't have to wait forever. I hear from investors every week who have been in projects for as long as two or three years and the developers still have not begun construction...but they can't get out.

The eighth deadly mistake is to leave timelines open ended without a way to cancel your contracts.

If you are part of a buying group there should be no problem getting a developer to agree to some reasonable timeline requirements. At the very least, you should insist that they consummate their construction loan and break ground within a timeline you are comfortable with.

When we invest, we won't sign the contract unless we are convinced the developer has already gotten most of his lending requirements completed. He must show proof of land ownership, proof of completed permitting, proof of other pre-sales, proof of completed building designs, evidence that his chosen lender will finance when he sells sufficient pre-construction units, etc.

In most cases our negotiation with the developer involves conversations with his lender. Often we are able to introduce developers to lenders that we've worked with in the past...who are comfortable with a group of investors buying the preconstruction units.

We generally won't invest unless we are convinced the developer will be able to get their loan and break ground within six months of us making our escrow deposits. If they fail, we cancel and pull out...or re-negotiate better terms as compensation for the delays.

Likewise, it is important the developer complete the project in a reasonable timeline...and provide you with periodic reports to indicate his progress. Should he fail to meet his promise...back out or re-negotiate. You may be able to pre-negotiate further discounts on your purchases if the project is not completed by a specific date.

Make no mistakes, delays will happen. Developers will not keep their promises. Unexpected events will occur. Projects will fail. The key to your success is to realize this and prepare for the worst when negotiating the project in the first place. If you do, your greatest risk will be the loss of time. You're money will have been protected safely in escrow.

In the next lesson we'll discuss a small, but important issue...reservation agreements. Here's a preview: Avoid them!

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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