How Does PreConstruction Investing Fit My Portfolio?

You would have to be living under a rock to not know what is happening in the American real estate and mortgage markets. Some believe we are only seeing the beginning of a long term run of debt turning bad, devaluations in real estate class assets such as residential properties, massive foreclosures imminent, and worse than all, a serious drop in consumer confidence, which drives the rest of the economy. It’s a pretty sure bet that, for many, Santa won’t be bringing much this year.

If the entire real estate industry were to be placed on a black background with the lights turned off, there would still be some glowing in some areas of the US and beyond. The lights would be in markets where appreciation is flat, or somewhat growing. It would be in certain asset classes, such as commercial, and luxury construction in certain markets. The picture is not as bleak as our friends in the media would have us believe. Remember, they have newspapers and ratings to account for, and bad news always attracts more people.

One group that has been doing its homework and finding the asset classes that are still performing is a 400 member preconstruction buying club. This club has a huge hammer in negotiating its deals with developers to get better prices and terms than any individual could get on his or her own. Developers in high-end projects, where buyers in that price range are not affected by economic conditions as much as the general public, get to start building when they have met their pre-sales requirements. The club’s partners give the developer those presales from the first day of marketing, which stimulates the rest of the market.

A good way to learn about how this asset class is performing is a visit to