As part of a new web site that we just launched, www.GetPreconstructionDeals.com, I get repeated requests asking if a particular deal is good or not. While we can’t answer this for individual projects, we can certainly look at what HAS to get done by the investor to dramatically increase the odds of a successful transaction.

Step 1 is always to determine the fair market value(FMV). As a real estate investor, you can always buy properties at the FMV. My question is why would anybody want to do that? Through careful selection, you can always find properties that are priced below FMV, regardless if they are existing or if they are a preconstruction project. The best way to determine FMV is to work with someone already familiar with the area or determine yourself through local websites showing recent sales histories.

Step 2 is to then determine the market trend for the area for which there are two critical pieces: 1) is the average price increasing AND 2) is the volume of sales increasing. If both are moving in your favor, then you have the comfort of knowing that the right trend is in place to keep prices moving forward. In stock market investing, there is the saying that the trend is your friend and traders frequently observe price and volume data to confirm the trend. If a hotly priced real estate market shows signs of dropping in volume, be very careful.

Step 3 is to learn about supply, especially in the preconstruction marketplace. In some areas, there are very few projects on the books and in others, there are 15,000+ units expected to emerge within 1 zipcode, in 1 year. Same is true for investing in houses. In you are competing with a bunch of new houses that are coming on-line, then rapid price escalation may be limited. For most savvy investors, they like to see lots of demand with very little supply which is nothing more than common sense.

Step 4 is to make your OWN opinions of the macro conditions of the local and regional marketplace. So, for example, if you are a strong believer that real estate is overvalued in the target area, why would you ever consider investing? On the other hand, if you believe that market forces will continue to escalate in the market, then why would you not be actively looking? As an example, some people believe that the graying of America is just now starting to drive people to warm, more attractive climates. Even though property values are high in these areas right now, are we going to see 20+ years of additional migration to them? You have to decide for yourself because we won’t know the answer for

About the Author: Chris Anderson is a leading authority on preconstruction real estate investing. Get his 4 day e-mail course and a 33 minute video free today! Visit http://www.GetPreconstructionProfits.com & http://www.GetPreconstructionDeals.com. In addition, Dr. Anderson is the on-line training coordinator at the Van Tharp Institute, a group that provides world class training for investors and traders.