Important FAQ’s

Why invest with the Fischer Investment Group? ... We focus on minimizing the investor’s Risk (exposure) to potential market price decline, as opposed to forecasting massive amounts of potential market price appreciation.  We do this by estimating the property’s replacement cost, on a worst case basis.  We are not aware of any other organization in America which follows this strategy.

In the investment world, risk management is an everyday term.  How would you define Risk Management as it applies to real estate? ... Risk Management is a structured approach to developing strategies in real estate that will manage uncertainty, and thus minimize the investor’s exposure to future price fluctuation.

We say that the profit is made in most investments when you buy and not when you sell.  What do you mean by that? ... When you sell real estate it is pretty easy to determine market value, and therefore, how much you will obtain within a few % points.   It is only when you buy that you can dramatically impact your investment exposure.  This can be done through the Group’s price negotiation, and by achieving certain minimum price objectives. 

Today, can’t most anyone get a good discount from a Builder? ... Yes, of course.  However, this doesn’t mean that the investor has obtained a good deal.  Quite to the contrary, it’s one of the primary reasons why so many investors and “owner-occupants” have found themselves upside down after they bought.  In other words, the property wasn’t even worth what they owed.

Do you mean that most properties were not worth what they were sold for? ... This is a complicated issue and there are many pieces to the answer.  But at the heart of the issue is the fact that one has to first understand how the Builders sold new homes in many parts of the US.  Up until the last couple of years, there was a substantial demand for new housing, both from investors and from “owner occupant prospects”.  The demand was so great that most Builders tended to increase their home prices every few homes that were sold.  This only added to their “bottom line” since it didn’t cost any more to build the actual home.  Eventually, the home prices increased to where the typical family could not afford to own them.  Therefore, demand slowed and the Builders started dropping their prices, by offering discounts.  But, these discounts were only subtractions from overly inflated prices. 

Thus, very quickly, the individual discovered that the equity in his or her home had vanished.  If, however, the property owner had approached the purchase from a “Replacement Cost point of view” the outcome might have been completely different.  Unfortunately, it would be extremely difficult for the individual, negotiating only on behalf of him or her, to have the bargaining power and investor reputation necessary to achieve a replacement cost purchase price.

How are we able to negotiate such attractive pricing from Builders? ... In selling large numbers of properties through the Fischer Investment Group, the Builder is able to benefit from several key advantages:  First, a big expense to a normal Builder is the rate of contract cancellations incurred with the typical onsite sales to potential “owner occupants”.  Typical contract cancellation rates have been in the 20% to 50% range.  But, with the Fischer Investment Group there is almost never a contract cancellation.  This saves the Builder carrying and administrative costs, plus it affords the Builder the ability to more accurately forecast their cash flow requirements.

Very importantly, the Fischer Investment Group substantially reduces a Builder’s total home costs by eliminating several builder operating expenses, such as onsite sales expenses, model carrying costs, marketing, advertising and general sales expenses, etc. (to name a few).

As a Group, we often help builders to reduce existing inventory, thereby freeing up credit lines and allowing new subdivisions to be started.  We also help builders sell out existing subdivisions or “seed” new ones.  These represent some of the builder incentives that make it attractive for a Builder to work with the Fischer Investment Group.

Why do Builders like doing business with the Fischer Investment Group? ... Builders like selling to the Fischer Investment Group’s investors because they know that each investor is receiving the full discount that has been negotiated.  The Fischer Group itself is not retaining a portion of the discount as a Group profit.  Thus, the investor is getting a fantastic net deal.  This means that the investor is usually well satisfied and will “close” on time, without complaints. 

Is it safe to invest now or should we wait to see if properties will go lower? ...This is also a very difficult question.  As a normal investor, or consumer, one should question whether home prices will remain stable or decline further.  And, of course, the normal individual is always subject to market pricing.  However, buying through the Fischer Investment Group, at estimated builder replacement cost, on a worst economic case basis, changes the equation.  At least, in this way, the investor should have some comfort in the fact that it’s not likely over the next few years that their investment could be duplicated at a significantly lower price.  This minimization of the investor’s risk (exposure) means that most of the investment’s pricing potential is on the upside. 

How do we know what area to invest in? ...We invest in major population areas which have substantial future potential.  And, of course, we only make investment agreements with Builders who will meet our requirement of buying at “estimated builder replacement cost, on a worst case basis.

Why do we only buy new homes? ...We don’t want to be in the repair business, except as necessary for a tenant.  As investors, we are seeking to make an annual Return on Investment greater than what can be achieved in a conventional, allegedly secure, investment (ie bonds or bank CD’s).  Thus, we don’t, as a rule, buy foreclosures.  We believe that our net cost is lower, once the cost of repairs is added to the purchase price in a foreclosure.

How does investing in real estate the Fischer way, compare to investing in securities?...Whether the investor buys common or preferred stock, bonds, ETF’s, Mutual Funds, etc. the investor is buying only paper and is, for the most part, expecting a return which is predicated on expected earnings and/or the ability to repay the enterprise’s financial obligations.  Unfortunately, the typical investor does not have access to the Company’s records so that the validity of the Company’s order book or its contingent liabilities from such items as Financial Derivatives can be analyzed.

Have we always bought based on a replacement cost philosophy? ...Yes, but like every strategy, it has evolved and been fine tuned over the years.

What does the investor pay the Fischer Investment Group? ...The Fischer Investment Group negotiates a master discount deal with a builder.  The individual investor is then able to buy direct from the builder, at the exact master discount price.  The contract for purchase is direct between the builder and the investor.   There is no fee to join the Fischer Investment Group.  The investor only needs to indicate his/her willingness to receive (by email) information regarding the master deals that have been negotiated and, perhaps, invest in various opportunities from time to time.

What does the Fischer Investment Group earn? ...The Fischer Investment Group receives a normal, reasonable, commission from the builder.  Thus, the actual cost to the investor for the unique investment opportunities presented by the Fischer Group is actually nothing.