Having the ability to keep focused is a key success factor in real estate investing. I can relate to this in several ways when it came to the real estate boom and bust several years ago.
At about the time I started closing the five bad flips in early 2005-although at this point I didn’t know they would be disastrous-I thought it would be prudent to diversify my investment product by acquiring small condominium units in Las Vegas. My thought process on this matter was that the days of flipping would not be as plentiful as they were at the moment, and that long term thinking required that I get something in the hopper in 2005, maintain a medium-term hold period of twenty-four to thirty months and dispose of those units for a profit. The rationale was that buying $1,265,000 worth of condo product with a 10 percent per annum appreciation rate on a two year hold would yield $250,000 to $300,000 plus in appreciation. Given that Las Vegas had 40 percent plus per annum appreciation in the preceding two year period, I felt that 10 percent would be a prudent pro forma. And although new tract home flip opportunities would slow down in the given markets that I had planned on investing in over the next couple of years beyond 2005, buying non-flips at an average cost per unit of $110,000 to $150,000 made a lot of sense, given a pro forma net profit layout estimated at $200,000 after closing costs on all nine units.