Last night I returned from a four day weekend in New York City. The guy sitting next to me on the plane just happened to live in a pricy lake-front development where I once owned investment property.

Turns out that lakefront property in this development now starts in the $300,000 - $400,000 range and tops out over $1 mil (this I validated from their Web site).

He estimated that the lot I used to own would now bring $750,000 or more. On top of that, I had a charter membership in the golf club that, had I held on to it, would have appreciated another $55,000.

All of this for a lot that I bought in the late 1980s for $72,000 cash.

What I did right

Anytime you couple a highly constrained supply of land with sufficient demand, real estate is bound to appreciate. In this case, I had selected lake property being developed by an organization with very strong financial backing. From the start they aimed to be a premium product. And the development was within a 1 - 2 hour drive of millions of potential buyers, in an area with a very limited supply of buildable lake frontage.

What I did wrong

The bottom line is I pulled the trigger way too early. I sold out within the first five years for about a $50,000 profit. I did not have the patience or vision to see the potential appreciation for this investment.

Looked at another way

Half a mil or more sounds like a lot on a $72,000 investment, but you need to remember that this was over a long period of time...

Out of curiosity, I ran the numbers through a compound interest calculator. The approximate return after property taxes and other fees would have been somewhere around 14-15%. This same money had it been invested in Dell Computer in this timeframe would likely have done even better. Unfortunately I missed out on Dell too :)

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