Recently a friend asked me to give him some advice on an investment opportunity he came across. It was a bank owned oceanfront lot he felt he could purchase for around $400,000. He argued that it had sold just 3 years ago for $900,000 and he projected he could sell this property within 5 years for at least $750,000. My analysis of this investment follows:
Investment 1 (Bank owned oceanfront vacant lot)
Value 3 years ago: $900,000
Projected Sale Price in 5 years: $750,000
Profit: $275,000 (factoring 10% selling costs)
ROI: 13.75% (annualized over 5 years)


