Speed - The crack of investing I recently took on 3 renovation projects within a 2 week period. Complete gutting of the property, new kitchen, flooring, gyp-rocking, the works. I hired some help, and the two week mini-projects, has turned into a month long affair. This was a sub-leasing exercise, however the impact would still resonate with any project, eg. renovation, development. It highlighted a few lessons on the impact of speed. A number crunching exercise brought to you by NHG. 1. Delay cost Note: I had 2 week early access to the property, if run effectively, it should have completed within 10-12 days. However it will finish at about day 22. a. I had 2 skilled labour, and 2 un-skilled labour. b. $350 + $300 + $250 + $250 = $1,150 c. Holding cost was $200/day d. (b)+(c) = $1,350 e. (d)*10 days in the week = $13,500 Total = $13,500 2. Un-rentable Note: Home is not ready for rent, a risky position the week before Christmas, could leave me empty until February. a. Total cash in at point of full tenancy = $9,600 b. Loss of rent for the week = $800 (keep this number in mind for later) Total = $9,600 3. Opportunity cost a. (1)+(2) = $23,100 b. A deal came up that would cost approximately $15,800, profit of $700/week c. $700*52 weeks = $36,400 Total = $36,400 4. The pain of compounding Note: This is where it really hurts a. Opportunity losses = (1) + $800 (lost rent for a week from example 2) + (3) = $50,700 5. Discussion One could continue down the rabbit hole of how the $50,700 could be reinvested. However it is not a healthy way to live. This is only a thought exercise, though it highlights why a handful of friends have been able to grow so rapidly whilst many around me have not. I can generally turn a house around in 3-5 days, with decent profit per property. However if you're taking 10 days, for half the profit, within a handful of years, the gap between net-worth is astronomical. I'm seeing this now. This is also not to say to rush, we each have our own pace we work at, nor does it mean there are always such an abundance of deals, where you are continuously missing out. What if each project made less money, but your turn around was quicker, would the compound effect leave you better off?