I have a love/hate relationship with the whole year-end tradition of setting goals for the upcoming year, not so much because I hate setting goals or being accountable to them, but more so because it’s hard to know what twists and turns the real estate market will take in 2009. We’re living in pretty volatile economic times and what seems like a great idea now might be idiotic three months from now, which makes crafting large uber goals a difficult exercise.

That said, my current plan is very much in hunker-down mode, as far as looking to acquire rental properties that need much work, which is slightly mmune from the vagaries of the real estate market. I guess if we all find ourselves lining up in soup kitchen lines then I’ll put a halt to looking to acquire rental properties, but barring catastrophic developments in the economy, I hope to pick up more rental properties in 2009.

If I can acquire and rent out 5 new rental properties in 2009 (including House #3), I’d be pretty happy. That’s roughly one property every two-and-a-half months, which seems doable, as long as I can continue to find suitable properties. Unlike some areas of the country, we’ve yet to see fire sales in the general housing markets, so it’s not like potential cash-flowing rentals abound here and there, just waiting to be scooped up.

I’d also like to wholesale at least one deal in 2009. Not so much for the cash, but as a way of forcing myself to be more active on the marketing and networking front. In theory, if I can twist my own arm hard enough into doing that, I should not only find enough projects to keep myself busy, but also occasionally get extra deals under contract that are profitable enough that I can wholesale them to other investors. I can’t see our smaller local market ever really supporting regular wholesaling, but it should occasionally be a possibility if I’m doing my job on the marketing front, as far as finding deals off of the MLS via direct advertising, signs, business cards, etc.

I also don’t want to slack off on working on our primary residence, as we still have a major kitchen remodel to tackle and a master bath remodel as well. We did knock out a ton of work towards the end of this year, but I really want the place ready to list. We’re not looking to sell for another 2-3 years at least but I don’t want to put renovations off and have to scramble around if we find the perfect deal as far as the next house to move up to, as far as getting our current home ready to sell.

As far as looking back on 2008, it didn’t feel like a raging success as far as real estate goes (and it wasn’t), but man, it could have been a lot worse.

While the various contracts to buy House #1 all ultimately fell through at the beginning of 2008, we quickly got it rented and started generating monthly cash-flow. A lot of the pressure to sell it was due to ongoing work (i.e. expenses) at House #2; once House #2 was sold, I was actually slightly relieved that we’d been forced to rent House #1. After refinancing it, it’s cash-flowing about $250/month after all expenses and we’ve got about $30,000 in equity in it. Remove any financial pressure to sell it and I’m more than happy to be holding a property like that indefinitely, which is the situation we backed into.

The saga of House #2 ended well, as we finished up with a final net profit of about $18,000 on that deal, but that was more due to the real estate gods smiling on us with the perfect buyer at the perfect time. That house should have taken a few months to sell, with us eventually knocking off $10,000-$15,000 off the list price, and in all likelihood breaking even or showing a small loss on the deal.

My first mistake with House #2 was tackling it with House #1 still on the market, and I should have negotiated more on the price of House #2. Instead of sitting tight and seeing how the housing market/economy played out, I leapt into another project. And not just a simple paint-and-carpet project, but a pretty major undertaking as far as converting a 3-1 into a 4-2, adding a new master suite and bath, and other fun stuff. And without any established relationships with contractors, plumbers, electricians, etc.

Long story short, very lucky to survive, much less show a profit on it. It was a great learning experience, don’t get me wrong, and I’m very much a believer in leaping in and learning on the fly instad of endlessly talking about doing something, but that doesn’t mean you have to leap into the deep end, like I did with House #2, with many factors working against me.

And I did manage to pick up House #3 at the tail end of 2008. The verdict is still out on it, obviously, but it’s got the makings of another profitable rental property with a decent amount of equity when it’s renovated and rented.

In the end, despite all odds (and my own best/worst efforts at times), 2008 ended up being pretty successful, as far as real estate goes. I made a little money and learned a lot, and feel like I built a solid base for more success in 2009, especially in regards to what sorts of deals to pursue, how to balance risks/rewards, and all that jazz.