QUOTE (invst4profit @ Jun 18 2008, 08:43 AM) If you buy something based on it`s expected future value regardless of how educated you may be you are speculating that it will increase in value. It may well be a highly educated speculation but it is speculation just the same.
Keeping in mind speculation is a accepted form of wealth growth.
Invest4profit:
Yes, I can understand your point, no question.
But then, take your point to its logical conclusion; everyone in REIN, then, is in some form, a speculator.
No one invests in real estate hoping properties go down. Let`s be realistic; the reason everyone is trying to buy up Edmonton is that the research indicates we have one of the greatest probabilities in Alberta`s history that our property will appreciate 5% to 9% for the next 5, perhaps 10 years.
Additionally, what if you bought a cash-flowing property in the US right now, and you get a decent pay-cheque every month, but 1 yr, 2yrs, 5yrs from now the house value has dropped another 20% to 30%? Speculation or investing? You bought a cash-flowing property, right?
Is the measure and qualification process of what is defined as an investment strictly based on the present value of cash flow? Does my -$50 a month cash flow speculative house `suddenly` blooms and mutates into an `investment` a year from now simply because I was able to raise rents $100, and now I am +$50? How did my caterpillar suddenly turn into a butterfly?
Answer: It either was and still is speculation, or it was and still is an investment, or you could say it has characteristics of both. If my opinion seems contrary, then I guess I believe at some level we`re all speculating, no sense in dancing around that truth.
You`re not going to convince me that 2100 REIN members buying 17,000+ properties worth 1.xx billion dollars weren`t investing in all that glorious Alberta property without recognizing the hope/anticipation (based on sound due diligence and fundamental "investing" principles taught by Don/REIN) that those properties won`t increase in value...
Maybe its splitting hairs, but in my mind there is still a vast difference between a diligently bought property in Edmonton that may start out slightly negative, vs what Don defines as a true speculation; buying pre-builds based on a piece of paper and a non-existent structure. That`s not apples and oranges, its apples and zebras.
Smitty