Unfortunately, when it comes to the subject of investing, much behavior demonstrates a lack of differentiation between investment and speculation.
Investing, at its core, describes the concept of buying an income-producing asset. In exchange for your cash, you now have an asset that pays you. Examples include dividend-paying stocks, cash-flowing real estate, or note payments from loans.
Speculation, the less used word, is often masked under the guise of an investment. These activities describe the unprincipled purchase of something in hopes of it going up in price. This happens often in the stock market, but can also happen in real estate when someone buys land, which currently provides no income, in hopes that some day it goes up in value. Speculation is not necessarily wrong, but it is important to know and admit when onewelf is speculating versus investing.
In our multifamily investments, we at Robinson Capital do not pay for anything that does not produce income. This means that our apartment investment opportunities produces positive cash flow on day one. This fundamental approach to wealth creation mitigates the downside risk of not having a stabilized property that operate and provide income as we execute our business plan, covering debt service and defaulting, not meeting targeted investor returns.
There is a time and a place for everything. Leave gambling for the casinos and take the risk out of your investment dollars by sourcing deals that produce income on day one.
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Rodney Robinson II