The Power of Passive Income by Nightingale-Conant

Author:Nightingale-Conant
Language: eng
Format: epub
Publisher: Entrepreneur Press
Published: 2018-03-14T16:00:00+00:00

INVESTMENT VS. SPECULATION

Of course, once you have financial freedom, you can choose to do whatever you want with it. You can even work harder than ever. However, that should be a choice rather than a necessity. Because the truth is, you don’t have to work yourself to the bone to generate passive income through real estate investment. But remember: We’re making a sharp distinction here between investment and speculation. But what are the real differences? Well, one difference is the role of time. For a speculator, a quick payoff is an important goal. A good example of real estate speculation is house flipping. The speculator buys a property, renovates it, and then sells it as quickly as possible. Depending on the kind of renovation, the whole process can take 90 days or less. That’s the goal, anyway. If there’s a downturn in the market, however, speculators can get stuck with renovated properties that no one is prepared to buy. And since they’re speculators rather than investors, they’re not prepared to rent out the property and create an income stream. They wanted a quick payoff, and they were willing to work very hard for a concentrated period of time. If the payoff comes, the speculation was successful. If the payoff doesn’t come, or doesn’t come quickly, the speculation failed.

To build passive income through real estate, you’re going to be an investor rather than a speculator. That means you’re going to take your time. You’re not going to be in a hurry. When the market is hot and prices are going up, you’re not going to get caught up the euphoria and pay too much. When the market cools off and prices fall, you’re not going to sell in a panic because you’re afraid prices will go down even more.

Plenty of real estate gurus will urge you to buy all the property you can. The idea is that it will go up in value and you’ll get rich when you sell. But what if it doesn’t go up in value? What if you can’t sell your property because there’s nobody who wants to buy it? A real estate investor, as opposed to a speculator, never has to face those problems. Real estate investors never have to sell their properties. They may choose to sell, but they’re never forced to because they never depend on the value rising.

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