New BiggerPockets Article: Should You Ever Invest Only for Appreciation?

My newest article for BiggerPockets is up and it asks whether a real estate investor should ever invest for nothing more than appreciation. Most importantly, when that comes along with negative monthly cash flow. 

Contrary to popular (real estate investor) wisdom, this is not simply "speculation." I quote Investopedia on the difference,

“Whenever a person spends money with the expectation that the endeavor will return a profit, they are investing. In this scenario, the undertaking bases the decision on a reasonable judgment made after a thorough investigation of the soundness that the endeavor has a good probability of success.
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But what if the same person spends money on an undertaking that shows a high probability of failure? In this case, they are speculating. The success or failure depends primarily on chance, or on uncontrollable (external) forces or events.”

There are times, however, when there's is good enough reason to believe that appreciation will come that it's not just relying on "chance." One example I give is of an investor who bought land between San Diego and Los Angeles in the 70's. He had good reason to think that land would become much more valuable and it eventually did. That being said, it's very risky. So I conclude,

...You should do this with only a small part of your portfolio. It should be considered a high-risk/high-reward venture that you are comfortable taking a hit on if things go sideways

Check it out!