Spec is short for speculation.

In a HOT market, you are competing with homeowners and speculators - these groups drive up prices to levels that don't make sense for the real investors like us.The solution: you have to have MULTIPLE WAYS to find deals.

Lots of folks though the bubble would keep inflating forever and made lots of speculative plays.

Hmm... my knee-jerk reaction to a first-time investor getting into speculative multifamily development in a predominantly single-family area is: don't do it.

And paying basically for three units that aren't there is speculation.

They may be too busy to deal with it and then a week turns into a month, six months, and before you know it, they got used to having a bucket in the middle of their living room, it's a permanent fixture, and they empty the bucket every few days.I am speculating here, but perhaps your tenant is one of those. 

Without seeing the note, I can only speculate on other people's deals.

@Brandt Tingen   ROI and cash flow is the main thing I go for, since property prices are too volatile (too many speculative investors) and may go down.

Some in the C areas will not have high appreciation and i am clear that you are buying a cash flow investment not speculating in an appreciating investment.  

I did what the OP is asking about in Southern California, and it sure as heck didn't take me 21 doors to get there, and no it wasn't speculative luck either ... been doing this 12 years, through the worst RE downturn since the Great Depression and have never lost a dime.