Our strategies and their business requirements

I also realised, though, that it took a long time to happen and that real estate takes a lot of money for the initial deposit, to pay the legal fees, and on-going taxes, maintenance, renovations, let alone money to cover the risk of tenants who may not pay the rent for a period of time.

This all adds up to quite a substantial cash flow drain. And if the tenants are not enough to cover the mortgage, it leaves a shortfall that needs to be paid for out of our packet!

So straight away, real estate does not necessarily match the characteristics of the ideal business. Also, it is a strategy that involves people. We have customers - technically we have our tenants who are our customers and we are relying on them to pay us promptly and on time.

We also, of course, are involved with a lot of government taxes and regulations Now, we can make very high returns out of real estate but there is also a substantial amount of risk and it is difficult to protect ourselves against that risk.

How do you stop your property from falling in value if the market slumps? You can buy insurance to protect the property in case it is damaged, but you can’t buy insurance to protect the market value of the property.

By Daniel Kertcher