Property and Human Nature

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Real Estate is such a difficult commodity to really nail down because it just doesn’t behave consistently.  When I was a bookbinder I could price a particular machine, work out the daily output and decide whether it would be profitable or not.

Equally I could look at the second hand market for those machines and know how much a  or 5 year old machine was worth.

Then I could break all that down a “$XX per 1000 books” cost and decide whether to invest or not.

But property, oh my goodness, if only it was that easy.

First of all trying to establish the correct purchase price is affected not only by the market but also the vendors circumstances, various factors around the appearance of the place plus the big wild card, human emotion.

So the same property could sell for up to 40% either side of what it should depending on these factors.  No “normal” business could ever survive with such enormous variations in stock cost on EVERY purchase.

Next the performance of the asset can be enormously affected by the market, government policy, natural disasters or even the behaviour of the asset next door!!

Thirdly the cash-flow of the asset can be predicted but it is dependent on a third party who frequently tries everything they can to NOT give you any money and we have no control over how much damage they may inflict on the asset.

Back to my bookbinding analogy it’s like me never being able to predict whether the machine will produce good quality finished product or destroy every second copy.

And lastly you live in an environment where you will forever be maligned for being non productive, freeloading unethical capitalist who is constantly being penalized for breathing.

So that’s why I love being a property investor, what about you?  
Stay Inspired and Stay Safe ~ Dean Letfus

PS: Make sure you come and say hello at SNI.PR this month