1. Real estate requires money

While you can buy stocks with a minimal cash outlay, real estate investing typically requires a larger cash deposit. To get started, you'll need a down payment plus purchase costs and money to repair and update the property to maximize rental income. Once you own the property, there will be ongoing expenses such as property taxes, insurance, loan payments and maintenance of the property. For most investors, investing in real estate with other investors is preferable. At Cartago Capital, we will take care of all the administration, so you will get the benefits and a part of your risk is covered by your co-investors.


2. Real estate takes a lot of time

You need to spend time learning how to manage your real estate investments. There's a learning curve, and you can lose a lot of money in real estate if you don't know what you're doing. Additionally, actively managing your rental properties can be time-consuming.

In our projects, we cope with the “heavy work” when it comes to managing your rental property. Our properties are selected based on several criteria, including

- Existing, strong tenants
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- Positive cashflow from the start
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- Possibility of rent regulation as inflation protection


3. Real estate is a long-term investment

Real estate should always be purchased with a long-term strategy. You're buying a tangible asset that you can't quickly liquidate for cash if you need emergency funds. Selling a property takes time and transaction costs are higher than when selling listed shares.


4. Real estate can be problematic

Tenants can cause problems and cost you money and valuable time. If you own rental properties, your cashflow can take a significant hit if you end up renting out to a tenant who doesn't pay, leaving the property in very poor condition when they move out, or both. We always focus on properties with as solid tenants as possible, and typically also commercial properties where the tenant is responsible for the majority of the maintenance of their tenancy.


5. Investing in real estate has unique risks

Risks must be understood and mitigated as much as possible. Below are a few of the significant risks of investing in real estate:

- Buying the wrong property at the wrong time

- Being overborrowed. This is a pitfall that causes many real estate investors to crash. You should be able to make monthly payments on your debt despite market downturns, tenant problems, idling in the property, unexpected repairs, maintenance costs and other expenses that are part of the business when investing in real estate.
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- Lack of inflation protection

As an example, many residential properties have leases that can't easily be regulated up when inflation rises. If you buy a housing property too expensive with too high a leverage, you could potentially lose your deposit. In addition, private housing tenants have a lot of protection that complicates the work in case of any discrepancies. This is precisely why we typically focus on commercial properties that can be indexed annually.