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My post was not target at Miat42, I have to make it clear. But I found the significant Profitability is the most important when people asked whether it is a good investment. Rental business can be profitable without being solvent, for example, down payment to buy new properties. Landlords can also be solvent even while losing money, for example sacrifice future cash flow. Down payment can only make it more insolvent, but it could result in more profitable or less profitable.
A landlord has to go bankrupt when it is unprofitable and insolvent. Many typical bankrupcy are resulted from too many purchase (downpayments).
For better manage the risk, you have to avoid risk, eliminate the risk, reduce the risk, mitigate the risk, transfer the risk to others, and accept and budget the risk when there is no other choice. We have to use credibility analysis to avoid and reduce the risk, and use liquidity analysis for risk transfer and retention.
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