Top 5 Factors Your Business Should Consider Before Investing in Property

As a business, there are many pressures on your financial status. In order to grow, you need to make a profit. But you also need to invest in your business. 

For many, investing in property was seen as a prudent investment of your hard-earned profits. And it still can be.

As well as investing in buying their own premises or building their own HQ, many businesses are branching out, buying commercial property to rent to tenants or investing in buy-to-let in the domestic property market.

Is property still a shrewd financial investment and is it something a business should consider?

Long Term Investment

Firstly, investing in property, commercial or domestic is a long-term investment. In the UK, the days of making tens of thousands of pounds’ profit within weeks or months of buying and selling a property are long gone, for the foreseeable future at any rate.

In other countries, the housing market is spectacularly buoyant. In New Zealand, the gap between supply and demand is such that in some locations, mainly Auckland, houses are being ‘flipped’, with buyers making amazing profits within days by selling at an inflated price to what they bought.

However, for those businesses thinking of buying their own commercial premises or expand with a property portfolio of their own need to understand that there is a risk to investing in property and that it is not a ‘get rich quick scheme’.

What Factors Should Businesses Consider When Funding Property Investments?

When seeking property funding aspects complete guide, businesses must consider the property location, market trends, and potential for growth. They should also assess the property’s condition and any necessary renovations or repairs. Additionally, businesses should factor in the costs of property management and ongoing maintenance to ensure a successful investment.

How to Successfully Invest in Property

The following is a point-by-point guide to how your business can successfully invest in property but as always when it comes to making investments, you should always seek advice tailored to your own specific circumstances.

1. Financial Roadmap

Investing in property means having a firm grasp of business finances, both now and in the future. This means drawing up a financial plan that sets out your business’s financial status and how you would expect this to change in the future.

It would also specify the level of investment, as well as a financial ‘buffer zone’ for maintaining properties to specific standards and so on. This is something a business should do for its own property, as well as for any it rents to tenants.

2. Evaluate the ‘Risk Comfort Zone’

Some people are more prepared to take a risk with their profits and income than others. Known as the ‘risk comfort zone’, this is a moveable feast between one business and another.

The important thing to understand is over-stepping in terms of investment and risk can lead your business down a dangerous path. Investments should protect your business and build it for the future, and not be the shifting sands that could topple your business.

3. Consider a Mix of Properties

Businesses with a successful property portfolio have several commonalities, one of which is a mix of properties.

This may be both commercial and domestic properties. Or, if in one area of the market alone, different styles and types of properties mean that tenants and buyers are from different sectors. 

This is a means of spreading risk as well as spreading investments.

4. Rebalance your Portfolio from Time to Time

On one hand, the long-term investment that is property means that it can almost ‘tick over’ but on the other, ignoring it for years could be to your detriment.

Property investment specialists suggest that rebalancing a property portfolio is a great way of ensuring that you reap maximum rewards from your investments.

This means watching the property markets, understanding the shifts in its and taking advantage of opportunities as they arise. For example, you may decide to sell some properties that have become less profitable and invest in areas of the market tipped as being the ‘next big trend’.

From investing in commercial properties, to shifting the focus to different areas of the country, to gain the most from investing in property, you need to remain alert and switched on to what the market is telling you.

5. Consider Building-Your-Own

House or property building is not just for established house builders. It is possible with the right financial backing, the right designs for property in the right location to create your own property ripe for sale or rent.

Many businesses invest in building their own bespoke business premises but there may also be a possibility to investing in creating your own ‘business park’. With start-ups to medium sized enterprises looking for modern, affordable office spaces and units, creating a unique space for other businesses to operate from could be a worthwhile risk and investment for your business to take.




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Is Property the Answer?

As a business, there are many opportunities and threats to your business. Expanding your business takes capital and when banks and lenders are not as free with their credit facilities as they once were, you need to take a more out-of-the-box, creative view to create capital in the longer term.

Property can and still does provide a healthy profit margin BUT it must be a considered purchase. It is an investment that must be nurtured and coveted.

You need your finger on the pulse of the property and rental market, both domestic and commercial, to ensure that your portfolio remains as strong and profitable as it possibly can.

James Trotter is a Marketing Assistant at MTX Contracts, a specialist construction company. Providing bespoke building solutions to clients all over the UK and Europe, James has his finger on the pulse of the property markets.

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