Property investment guidelines for business owners: There Are Many Ways You Can Make Additional Money That Can Improve Your Cash Flow
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There are many ways you can make additional money that can improve your cash flow. And, although people may argue that getting into property isn’t easy, it does have its benefits. Even in times of uncertainty with the economy, property will still be a wise investment. This is especially the case in big cities like Johannesburg and Cape Town.
But for business owners, property investments can be tricky. This is mainly because you already have day to day responsibilities which come with running a business. And, it will be an expense which could have gone to the business, unless of course, you participated in the Mega Millions jackpot. Then of course, investing won’t be an issue. But, this way of investing won’t only help you with growing your wealth, but it will help you grow your cash flow, maximise income tax returns, and can be used as collateral when needing additional funding for a lender. But, apart from that, let’s get into how you can invest in property as a business owner.
Understand and know what you’re looking for when investing
Now, this has nothing to do with the design of the property you’re looking to invest in. This is more about knowing what your objective is for this investment because property investments can provide you with different needs. For instance, are you in searching for the property which will help pump your cash flow, or are you simply looking for an additional source of income for yourself? Differentiating and knowing what you want will assist you in finding the right property. So, if you’re looking to get into property investments because you wish to boost your business’s cash flow, then you should find a cash-generating property. This type of property is usually expensive, a top-class apartment that has an expensive rent amount. However, if you’re not too focused on that, then you can find a property that offers less rent but will have a long term capital growth.
Factor in your time
Unlike other investments where you let your money do the work, you need to factor in your time because you are also running a business. So, before purchasing a property, you need to get it inspected so that you’re aware of any issues that could arise and influence your decision. You should hire someone who will take care of the maintenance of the property, especially if you have a busy business.
Do your research
Smart property investments which will help your business generate more money, in the long run, requires you to do plenty of research. With the internet, you can find all the information you need before making an offer.
Here are a few things to consider when venturing into property investments:
Know your budget
The first thing for every guide that involves a big expense is to know your budget. Knowing what you can afford ensures that you purchase property that is within your affordability. Especially because this investment is supposed to help your business grow, not put it under financial strain. So, even when you see a property you’re interested in, always assess your budget and see if your business can afford this expense. Remember the market is large, so you will find property investment that’s within your price range.
Get a building inspected
Before signing any contract, make sure you get the building inspected. This is especially important because this is your first property and the last thing you need is to purchase a building that’s not worth the money you’re paying. So, if you’re not planning on demolishing it,make sure you hire a professional so that they can give you a property inspection of the home. From there, you can decide if it’s property you can work with or not.
Consider buying to let
Purchasing to let is one of the favourable types of property investments. The reason why this is a popular one among investors in South Africa is that it’s an easy way to invest, and your returns will be worthwhile. Even though there are risks to this investment, renting out property is the safest option. Because when you think about it over time, the balance of the mortgage will become lower, yet the value will continue rising.
At a later stage, you can decide to sell the property or keep it and let the recurring money from the property help your business. However, before making any commitment, make sure you calculate the potential yield on the property. This can be done by calculating the annual rental income of the property without expenses like maintenance. To also get an overall idea, you can find out how much the rent is on other properties in the area to get an idea whether you’re being charged correctly. This can ensure you’re not being overcharged by the seller.
Always keep the location in mind
Your property’s location is important and can impact how much you get in return. So, always make sure you purchase property in a location that is appealing to many tenants. This will help you to get more out of the property that what you had initially spent. And, having property in the right location will make things easier for you when you wish to sell the property. Having a place in a dodgy area won’t only make it difficult for you to receive tenants, but will also make it difficult when you choose to sell the property. For example, at the moment,Cape Town is the ideal place to invest in property right now. And, with that, you can be certain that your returns will be good enough. So, before any purchase, make sure you research where the best place is to ensure you’re making a profitable investment.
Don’t ignore listed property
If you aren’t interested in the renting aspects of the property industry, then you can go into the listed property. By going into the listed route, you won’t have to worry. All you need to do is put money towards a property fund invested in publicly listed estate companies.
There are many advantages to this kind of investing. For example, it opens you up to various types of assets that you can invest in. Those assets include residential, retail property and industrial. This can mean large returns for you, so keep it in mind.
Although South Africa has its issues with safety, property still remains to be an effective investment. And although it can be tricky, it is worthwhile and can help many business owners, especially those who have an SME. You can get high returns, a diversified portfolio, longer-term lease contracts, and it can help your business when it’s in need of refinancing in the future. This is an effective and safe way for you to continue growing capital for your business. Although you’ll have to wait till your mortgage is low for you to actually see the money coming in, this can be an amazing way to help lift your business off the ground.
Business News Sector Tags: Property|