Knowledge

5 Key Factors to Succeed in the Real Estate Industry

If you are thinking of purchasing real estate for investment and business purposes, or currently own or operate real estate, you should know that there are certain factors that must be considered in order to be successful. Typically, every industry has their own set of factors that are created by the market which impact businesses.

Each real estate business is unique in its own way, although, several factors apply to the entire industry. Read below for five key factors for success in the real estate industry.

1. Corporate Structure

How your company is structured in terms of legal business entities, such as corporations and partnerships, can have a large impact on your company. Landlords are known for being wealthy which makes them particularly susceptible to lawsuits, corporate structures can mitigate damage.

Business entities separate an individual’s personal assets from their business assets. In the event of a lawsuit against the property owner, the owner’s personal assets won’t be touched. In addition, by holding numerous properties under separate business entities, the corporate structure protects other properties from being sued under a lawsuit.

Structuring your real estate company this way is a key factor for success because nearly every property owner is already doing so in today’s market. It can prevent the individual and company from deteriorating completely as a result of a lawsuit.

2. Cash Flow

As a property owner, you’re responsible for all the repairs, maintenance, property tax and other operational costs of the property. These expenses are not cheap and can arise unexpectedly.

Owners need to consider this and ensure that they have adequate cash available in the event of a sudden expense or increase in costs. If the cash is not available, the owner can run into a number of legal and financial problems causing the demise of their business.

3. Market

A lot of the success that real estate companies achieve is dependent on the market. The value of your property can go up or down based on market trends and your ability to lease out space relies on the popularity of your property’s location. That being said, there are certain factors that you can control in relation to the market.

Before purchasing a property, be sure to do ample research. Consider the location’s popularity, demographics and other related factors before making an investment. Competitors are surely doing their research, make sure that you have the same information they do, otherwise you might make a bad investment.

4. Asset Quality

There are many aspects of a property that can determine its success. Location, nearby shopping centres, new versus old, renovations, age, size of property, nearby transportation and perception of potential dwellers are all examples of qualities that have an impact on your real estate business.

Be sure to consider these things before buying the property, as all other real estate companies do. Also, determine factors that can be manipulated in your favour. For example, if a property is old, it may be possible to renovate it thereby rejuvenating the location into an attractive asset.

5. Diversification

If your real estate business owns or is planning to own more than one property, be sure to diversify your investments. This means buying assets that tap into different sub-markets of the real estate industry.

If one of your assets suffers as a result of market factors that are out of your control, you don’t want your entire company to suffer. If you have assets in various sub-industries, your company will do well during economic downturns by having assets in different locations and offering different services.

Ronald Ryan

I'm a self-proclaimed science geek and all-around nerd. Useless fun trivia seems to be my forte. If you ever need to hear a good dad joke, I'm your guy!

Similar Posts