Property Vs Traditional Business – The Main Differences

Property Vs Traditional Business – The Main Differences

So how does property investment compare to running a traditional business?

The problem with a traditional business such as a restaurant or insurance agent is that they are generally heavily reliant upon the staff. If you have ever been the owner or manager of a business, you will know how difficult it can be when you also have to deal with the company’s staff. At the end of the day no matter how well you work as a leader or how many reminders you set on your calendar for payroll, there is always going to be additional headaches and it is very difficult to get things running on autopilot. With property investment it is very different – once you have set yourself up in the right way 90% of your ‘business’ will run on autopilot.

Instead of needing to hire staff and pay them monthly, the property industry will already be set up for you to outsource or use contractors.  The kinds of specialisms you need are things like mortgage advice, legal providers for contracts and conveyancing and possibly an estate agent of someone who can source properties.

This gives you so much more freedom with who you work with because if you are not getting the results from one part of the chain, you can just stop working with them and choose someone else instead.

If you choose the right team on the first go, then you shouldn’t come across the problem of changing contractors, however, it is an option that most traditional business owners don’t have. This makes property investment a lot more flexible than traditional business and can give you the kind of time and financial freedom that improves your lifestyle immeasurably.

Focus on Cash Flow

In any business, whether it is a product, service or asset it all boils down to supply and demand. Property prices are determined by government stimulus, outside involvement and access to finance. This will affect the severity of a boom and bust, how deep or high the prices might go and the duration of time that they stay that way. Other outside factors that may contribute to the increase and decrease of the prices in a free market such as property can also be financial.

The cyclical patterns of increasing and decreasing property market prices (from ownership and the rental market) will likely continue to happen because the industry is driven by supply and demand.

Periods of huge boom and periods of ‘price readjustment’ are generally the result of an outside catalyst. For example, the legislative changes in the 1988 Housing Act combined with the emergence of the buy-to-let mortgage in the mid-90’s led to a spike in the number of buy-to-let landlords and kicked of a whole cycle of events.

A good way to look at this is by thinking of it as a property clock. The prices rise and fall and as time passes it comes back around like a full circle. However, trying to predict the right time to get into the property investment business is almost impossible. The good news is, you don’t have to.


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