Tuesday, 23rd April 2019


Having a strong concept for a building is one thing, but being able to actually begin construction is very difficult for most. This is where property finance and investment comes into its own. Every project, no matter if it is large or small, needs finance to make it work. The finance enables all costs to be paid and the project to begin in the very first place.

There are two main ways to invest in property, both of which can be lucrative and most certainly highly competitive.


Direct ownership is the most traditional way to perceive property investment and finance. A landlord will either sell or let out his property for an agreed amount of money. If it has been a good investment then the amount the landlord paid for the property or to have it built will have gone up when he sells it. If renting it, the landlord will try to ensure his income stream from his tenants far outweighs his costs. Finance for the project would be mainly produced by the landlord or original investor with the bank providing the remainder. Returns on investments are always calculated using a percentage figure of the total sum. Anything above an 8% return is seen as a good investment. For many years this was the only way to invest, property was seen as a steady asset, unlike more ‘liquid’ forms of investment, such as the stock market.


In recent years everything has changed. As the property market grew, along with substantial returns, so did the interest in investing in it. Obviously, not everyone could be a landlord; not everyone could adopt the traditional approach. Therefore, the market changed, it started to see indirect investment and REITs (Real Estate Investment Trusts). Providing that a project looked good, profitable and low risk, many investors looked to fund it to reap the rewards of the substantial returns. Property changed from a tangible asset to a commodity that could be traded thanks to its increased liquidity. It is crucial to remember that property in this sense must be viewed as an investment only and not a physical class.

Indirect investment needs funding from often many parties, including the bank. Risk analysis is also essential. If the bank could lessen their own risk they would be more inclined to help fund a project. The more investors there are that can raise a substantial total, the more likely the bank is going to invest. Of course, with more investors the profit margins are diminished but so is the overall risk. Only the very brave or very brilliant invest totally on their own.

In both cases, surveyors who are involved with property finance and investment are more concerned with the returns gained from owning, renting or putting money towards property. Basic surveying skills are still needed such as inspection and valuation but this requires a more analytical and judgmental approach.