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Property Investment as a Business: How to Plan and Start

Updated on October 1, 2010
Photo: Drumaboy
Photo: Drumaboy

Property Investment: a Business

If you are considering investing in property one of the key concepts to remember is that you are in fact going into business. Buying property is not the same as buying shares and putting them in the top drawer. Property is a much more active investment, and even if you employ professional property managers and maintenance people you still need to consider your property investment as a business. Your clients are your tenants and your stock is your rental properties. Any small business book will tell you that if you fail to plan you plan to fail. You need to start your property investment career not hanging out at Open Homes and Real Estate offices but with a business plan.

Your Business Plan

What are your aims with your property business? A lot of people, having decided that property is for them, jump into checking out the local "For Sale" lists on websites, newspapers and property magazines. That's not a good place to start. Instead you have to decide what you want out of your new business. Any good business starts with a business plan. What is your goal: do you wish to create an income stream for retirement? do you want to acquire an asset to live in or to sell? Do you want to access tax benefits? A good goal is a SMART goal that is:






Covent Garden, London Photo:18percentgrey
Covent Garden, London Photo:18percentgrey

So starting with an idea - I would like to invest in property, Go through the exercise: Specific: what type of property, apartments, houses, are you looking for captial gains, rental returns both? Who will you know when you have achieved your goals: will you measure your rental returns, your capital gains, how? Is the plan achievable - can afford the repayments, without risking your current lifestyle? What happens if you loose your job, get sick - have you got the appropriate insurances in place. What is your time frame? When do you want your plan implemented by, in 5 years, 10, 20? Is that realistic, achievable?

The whole process is circular - you may want to start at the end - you may want a $X million of property in Y years - but if this will require a capital gain twice the average of the last 10 years, and require you to commit 50% of your present income? Won't work start again, good plans take more than one iteration - even if you settle on a plan in shouldn't be a static document gathering dust in your bottom drawer. Instead review it at least yearly if not quarterly - is it still working - has the property market changed? Has your family circumstances changed?

Create your team.

Although you are going into business that probably won't have employees you certainly need some professionals to be on your team. Try to develop relationships with professionals that you can relate to and who, most importantly understand your property goals. Professionals you should look at developing relationships with include: accountant, lawyer, property manager, mortgage broker, maintenance experts, real estate agents.

Now Implement your Plan

Although many get into property investment without thinking through their plan, others get caught up in planning and suffer "analysis paralysis" - always planning but failing to act. Worried that the best returns are already gone and they are too late into the market to profit. There is some truth in old real estate staying "now is the best time to buy" - but they would say that wouldn't they!

However you now have a plan you know which direction you are heading - its easy to focus on what you want: if you aim to purchase student accommodation you know which suburbs to buy in. if you want to buy a property and renovate then only look for "renovator's delights". It doesn't make it straightforward but at least you have a plan to work to.


I am not an accountant, mortgage broker, real estate agent or lawyer. I am however a New Zealander who has invested in NZ property for over 5 years and currently own, along with my partner, in excess of NZ$2 million of residential property, over 8 houses. What's your experience in property investment? What is your plan? Please leave me a comment - I'd love to hear from you.


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