Corporate Property: How To Protect Your Assets & Investments

Whilst property investment can be a feasible way to create wealth, this endeavour also comes with inherent risks. Learning how to protect an investment from financial risks is essential whether you’re an experienced professional or you’re making your very first investment.

Protecting your property investment is a multifactor job, and it actually starts at the research phase — selecting properties with high rental potential, managing rental revenue streams and mitigating legal risks are all key to ensuring the greatest return in the long run.

Real estate investing can generate substantial financial gains, but with any great investment comes great responsibility, and property investors must safeguard against unexpected events that might compromise their assets.

Here are our top strategies for protecting your real estate assets.

1. Secure Suitable Insurance Cover

Insurance is foundational to protecting any property investment. However, whilst rental properties can be safely insured with landlord insurance, corporate properties require a more dynamic approach.

For instance, when people are conducting business in your property, you’re inherently at risk of accruing potential liabilities.  Liability coverage protects you from being liable for unanticipated events that may occur, alongside safeguarding your property in the event that it accrues any damage following an insured event. Liability coverage may also be able to cover the financial costs of any fines or legal fees. 

When sourcing the appropriate liability coverage, it’s always best to seek consultants for detailed insights tailored to your property’s needs.

2. Conduct Tenant Background Checks

To protect an investment property, you want responsible and fair tenants who won’t cause deliberate damage to the property and pay their rent on time. This is why conducting comprehensive background checks on potential tenants as well as any contractors who will be working on the premises is critical to safeguarding your property.

Background checks are best facilitated by dedicated property managers who have the resources to gather and interpret a high volume of tenant applicants. In this process, your property managers will verify the income of these tenants to protect cash flow and maintain rental income. Doing this will also help you find tenants who will pay rent promptly and look after the property.

3. Run Regular Inspections

Property inspections will help keep your investment property in tip-top shape, whether it’s being used for residential purposes, as commercial office facilities, or even for consumer retail or hospitality enterprises – or a mix of everything!

Inspections can help identify minor problems before they escalate into costly repairs. By checking for structural damage, pest infestation and leaks regularly, you could save yourself significant costs in repairs over time. You can also inspect to ensure the property is kept within health and safety regulations. 

In addition, well-kept homes and buildings will attract tenants more easily, increasing your rental income significantly.

4. Maintain Property Regularly

Proper property upkeep is crucial to its long-term success and tenant happiness. You should make regular inspections to identify any repair or maintenance needs on your property, then address them immediately in order to prevent more serious problems from developing over time. If you have the means to afford a building manager, they can help you implement a property maintenance schedule and manage the contractors that will perform routine maintenance to keep your asset in top condition.

5. Maintain Healthy Cash Flow

Your rental income should cover mortgage payments, taxes, maintenance costs and building manager fees as well as any other unexpected costs that might arise. Negative cash flow occurs if your rent falls short of covering all your expenses, forcing you to find ways to cover any remaining balance. Savings or another source of income could help cover this shortfall if your property becomes "negative-geared”. 

Depending on market conditions, making an income if you still have a mortgage on the asset might not be achievable. But if you begin to slip into this territory, it can be helpful to seek financial advice to see if there are any ways to boost cash flow, like revaluing the rental rate, cutting maintenance costs, or investing in energy efficiency facilities.

6. Communication Is Key

Establishing strong relations with tenants is paramount to successful property management. Tenants make your property their own, whether they’re living or working in the building. On a foundational level, maintaining lines of communication with commercial tenants, in particular, is important not only to boost your relationships but also to provide effective customer care. If you can address their concerns and attend to any issues they have fast, they will see your property as a valuable asset to them and help you maintain its value and condition, as well as stay in the property for longer.

From the start, you can establish strong communication by making sure that your rental policies are transparent and clear, from lease agreements and maintenance procedures to payment methods and rental payment processes. This will ensure there is no grey area regarding payment dates, maintenance expectations, and termination agreements.

Protecting Your Investment Property is a Multifactor Task

While it would be nice if it was as easy as purchasing the property and handing the keys over to a tenant, getting good value out of an investment property requires effort to protect it. Beginning with the tenant selection process, you should perform background and income checks on candidates to ensure they can pay rent and reduce the chance of cash flow issues. 

Similarly, securing liability cover will help insure you in the event that any prosecutions are made against you and your property. Get in the habit of performing routine inspections and arranging regular maintenance to keep the tenants happy and protect the condition of the building. Finally, maintain strong communication with your tenants to foster good relationships that mitigate the risks of tenants having issues with the property.

By employing the appropriate strategies, investors can help protect their real estate assets against claims by creditors, liabilities and lawsuits. Many real estate investors already employ several strategies to protect their investments, including purchasing landlord's insurance policies and keeping debt levels to a minimum. However, maintaining a multipronged defence is the best way to ensure you receive a strong return on investment.