Developing real estate, whether for private tenants or commercial enterprises dealing with offices for sale, is one of the most common forms of entrepreneurship. It’s no surprise that so many people are involved when you consider that you don’t necessarily need any specialist skills to be successful; you need some starting capital and a brain for business. There are potential pitfalls however, as with any business there are risks, and they’re not always as obvious in real estate. Too many people think it’s a simple case of buying a building, doing it up, renting it out, and moving to the next.
Planning for the unavoidable
Unexpected outlays can crop up absolutely everywhere. There can be subsidence that damages buildings structurally, environmental hazards like mould or asbestos can be discovered, and natural disasters can be catastrophic to a business. Your entire portfolio is exposed to risk, and it’s very important that you remember this, to protect yourself look at reputable insurance companies such as Catlin.
Even if you buy only very new real estate, and have someone qualified check everything out, there’s always the chance that something will go wrong (source: Oceanfront HHI). Ultimately, the only way of safeguarding your business against this kind of thing is to make sure you have a comprehensive set of insurance policies.
Covering all the bases
You can of course find insurance for just about anything these days. The key is to identify all the areas in which you think there is a potential risk. To do this you must remember that identifying risk means looking at not only the likelihood of something happening, but also the potential impact it could have. A natural disaster for instance might be quite unlikely, but the damage it would do could well be ruinous.
It’s always a good idea to get some help in on this bit, because it can be quite difficult to work out exactly where all of the risk lies. Business advisers are best here. Insurance specialists are good to talk to when you know what you need, but you shouldn’t have dialogue with a company who have a vested interest in recommending more and more insurance products to you.
To conclude, risks are everywhere in business, and while real estate development might seem like it has a relatively straightforward process, you’re exposing your portfolio quite literally to the elements, and you need to cover it as best as you can with the correct insurance policies.
Cover photo credit: www.stephanniefell.com
