Benefits of investing in real estate and film production compared

Written by Posted On Wednesday, 01 November 2017 13:41
real estate and film investment comparison real estate and film investment comparison

Film production investors increase their profits every year and occupy a significant place on worldwide investment business. The industry has its own advantages and wide opportunities compared to more traditional forms of investment popular among diverse demographic groups such as real estate.

Executive producers and businesses engaged in gathering the funds for film and TV projects, like Red Rock Entertainment film investment company, raise the image of British Cinematography. They manage to supply unconventional, yet promising native productions with the finances needed to make the idea grow from an outstanding script to an enjoyable film or TV show receiving positive feedback from the audience and generating decent return on investment.

Still, most people prefer to purchase real estate and turn it into a long-term investment, but not participate in the film production industry, contribute to the development of art and get a comparatively quick profit in return. Why? Usually, entertainment industry is associated with substantial financial risks while real estate appears to be the safest investment option. However, if one compares the benefits of investing in property and film production, they may come to a different conclusion.

Real estate investments have a few exceptional benefits

1. The flow of cash. The reason why most people looking for investment opportunities choose real estate is that property may provide steady monthly income in the form of rental payments from the tenants. The income landlords collect is always predictable and allows them to concentrate on building their own business, expand their investment network and explore the world.

2. Tax advantages. Taxes are the biggest pet peeve for the most of the investors, but there’s way to combat the money loss in taxes within the real estate investment. There’re different tax rules for residential and commercial properties. Also, the amount of money you’ll have to pay in taxes will undoubtedly depend on your income and primary occupation. But generally, government tends to support rental property investors and provides some tax benefits to take hold of.

3. Hedge against the inflation. The return on real estate investment is directly connected with the payments made by tenants. Most tenancy agreements contain the provision that the monthly payments may be indexed to the inflation. Additionally, you may increase the rent each time you change the tenant if you understand that the prices on the market went up.

4. Investment at the expense of the tenants. Another massive benefit of investing in rental property is that you can cover the mortgage with your rental income. At the same time, if you’re purchasing a home to live in, you won’t be able to enjoy this benefit.

Despite the undoubtful advantages of real estate investments, it’s worth to mention that they have certain drawbacks. First of all, the landlords are responsible for the upkeep of the rental property and need to deal with timely upgrades to make sure that its condition satisfies the potential tenants’ demand. Those expenses reduce the landlord’s revenue.

Secondly, the transaction costs related to the real estate purchase are quite high when compared to other types of investment. And lastly, real estate has low liquidity, as well as creates legal and financial liabilities. This is probably the most crucial drawback to pay attention to when considering real estate investment.

And, if you’re not ready to take up the responsibility of managing a rental property, you’re opened to another opportunity - participating in gathering the funds for the film production projects.

Film industry investment opportunity - your chance to make money

Film has a reputation of a high-risk investment zone. But, despite the concerns, the investments in the sphere are growing fast nowadays. Box offices of the high-grossing movies this year reached billions of dollars. British film production is keeping the pace and expands its global influence each decade. Apart from delivering entertainment to millions of satisfied viewers, it also presents extensive opportunities to get profit from producing films of different ranges.

According to the CEO of the Red Rock Entertainment film financing company Gary Collins, even such challenges as the UK’s withdrawal from the European Union won’t damage the industry. In fact, since the decision was made, the funds from the US and other states have only increased.        

Not to get too far away from the reality, it’s worth to mention that film investing could be a very long process. Sometimes it takes a few years to produce a film and make it reach the cinema’s screens. However, if you partner with the reputable executive producers and choose a worthy project, you’ll get a return on investment that will be much impressive and accessible than in case of the real estate purchase.

There are two different types of the film investment:

  1. 1. Providing funds to launch the entertainment project. In this case, you spend your money during the starting stage of production, but there are good chances to get maximum profit after the
  2. 2. Investing in the final stage of film production. Such option involves fewer financial risks, and the revenue is almost always guaranteed.

And here’re the most prominent benefits of investing in film production:

1. Lifetime benefits in a case of successful franchises or new projects. Famous franchises such as Star Wars, Halloween, and many others are earning money even after several decades after they were released in the rental.

2. Films are profitable for commerce and advertisers. Every movie is a lucrative opportunity for huge companies to advertise their products. Displaying your products (new cars, clothing brands) in popular franchises or adding your name to the list of producers raises brand awareness and contributes to the business growth. And, that advantage comes along with the return on the film investment.

3. Growing popularity of British films. The U.K. has become a favorite production site. These days, British films are well-accepted not only by the native audience, but also the viewers overseas, which increases the investor’s profits. Additionally, people express the growing interest in indie films. This is something beginning directors, and mid-range investors are really excited about.

How to access the film industry

As mentioned above, the easiest and the safest way to invest in film production and get profit from it is to cooperate with a well-known film financing company that produces projects you’d like to participate in. They will guide you through the process and suggest only the films that have solid chances for success.

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