Film production is an important and lucrative industry. Many film and television productions are made on remote sets, meaning that properties outside the studios need to be used to make these productions come to life. David Ebrahimzadeh believes that there is a significant opportunity for property investment in the service of film production.
Types of Properties to Invest In
Property investors may be interested in investing on production facilities where movies and TV shows are made. These production facilities are often leased by major studios. Owning a stake in these facilities means that the investor can reap the benefits when the movies succeed.
Production facilities are generally large and expensive to operate. They use great amounts of energy and resources. They support hundreds of employees at a time, and it is difficult for them to move easily. This means that they may be a great investment. Investors in film production often build strong relationships with the studio, offering more money when it is needed and reaping the benefits when a production succeeds.
Investors can also take a stake in the remote sets and production facilities involved in any film or TV show. Investing in an especially valuable or attractive property can lead to a productive relationship with the filmmaker and their company. This could be risky because you can never be sure what types of property a film studio will want to use for their next production. For this reason, investing directly in a studio or film production facility that is newly built or already in use could be a smarter move.
Private Equity Funding
One of the ways in which an investor can put money into a studio is through private equity funding. This is an easier situation to manage than investing directly in the film production facility. Another good method of investing in a production facility is through an REIT or Real Estate Investment Trust. This means that an investor is able to collaborate with others in order to meet the property’s price, and that the risks are better distributed.
The Benefits of Real Estate Investment for Film Production
Real estate investment tends to have a positive cash flow. Production facilities and shooting locations can provide a steady monthly income in the form of lease payments. The income collected tends to be predictable, allowing them to focus on building their portfolios.
Film production can carry certain local and state tax advantages that can be applied to the property where they are being shot. These programs are an important part of attracting investment in the film industry.
Unfortunately, as in most other areas of investment, putting money into properties for film production can be risky. The process of preparing for a film or TV production is long, and there is always the possibility that the production will be canceled or changed. This could leave the investor holding the bag and lead to significant losses.
There could also be losses if the property needs to be upgraded or renovated in order to be used. For this reason, it is best to look at properties that have been carefully kept up, unless your producers are looking for a gritty aesthetic.
In order to combat these risks, it is vital that an investor contracts only with reputable companies. Investing in independent films may be exciting, but in most cases, it is a costly gamble. It is better to invest in a film that has already been picked up by a national studio.
Star power is another area that could be risky. Not all movie stars are created equal when it comes to the value of their production. If the star’s prominence rises or falls, this could significantly change the outcome of your investment.
Finally, the possibility that the film or TV show will “flop” have to be taken into consideration. If the film or TV show is not successful, your investment may not succeed either. It is better to put your investment into the early part of the process and stipulate in your contract that you will be paid regardless of the film’s success or failure. This could be difficult to accomplish, since many contracts in the film industry are dependent on how much money the production makes.
Film Investment Can Make Sense
In addition to investing in the properties used to make the film, an investor could put money directly into the production. This carries somewhat more risk than investing in the property, but it can carry an exciting rate of return if it is a successful production. David Ebrahimzadeh cautions that potential investors in real estate properties that will be used for film sets should take a careful look at their contracts before proceeding. If the deal is based on the movie or TV show’s revenues, you should be aware that there is always a possibility of cancellation or failure.
Written by Callum Jackson