Investing in property: directly and in equities

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EasyProperties launched over a year ago in 2020, giving investors the opportunity to buy shares in property units. We highlight the key differences between buying shares in a property company via EasyEquities and buying shares in a specific property via EasyProperties.

The key difference between buying shares in companies that operate in the property industry versus buying shares a property directly is that your investment is not diluted by that companies' other assets, nor are you at the mercy of a company's management of the overall company's finances.

The Macro vs Micro 

In a property company, many factors are at play including the sheer amount of assets they manage. Chances are that if a company is publicly-listed on an exchange, then their hands are in dozens of other assets/properties. As a result, they'd be vulnerable to the ups and downs of the broader market.

In addition, a company's liabilities and income are not only dependent on its fixed assets (i.e staff wages, corporate actions, investments, etc). These are the macro-influences that contribute to the company's success, and a property development is simply one piece of the pie.

On the other hand, investing in a property directly means a more granular exposure. 

Although the concepts remain the same, direct property investment reduces dilution. Even while a development must pay its own costs and obligations before it can turn a profit, the link between the revenue it generates and the profits an investor realises is closer, more evident, and easier to identify.

 

Dividends vs Rent 

Companies may pay out dividends, and the factors that determine whether they will pay out dividends are outlined in this blog. But, in short, dividend payments are determined by a company's executives and that's that. Dividend payments are often guided by the business' health, strategies, and sometimes sentiments about the company.

Essentially, dividends feel like a reward for investors to attract more investors.

Property investors receive rent, which is far less negotiable. Flexible rental agreements may happen somewhere in the world but they are not the norm. A regular income is generated from the rent that property owners receive and it's no different on EasyProperties. The platform pays out rent to all shareholders in a property on a quarterly basis. 

 

Side note: EasyProperties is giving first preference to potential renters in our community. Want to stay in one of our units? Hit this link to register your interest to call one of our units 'home.'

Liquidity 

Trading in equity shares via a stock exchange are likely to happen on a second-by-second to day-to-day basis. If you wish to buy or sell shares in a company you would likely find a buyer immediately so long as markets are open. Of course this is all predicated by whether a share is small cap or large cap, or what its status is on the exchange is (suspended or actively trading).

Buying and selling property is less liquid - a trader's nightmare as they would have to wait for a buyer after listing a property for sale. In the traditional environment this could take months to happen, and even then a lot of negotiation could take place before the transaction done.

Fortunately, EasyProperties aims to minimise this timeline to a quarterly basis where investors on the platform could bid and offer for shares in a property with other investors exclusively on the platform.

 


Learn more property terms here or click below

Property Jargon


The point of this comparison

It's all up to you to decide what's best for you. Thankfully, South African residents have access to both on Easy so they don't have to choose one over the other type of investment. Deciding on how much to allocate your finances is down to your appetite.

Dividend-loving investors might veer toward direct property investing, while traders might appreciate the much faster-paced equity markets. Fortunately, the bulk of us do not choose to identify ourselves in such binaries, so a little bit of this and a little bit of that doesn't hurt. That is why I'll close with a cliché tip echoed in the markets and in Easter Egg hunts - don't put all your eggs in one basket.

 


 

Have you seen the exciting properties currently listed?

To make investing through EasyProperties even more valuable and exciting, we continue to add more excellent properties onto the platform. We are super excited to show you these amazing properties, and we know you will fall in love with them just as much as we do because of the potential income they will provide.

View Properties

 

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map marker 112 Loop Street Cape Town City Centre, Western Cape

 

Got Questions?

Here are a few common ummm’s and aaah’s for you to check out, otherwise you can hit up our rockstar client engagement team on helpme@easyproperties.co.za for any questions you have.

Check out our Help Centre - it's jam packed with answers to all the questions you can think of.

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 Happy Investing. 🔥

 

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