Property is considered a “safe” investment. In most cases, it appreciates in value over time. For this reason, the demand for properties has skyrocketed. Consequently, property cost has increased significantly. Even so, you still have a chance to invest in real estate by purchasing property shares in South Africa. The cash you invest in these shares is then used to buy a property (residential or commercial). Eventually, you get the benefit of distribution and benefits. You also earn from a property on a long-term basis.
If you are looking to build your own property portfolio, you may have come across finance apps such as Easyproperties. You may have also read terms like Real Estate Investment Trusts, Real Estate ETFs, and Property Stokvels. Before you sign up for these, it is vital that you do your due diligence and understand how these investments work. In this article, we offer a guide on how Easyproperties work and everything you may need to know.
What is Easyproperties?
EasyProperties is an investment platform that was founded by EasyEquites (EE). EE is a subsidiary of JSE-listed Purple Group Limited – an online platform that enables anyone to purchase shares in the companies or brands that they love.
EasyEquities platform enables ‘normal’ people to acquire shares, exchange-traded funds, crypto (via EasyCrypto), retirement products, and ultimately property. Their unique selling points include:
- The ability to buy it yourself rather than paying financial advisors costly management fees or going through expensive brokers.
- The ability to obtain fractional shares. This means you can buy property shares with the money you have at the moment, instead of saving up to buy in its entirety. Saving takes time and the properties you wish to buy could be costly in the future. You could also use the money on other things.
EasyProperties function on a fractionalization module, like exchange-traded funds. The fractionalization module refers to the concept of splitting up ownership of a product to allow multiple individuals to benefit from it in the long run. This property technology (Proptech) company allows investors to handle their property investments like they would stock portfolios, rather than dealing with the hardship of property management, they focus on asset allocation instead.
Most property opportunities that are offered by Easyproperties have an investment term of up to 5 years with no minimum investment amount.
So, if you are looking to invest in property in South Africa, but you don’t have enough funds to make your dream come true, Easyproperties has you covered. Easyproperties allows you to invest the money you have in South Africa’s real estate market. They invest in both commercial and residential properties within the country and often tend to acquire multiple properties within the same sectional title block.
How Does EasyProperties Work?
Owning a property in South Africa is very expensive. To make property ownership more accessible, Easyproperties enable you to buy as little as a fraction of a share of a property company. The company then acquires the property, meaning, you will own the property jointly with multiple other individuals who bought the shares. Since EasyEquities work in conjunction with fractional shares (CDs), investors are allowed to buy shares according to the money they have, instead of mandating them to buy shares in whole.
Easyproperties has formed a partnership with leading rental managers to manage the day-to-day operational responsibilities of the properties, including:
- Signing and managing leases,
- Rent collection,
- Property inspections,
- Paying accounts,
- Finding accounts,
- Maintenance, and
- Other day-to-day tenant relations.
Building a diversified property portfolio with Easyproperties has never been easier. You can invest with as little as R1.
How to Invest With EasyProperties
Register for an EasyProperties account. Registration is free and has no minimums or limits. Sign up for an EasyEquities account. After that, activate your Easyproperties account within your EasyEquities platform. Once your account is active, the menu item for Easyproperties will appear. To deposit money to your account, go to the menu, click on deposit and follow the instructions given while keeping your Easyproperties tab active. Once that is done you can proceed to the next step.
Click on ‘Invest Now’ to show you auction options, IPOs, and properties. Browse through the properties available on the marketplace and under new listings. Easyproperties hand-picks lucrative properties for you to select from. Be sure to read all the fine print and understand the terms and conditions of the investment.
You can either take part in their latest IPOs or you can buy shares that are available on auction. To buy, place a bid for the amount you want to invest and the highest value you are prepared to pay. Alternatively, offer up some or all of your shares for sale and set the least amount you are prepared to accept. Easyproperties will find the price for the highest amount of shares to complete your transaction.
Start earning net rental income through dividends which equal the number of shares you own with the investment company. Properties generate income monthly through rent.
After the stipulated 5 to 7-year investment period, you should begin enjoying your capital gains. Watch your investment grow hand in hand with your property portfolio.
Each Easyproperties detail includes:
- Forecast cash flows
- Historical suburb growth
- Estimated net rental yield and income
- Independent and professional property valuations
What is EasyProperties IPOs
IPO stands for Initial Public Offering. This refers to when a property becomes available in public for investors to invest. You may submit your application as many times as you deem fit. When the IPO eventually closes, your shares will be allocated to you.
When Easyproperties find an appealing property deal they:
- Carry out all the calculations, and decide to go through with the deal.
- Will register a company to handle the property’s affairs. Meaning, you do not actually buy the property, but you buy shares in the company that owns that property.
Therefore, the company will manage the property’s affairs on your behalf, while paying you dividends from the rental dividends.
Typically, 1 share is issued per R1. Meaning, if the total investment for a particular deal is R19 589 750, then the total shares to be issued will be R19 589 750. To sell these shares, the company shares need to be put available to the public. This is achieved through what is referred to as IPO. If they successfully attain their fundraising goal, the property deal will proceed. If they don’t, the deal will be discontinued and all funds collected will be given back to the potential shareholders.
How Do You Make Money From EasyProperties?
With Easyproperties, you receive the rental income that the company property pays, as well as the capital gains of the property itself. Easyproperties pays the rental earnings as quarterly dividends to all its shareholders. They also have professional evaluations which are carried out independently every six months and the share price at the auction is adjusted accordingly.
Earn Rental Income
- You earn a share of the rent received after deducting the expenses, in the form of quarterly dividends, in equal proportion to the number of shares you own with the company.
- Benefit from rental pools for particular properties which could result in more revenues than a traditional residential rental product.
- Independent and professional valuations are carried out every 6 months
- You may use the valuation to guide you in buying and selling property shares on the platform.
- Realize capital returns when the company sells properties via auction or at market value after the investment period.
Easyproperties allow you to invest in property with zero property management and minimal admin fees. This platform removes the hassle that comes with being a landlord, giving you the simplicity of being an investor. The platform partners with rental management companies to manage the day-to-day operations of the property. These operations include:
- Paperwork and lawyers
- Day-to-day tenant operations
- Paying accounts
- Rental collections
- Property inspections
- Signing and managing the lease
- Finding tenants
Invest with Confidence
Easyproperties platform offers a range of properties that are carefully curated by property experts to unlock a combination of quality rental yield opportunities and capital growth.
Build a Diversified Portfolio in Minutes
Easyproperties allow you to build a diversified portfolio in no time with their ever-growing property offers.
The platform has created a market within its own community to give investors regular opportunities to realize their financial goals.
Long-term Investment is Made Easy
Property investment is considered medium to long-term in South Africa, which is why Easyproperties tend to hold properties for between 5 to 7 years at a time. Once the investment cycle of a property ends, they sell the property at market value with the aim of achieving maximum return on investment through capital gains and quarterly dividends. This arrangement makes long-term investment easy.
Easyproperties fractionalize property ownership by establishing a company that owns and allocates shares among investors. This makes it possible for the “common” man to be a property owner despite the hard times.
Withdrawing Funds From your EasyProperties Account
Once you have sold part of your investments via auction, or if you have unused money that is earning interest in your Easyproperties account, you can withdraw the money into your personal bank account. This is how to go about it:
- Log into your Easyproperties account point or hover over the wallet icon that is located on the top-right-hand side of your screen.
- A drop-down menu with three options will appear. Second, on the menu is the option to withdraw money. Click on the option to proceed with the withdrawal process.
- On the withdraw funds page, choose the account you want to withdraw from the “From Account” icon. Tip, red is for EasyEquities, while blue is for EasyProperties.
- Once you have chosen the account to withdraw from, you will see the amount of money you can immediately withdraw from the “Available to Withdraw” icon. Below that icon, there will be another box asking you how much you would like to withdraw. Enter the amount of money you would like to withdraw in the field with a bolded “R” next to it.
- Scroll down the page to check and confirm that the banking details indicated are correct in order to proceed with the withdrawal process. Once you have confirmed, scroll further down to locate and hit the “Withdraw” button.
- Upon completion, you will be redirected to another page or screen a few seconds later with a congratulatory message on your successful withdrawal.
Is Easyproperties a Real Estate Investment Trust (REIT)?
No, REITs and Easyproperties are two distinct types of property investments.
A real Estate Investment Trust (REIT) is a company that operates, manages, and owns real estate portfolios comprising income-generating properties. These types of companies possess equity and bond features such as capital growth (share price) and cash distribution (profits). REITs allow shareholders to receive the benefits of owning a property without directly owning and managing a property.
What are the Differences Between REITs and Easyproperties?
While Easyproperties invest in distinct properties in distinct locations that they know, understand, and like, REIT investors have no say in properties that are brought or sold.
With Easyproperties, you can only sell your fraction once a year when auctions are held, REITs allow you to sell any time within the trading day.
While Easyproperties pay out their dividends quarterly, REITs pay out annually.
Easyproperties pay out dividends which are subject to DWT, while REITs classify their distribution as income thus subject to individuals’ marginal tax rate.
Easyproperties payout 85% of profit as 15% is retained for property-related expenses and maintenance. REITs pay at least 75% of taxable earnings bi-annually.
Easyproperties is an investment platform that offers every individual, regardless of their financial status, an opportunity to buy shares in real estate and become a property owner. The platform allows investors to access fractionalized shares in existing and new property developments.