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How to invest in Real Estate without having to buy property

My Money Matters | Written by Moza Moyo

13 February 2017

If you’ve ever had a chat with friends or family about investing, chances are you’ve been advised to get into property. While it’s a truly low-risk investment alternative, real estate may seem difficult to get started in for a lot of people who feel daunted by the escalating property prices. Fortunately, there’s a way to invest in real estate without having to buy an actual house, flat, or office space.

The alternative to owning a physical property is to invest in the real estate market through property funds. A property fund is a mutual fund that invests in publicly-listed real estate companies. It gives an individual the opportunity to invest in a range of properties through the purchase of stock. Property funds buy you a stake in real estate companies listed on the Johannesburg Stock Exchange (JSE) – saving you the headache of maintaining property and dealing with dodgy tenants.

As the country’s top performing property fund, the Absa Property Equity Fund is one way to invest in real estate. Having recently scooped the 2017 Raging Bull Award for Best South African Real Estate Fund for recording the highest investment return over three years and five years risk adjusted, this fund is the best-performing in South Africa.

“The Absa Property Equity Fund gives you exposure to the commercial property space for as little as R2,000 lump sum or R200 per month. You get diversification across different types of assets: residential, industrial, retail, office space, and storage facilities,” explains Fayyaz Mottiar, Fund Manager of the Absa Property Equity Fund.

This means you become a real estate owner without having to physically buy or finance property. Imagine owning a piece of luxurious and high-value properties such as V&A Waterfront and Centurion Mall. Interestingly, the Absa Property Equity Fund gives you access not only to South African properties but the foreign property markets as well – serving as a hedge against the rand when needed.

So, how do you get returns? “Through rental collection,” shares Fayyaz. Sparing you all the admin that comes with owning physical property, real estate companies buy property, collect rent, and pass the majority of the money to shareholders. “Property companies pay out about 90% of their income to shareholders. So you’re effectively sitting there as a rental earner,” explains Fayyaz.

Investing in listed property is a safe way to build your wealth. Fayyaz calls it “a great savings tool and a way to park your cash until you buy your dream home.”

Before you embark on your wealth-building journey, have a look at some of the benefits of investing through the Absa Property Equity Fund, and why the fund has been the top-performing unit trust over the last 10 years.

  • Headache free – invest in property, without having to deal with tenants, or property maintenance yourself
  • Great returns – exposure to the growth of the shares, dividend payouts, underpinned by capital growth on the assets
  • Exposure to offshore property markets – hedge against currency volatility
  • Low barrier to entry – can start with as little as R200 a month
  • Liquid – with 24 hours’ notice, you can have your funds paid into your account
  • No need to pay transfer costs and conveyance fees

Channel your inner-landlord and start your property investment journey today: get started

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Disclaimer: The advice contained on this blog is for general purposes only and does not take into account individual circumstances, objectives or financial needs. Accordingly, readers are advised to seek appropriate advice from licensed professionals prior to making any investment, or taking up a financial product or service.