Diversification

Typically investing in property requires a large capital sum to be outlaid at the outset which remains tied up in an individual asset. Property shares are hugely beneficial as instead of sinking all your money into one single property you can split that investment into multiple properties. This would allow you to diversify your investment and invest in properties in different geographic locations and sectors – be it in varying different counties across the UK and a mix of residential, commercial, development or mixed-use properties.

The advantage of being able to diversify in such a way means that you can reduce the risk of your investment as the investment is split in a variety of ways but it also increases your potential for returns on those investments. It allows for multiple opportunities for rental income and appreciation – the appreciation and annual increase in property prices vary across the UK. For example, in London the average price is £385,941 with an annual increase of 1.9% whereas in Manchester the average price is £232,917 with an annual increase of 4%.

KAPITL offers shares in an SPV for sale and each property that you see listed on the platform is owned by its own SPV. For example, if you bought 25% of the shares in the SPV you would own 25% of the property. KAPITL will have a vast range of properties available for sale – initially residential across the whole of England but in the future this will also include commercial, development and mixed-use assets as well as the opportunity to diversify outside of England.

Rental Income with No Property Management

Typically, when you invest in real estate it comes with vast expenses too – not only a large capital sum that is tied up in the asset but also significant costs when it comes to finding a tenant and managing the property.

Investing in property shares changes this. You will still benefit from the rental income (proportionately to the number of shares that you own in the SPV that owns the property) which is paid by way of dividend and benefit from significantly reduced costs – the costs in finding the tenant and property maintenance are split between all the shareholders of the SPV.

KAPITL goes one step further than this. You will still benefit from the proportionate rental income but you will have significantly less costs than even fractional ownership. KAPITL manage every property that is sold on the platform. This means that KAPITL find the tenant, carry out the referencing checks, deal with rent collection and all aspects of managing and maintaining the property. What are the advantages for you? It is a hassle-free investment – you receive a monthly dividend proportionately to the shares you own along with minimal property management charges. This property management charge is significantly less than the usual costs which consist of a tenant find fee – usually being one month’s rent (KAPITL do not charge this) along with a monthly agent fee of 10% +VAT of the monthly rent. KAPITL’s fee structure is simple and transparent: a small percentage of rental income, along with a flexible annual percentage of the investment value under management, adjusted according to your portfolio size and desired level of service. This may include a dedicated account manager, enhanced reporting on returns and fully customised management plans tailored to the investor’s needs, such as bespoke renovation projects, tenant management and direct access to exclusive deals and opportunities. There are no hidden charges and they deal with every element of managing the property, it really is a hands-off investment for investors.

Enhanced Liquidity

Liquidity is an important aspect of any investment and refers to how easily assets can be converted into cash. Property is known as being a relatively illiquid asset – it can take a considerable amount of time for properties to be sold, especially with the length of traditional transaction times.

Investing in property shares on KAPITL enables you to transform a property investment into a much more liquid asset. Property shares can be sold on at any time – the transaction time is instant just like any share sale would be on the stock exchange; meaning you can access your cash much faster than traditionally selling a property.

KAPITL has a secondary market – its a marketplace where you can sell the shares you have in the SPV owning the property at any time and receive your cash instantly upon them being acquired. You can also buy further shares or diversify your portfolio instantly too on this secondary market.

Greater Accessibility

At present it is considered a real privilege to be able to have an investment property as well as owning your own home. This is due to the large capital outlay that is required at the outset through the property price, legal fees, surveys and searches, SDLT and Land Registry fees.

Investing in property shares opens real estate investment up to the masses as you can invest as much or as little as you like, which is reflected in your shareholding in the SPV that owns the property. KAPITL aims to make real estate investment as accessible as possible, offering opportunities that could start from as little as £100. There is also great flexibility as you can acquire further shares at any point that they become available on the secondary market or diversify your portfolio by making a similar small investment into another property that is listed for sale.

Asset Appreciation with Lower Risk: A Smarter Alternative to Traditional Shares

Real estate asset appreciation refers to the increase in the value of property over time. This can happen due to various factors such as market demand, economic indicators (being inflation, interest rates etc) and location.

There is something known as the “real estate cycle” which has four unique stages to it:

1. Recovery
2. Expansion
3. Hyper supply
4. Recession

Each phase has its own purpose and function in the overall cycle and offer both potential risks and rewards for investors. This cycle can help to predict the optimum time to buy, hold or sell real estate and with property shares being so liquid you can really take advantage of the market.

During each real estate cycle the property prices are typically higher each time stage 1 of the cycle is reached. Real estate is known for being an appreciating asset – the average price on a home in September 2024 jumped by 0.8% which in monetary terms is nearly £3,000.

Investing in property shares allows you to take advantage of the appreciation and the flexibility to sell and cash in on that appreciation at any time. Property shares are also a much less risky investment than traditional shares on the stock exchange. Put simply, a property will never be worth £0 – whereas traditional shares on the stock exchange can be practically worthless with no dividends paid; this can easily happen if the company goes bankrupt. With property shares they will always be worth something – even if the market turns to a recession and you will still be receiving the dividend payments monthly through rental income and still have an asset with a significant value.

KAPITL allows you to cash in on appreciation at any time by selling your shares on its secondary market. It is also the ideal platform to navigate a recession in the property market. You can limit your losses by selling your shares when you anticipate a downturn, or take advantage of lower prices by purchasing shares during a recession and waiting for the market cycle to restart.

Both strategies can help you minimise losses and maximise potential appreciation, offering a unique approach to real estate investment. The secondary market offers the opportunity to sell your shares and receive your money quickly, providing flexibility when you need it.

Let’s summarise

Investing in property shares through KAPITL’s platform offers a modern and accessible route into real estate, combining the benefits of property ownership with the flexibility of a stock-like investment. From diversification and rental income to enhanced liquidity and capital appreciation, property shares present an attractive alternative for both seasoned investors and those new to real estate. With minimal management responsibilities and transparent fee structures, it is a hands-off way to grow your wealth through real estate while enjoying the security and potential of property ownership.