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IPO-ing Real Estate Properties: How It Works
IPO-ing Real Estate Properties: How It Works
Landa was formed with a simple mission, allowing everyone to build their real estate portfolio, share by share.
Transforming properties to shares is game-changing. It creates broader access, new levels of liquidity, better price discovery, and allows more individuals to invest.
It's also enabling us to evaluate the economics of real estate in ways that didn't exist before.
How much value is created when we IPO a property and convert it to 10,000 shares that are available for purchase to the public?
Using data from Landa’s historical share prices during IPO as well as secondary share prices (until August 21, 2023*) we found that on average, investors that invested in the IPO stage made 88% growth on price per share.
It is fair to say that under any market analysis the real estate market didn’t grow at 88%. It was actually not a great year for the real estate market. Prices were between stable and in minor decline.
The fact that 95% of America doesn't have access to the real estate market, allows us to unlock huge value opportunities in the properties offered.
So what exactly is the add-value that is being generated to the properties by adding them to Landa where everyone can buy and sell their shares?
We believe that’s a combination of access, liquidity, reduced costs and tech.
Access. Every rental property offers an economic interest (shares) that investors can purchase for under $10, creating an affordable starting point for real estate investing. Investors who purchase these shares receive their portion of the property’s profit (based on performance). We designed a mobile (and desktop) app that makes it easy to browse properties and invest in them. We use clear language and a user interface that is inclusive, inviting, and educational.
Liquidity. A property can take months (or years) to sell. We decided to turn real estate properties into securities, allowing investors to conveniently buy and sell their shares in shorter time frames.
Reduced Costs. By investing in shares of real estate, investors can avoid the costs of typical real estate ownership transfers (there are no brokers, closing attorneys, or title companies to pay). We use technology to make day-to-day property management more efficient, and use economies of scale to reduce costs (insurance, maintenance, improvements, etc.). We internalized the sourcing, acquisition, and property management of the properties.
Tech. We embrace a tech-first approach to our entire business. For every challenge that we have (real estate, legal, accounting, operations), our first call is to hire another engineer rather than another operations person. We evaluate and select properties using data analysis models. We analyze market data to empower our investor community, increasing yields while reducing vacancies. Our residents use a custom-built app to make rent payments, request maintenance, renew leases, etc.
Landa's approach of converting properties into shares has not only expanded the real estate investment landscape but also offered remarkable returns to its investors, even in a challenging market year. The impressive 95% growth in price per share from the IPO stage to the secondary market, as evidenced by our data, underscores the potential that exists when broadening access to a historically exclusive market. By seamlessly integrating the principles of accessibility, liquidity, cost efficiency, and technology, Landa ensures that both investors and residents benefit from a system designed for efficiency, transparency, and inclusivity. As we continue our journey, we remain committed to enabling every individual to tap into the world of real estate, one share at a time.
This information is intended only for educational purposes and provides an overview of the market situation as of the publication date. Keep in mind that it might change without prior notice. It is not meant to offer investment, legal, accounting, or tax advice.
Landa is not obligated to inform you of any changes that might impact the information provided. This content should not be considered as research or investment advice for any specific financial instrument. The strategies mentioned are purely for explanatory and educational purposes and should not be seen as a suggestion to buy, sell, or offer any security. We can't guarantee the effectiveness of these strategies.
Additionally, the information does not factor in costs like commissions or taxes, which could significantly affect the outcomes of a strategy or investment decision. Don't replace professional advice with this material; consult an independent advisor before making decisions, and consider your willingness to take risks and your financial capacity to handle potential losses.
Past performance doesn't ensure future results. Investments carry both the potential for profit and the risk of loss. Reproduction or reference to this material in other publications is prohibited without written permission.
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