There are two ways you can make money from property.
You can either buy the property outright. Of course, this will involve a hefty 30-year mortgage. Along with a life of stress.
Or, you can invest in a real estate company on the ASX.
You can choose to do either. If things go your way, both of them could pay handsomely.
Take a look at this slow burner, for example.
REA Group Limited [ASX:REA] is up 2000% since the GFC.
Quite insane, isn’t it? Better yet, they didn’t do it by flipping properties.
Wanna find out how they did it?
Who is REA Group Limited [ASX:REA]
Well, it’s quite simple really.
They built a product that today we’d find hard to live without!
Chances are you’ve used it before. Does Realestate.com.au ring a bell?
If it does, then good!
You see, REA Group is a digital media business.
They’ve got 20 brands, 1,400 employees and they operate in six countries.
Today they’ve got a market cap of $14.87 billion. And the chart has just broken into an all-time high.
That’s good news!
And as I said, they operate in the real estate business but don’t flip properties.
Instead, they’ve turned into a juggernaut buying out their competition.
They own flatmates.com.au, Hometrack, realestate.com.au home loans…
Move and Realtor.com over in the US…
And even iProperty, Rumah, Squarefoot and housing.com over in Asia.
In short…they offer a digital solution for other people to sell property.
You can say they’re the middle man for one of the biggest markets in the world.
Last year the company made $874.9 million in revenue. Net profits were up 8% at $295.5 million. I guess you could say they made some coin!
As for the chart.
Well, it’s broken out into new all-time highs. Look, I’ll show you.
Let the chart do the talking
What you’re looking at above is the weekly line chart of REA. It goes back to 2011.
Back then the share price was hovering around $11.50.
Today, it’s above $114. That’s nearly a 1,000% return. If you go back to 2009, the gain is even higher!
If you want to get an idea of the property market…then I’d suggest you keep this stock on your watchlist.
Any fall in profits could indicate a decline in property values.
Just see the price action between 2018 and 2019.
But for as long as people are buying and selling from each other, there’s a market for this company.
Could be well worth watching this.
As always, this is not a recommendation to buy or sell REA. It is an update only. I hope you found it useful.
Until next time,
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