Own Your Share in a Dream Neighbourgood Location

No, we have structured our investments, so they continue to operate even in the unlikely event that Neighbourgood is no longer in operation. Each property is owned by its own company, which has its own bank account, and separate ownership structure. Because the investors own the property directly through the company, your investment will continue to hold value as long as the underlying property retains its value. In the unlikely event that Neighbourgood ceases to operate, we would simply assign a new custodian that would make all major decisions like appointing a new property manager or choosing to sell the property and distribute net proceeds to investors.

Neighbourgood Co-ownership aims to provide investors with the opportunity to build wealth through property. Historically, property returns have been maximised when treated as long-term investments over multiple years. As a result, we have designed the Co-ownership platform and our products for investors who are looking to build wealth over the long term (5 years +). We do not recommend Co-ownership for investors that wish to hold their investment for shorter periods.

Here are three reasons why we see property ownership as a longer-term investment:

1. Steady Growth: Property has proven to be one of the more stable and less volatile assets over the long term. While that can increase the odds of achieving consistent returns, that also means that it is less feasible to obtain very high returns in a short period of time like is possible with higher volatility returns like high risk equity stocks or cryptocurrency. As a result, in order to maximize the wealth building, investors need time for the investment to accumulate both the revenue income and property value appreciation. Time can often be the biggest advantage for a property investor.

2. High transaction costs: Buying, renovating and selling property has high transaction costs that need to be amortised over a long investment period. These costs can include property agent fees, transfer duty, legal fees, bond origination fees, development fees and renovation costs. By holding an investment property longer, you are allowing more time for the revenue income and appreciation to recoup those high initial transaction costs.

3. Market Timing: Like most asset classes, property prices and returns often go through cycles, both up and down. Investors with shorter investment holding periods are more likely to have to sell during a down cycle. Investors that have a longer investment holding period are more likely to be able to ride out the down cycle and then sell their investments when their investment returns are maximized. An example of this would be at the start of Covid lockdowns for example, a property investor that bought at a higher value pre Covid but was forced to sell for some reason probably didn't receive great investment returns. However, a property investor that bought a similar property at the time with the market correcting over the next two years enjoyed a much better investment return given they could hold out the market conditions over a longer period.

Dividends reflect how much income was left after collecting revenue and paying all applicable expenses.

With Neighbourgood’s hybrid operating model the income and expenses do vary over the year with some seasonality to offer higher yields in peak periods with a focus on longer term stays over the lower demand periods. This is to maintain the best net income over the year. Before a final dividend payout is determined our team will ensure the property has enough cash flow for the dividend and may hold back a dividend if the property requires an improvement to protect its value or offer income longer term to protect the value of the investment over the holding period.

Share prices are reflective of the overall value of your investment in the company that holds the underlying property. The share price values include the value of all the assets and liabilities held by the company that directly owns the property. We use external property valuers to conduct annual valuations of the property's current value.

That new property value is added to the balance sheet for the company. The company's largest asset is the property, but there are other valuable assets like the cash reserve in the bank account. There are also liabilities, such as the debt or loan balances and any accrued expenses. We also make some adjustments for the upfront fees involved in preparing the property for investment. This includes all holding costs while the property is being renovated or transferred including the Neighbourgood development fees. The startup costs of opening a location from starting operations and servicing debt can negatively impact the share valuation initially. The share price value may go up or down, and the actual investment returns will largely depend on the property’s eventual sale price at the end of the investment period (capital growth over the period).

Dividends are paid twice a year in April and October. They are distributed directly back to your connected bank account or payout method set on our investor platform.

Please note we may choose to update or change our distribution policy in the future however all investors will be provided with enough notice.

IMPORTANT NOTE: Depending on when the property was fully funded and the period of renovations and startup of operations sometimes the first dividend payment may be withheld to ensure the property has sufficient funds to open the location and meet all its obligations during the initial period to the location reaching full stability. It is important to note that locations generally take 8 - 12 months to reach their full earning potential depending on the property and while dividends may be lower in the first year, property is a longer-term investment and revenue for years 2+ will likely be higher. Our investment and management team track the performance of the properties constantly and will declare dividend payouts keeping in mind that the property may need to withhold certain funds for major repairs or improvements to maximise the investment return longer term.

Yes, you can. Co-ownership is designed for individuals that travel, remote work, run business or live elsewhere. Neighbourgood takes care of all the hassle and you enjoy the benefits of your investment from wherever you are in the world. There are some factors that need to be taken into consideration and the structure for your investment may differ depending on your specific circumstances such as where you live and whether or not you hold an investment holding company which would hold your shares in the property holding company.

As Neighbourgood was founded in the middle of a pandemic our hybrid flexible stay operating model was designed especially to maintain occupancy and revenue even during periods of economic uncertainty. While we cannot guarantee how any future events may impact occupancy, revenue, expenses, interest rates or other financial indicators we can provide comfort in that our approach would be to allocate a high number of suites and units to longer term stays that also cater to the local markets. During the previous pandemic this model allowed us to grow and maintain adequate income to meet expenses at our locations.

We have a cash reserve for each individual property. It will typically average around 1-2% of annual revenue. We also budget for ongoing operating expenses, both planned and unplanned. In the event that expenses or negative cashflow ever exceed the cash reserve and operating expense budget, we would then extend a short-term loan from our holding company to the individual property and then repay the loan with future cash flows when available.

We would not expect further funds from investors; however, it could lower the anticipated new cash flows until the short term loan was repaid or cash reserves were replenished.

Each property has a unique anticipated hold period, but we typically estimate a timeline of 5-15 years. During the hold period, we intend to make dividend payments to investors.

The determination of when to sell a property is made based on a series of relevant factors, including the prevailing and projected economic conditions, whether the property is anticipated to appreciate or decline substantially. As a result, we may decide that it’s in the best interest of shareholders to sell a property earlier than five years or to hold a property for more than seven years. If the property has reached its minimum holding period and a shareholder wishes to sell their share the share/s will be offered first to the existing shareholders in that specific property and then open to the greater Co-ownership shareholders or new investors. Share values will be set by the latest company valuation at the time.

Currently, investors will need to plan to hold their shares for the full investment period until the property is sold and investors are paid their proportional proceeds from the sale. In the future we intend to offer an option to trade your share/s via the platform or by other means during the investment period. Please bear in mind there can be no guarantee when or if that will be available, and there may be fees involved. If all shareholders however wish to exit their investment after the 2nd year a vote will be taken annually thereafter and if 75% of the shareholders wish to sell the property will be sold and the net proceeds distributed to shareholders.

If you are a South African citizen you can invest using either, however you should consult your accountants, current tax practitioner or advisor for any implications you need to be aware of. If you do not have a local contact, we can provide you with a list of providers you can approach for advice or a consultation.

No, we take care of all the ownership responsibilities, including any redevelopment, the purchase, renovation of the property, as well as all ongoing operations and management. As an investor you only need to make an investment and earn your share of income from dividend payments.

You can access your current account balance, track your investment, set your payout method, review any important reports or documents simply by logging into your investment dashboard on our online investor portal. Neighbourgood will periodically update your account balance with the details of your investment value. This includes notifications of estimated earnings, estimated appreciation, and any processed dividends processed.

No, each property is owned through a Proprietary Limited company to protect shareholders from personal liability.

Investing with us is very simple, you can register your interest here. There is also an option to book a one on one call session with our team as well who can take you through the process.

We notify all of our investors when new properties launch. If you are not getting any emails, then it's possible that the emails are going to your spam folder. To ensure our emails get to your inbox, we recommend that you whitelist the email we send our emails from invest@neighbourgood.co.za. For instructions on how to white list this email click here.