The Motley Fool

Forget buy-to-let! I’d buy this unique property share instead

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Mother, father and child girl in new house with a cardbox roof. Symbol of protection and property.
Image source: Getty Images

It’s fair to say that many buy-to-let investors have done well over the past couple of decades. But despite the recent temporary easing of stamp duty, new tax rules and other requirements have made the sector look less attractive than property shares. 

On top of rising costs, the property market looks toppy to me. My guess is the next two decades may prove to be less lucrative for those entering the game of investment property ownership now.

5 Stocks For Trying To Build Wealth After 50

Markets around the world are reeling from the coronavirus pandemic… and with so many great companies trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.

But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times.

Fortunately, The Motley Fool UK analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global upheaval…

We’re sharing the names in a special FREE investing report that you can download today. And if you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio.

Click here to claim your free copy now!

But another big factor is the sheer amount of effort and time it will take you to buy, own and manage a property for letting. You’ll be exposed to many risks and uncertainties. And, like me, you may conclude that it’s better to spend your time in other pursuits.

Passive investing in property shares

Happily, we can invest in the theme of property passively. It’s as easy as buying the shares of one or more of the property-backed stocks listed on the London stock market. Just do your research, make your selections, and buy some shares. Then hold them with the same tenacity you’d cling to a property you own for rent.

Over the next 20 years or so there’s a good chance your investment will rise in value. The returns will likely come from shareholder dividends and gains in share prices because of the underlying progress in the business.

And the Covid-19 crisis has driven down the price of many property-backed stocks because of the short-term challenges faced by the sector. It’s true that property companies are sensitive to cyclicality in the economy. But the coronavirus pandemic may have created the conditions for the current cycle to bottom out. Indeed, it could be a good time to go shopping for property shares right now.

For example, I like the look of “the UK’s leading developer and manager of retirement communities,” McCarthy & Stone (LSE: MCS). But today’s half-year results report reveals to us some dire figures for the six months to 30 April.

Indeed, legal completions for sales and rentals dropped by 44% compared to the equivalent period the year before. Revenue plunged by 64% and the firm lost underlying earnings per share of 4.1p compared to making 2.9p last year. And because of the effects of the coronavirus crisis, the interim dividend is toast.

Good value despite poor trading

However, worse figures may still be to come. The company reckons the full financial effects of the crisis won’t show up until the second half of the year. Indeed, sales and building activities halted during the lockdown. And the firm is being very careful about how fast it’s reinstating operations because most  customers are elderly.

But today’s news hasn’t rattled the share price, which remains steady as I write. I reckon that suggests the market may have already factored in the trading negatives. Meanwhile, with the share price near 75p, the tangible book value sits just below 0.6, which looks like good value to me.

Looking ahead, the company serves a growing sector. And the directors think it’s well-placed to capitalise on this exciting opportunity.

One Killer Stock For The Cybersecurity Surge

Cybersecurity is surging, with experts predicting that the cybersecurity market will reach US$366 billion by 2028more than double what it is today!

And with that kind of growth, this North American company stands to be the biggest winner.

Because their patented “self-repairing” technology is changing the cybersecurity landscape as we know it…

We think it has the potential to become the next famous tech success story.

In fact, we think it could become as big… or even BIGGER than Shopify.

Click here to see how you can uncover the name of this North American stock that’s taking over Silicon Valley, one device at a time…

Kevin Godbold has no position in any share mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Our 6 'Best Buys Now' Shares

Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply click below to discover how you can take advantage of this.