The BRICKX platform allows Australian residents (those classed as residents for tax purposes) to purchase part of a property that has been acquired by the company’s funds.
Each property is put into a trust, which is then split into 10,000 units, or ‘Bricks’. Once the property is rented out, registered users are able to buy and sell Bricks on the BRICKX Platform (limited to 5 per cent of any one individual property), with each Brick initially sold for its respective proportion of the purchase cost.
According to BRICKX, the properties are all valued every six months to allow users to monitor their portfolio performance and provide guidance around pricing, should they wish to divest.
The company then charges a fee of 1.75 per cent of the transaction value.
Currently, the platform owns five properties:
- a unit in Mosman, New South Wales;
- a unit in Enmore, New South Wales;
- a house in Annandale, New South Wales;
- a unit in Double Bay, New South Wales; and
- a house in Prahran, Victoria.
The cheapest brick on offer at the moment is $67 for a share of a unit in Enmore, New South Wales.
According to BRICKX, this type of property investment is attractive because it allows new investors to get onto the market, gives existing investors the opportunity to diversify, and provides fast divestment as “the average selling time [for Bricks priced around market value] is one or two days”.
BRICKX CEO Anthony Millet said: “The reality is, many Australians are put off investing in residential property. It’s generally accepted that acquiring a property is expensive, time-consuming and daunting for those without specialist knowledge.
“With BRICKX, Australians have access to all the potential benefits of investment property ownership — capital returns and rental income in proportion to the number of Bricks they hold — without needing to purchase an entire property.”
Mr Millet added: “There’s a deep sense of frustration, particularly among younger generations that they, or someone they know, will be locked out of the property market forever. This form of property investment is accessible on so many levels — investment is easy, distributions are typically regular, divesting can be as simple as listing your Bricks for sale.”
Platform could help mortgage brokers
Speaking to The Adviser, Mr Millet said: “We are the first company globally that is providing the solution and breaking down the barriers of entry to market in this way and going direct to consumer.
“This is just like owning an entire property, it works in exactly the same way, other than that you own a fraction, or a part of it, and get the fractional benefits through any capital returns or rental income.
“What we're doing here that we think is such a key benefit is that we're offering people the ability to invest in highly-desirable properties that they hadn’t been able to access before, and it really is a great way for existing property investors to be able to diversify without the hassle of having to manage the property as well.
“BRICKX itself appoints property managers to manage each of the properties and we work with them to make sure they're maintained and look after them on behalf of the investors.”
According to Mr Millet, the company aims to have “in excess of 100 properties within the not-too-distant future”, and believes that mortgage brokers could find the platform useful.
He said: “We don't think there has been an effective method for that first-home saver who is not close to buying their first home but is looking to save $20,000 a year with a view of saving $100,000 over five years.
“They'd be putting money in the bank or investments that are not aligned with the property market and by the time the save up what they needed for a deposit, say five years, that money is getting them a lot less.
“In terms of mortgage brokers and mortgage advisers, if they are speaking to their clients who are not close to buying a property and are wondering how to save for it — they could point them to BRICKX, because we believe we are helping savers save for their deposit.”
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Annie Kane is the editor of The Adviser and Mortgage Business.
As well as writing about the Australian broking industry, the mortgage market, financial regulation, fintechs and the wider lending landscape – Annie is also the host of the Elite Broker and In Focus podcasts and The Adviser Live webcasts.