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Fractional Property Investing- Brickx

Discussion in 'General Property Chat' started by House, 25th Jan, 2016.

  1. House

    House Well-Known Member Premium Member

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    Interesting concept... REIT for resi?

    "Our mission is to provide everyone with easy access to the Australian residential property market. For now, though, BrickX is only authorised to provide financial services to wholesale investors and is only open to Australian residents.

    Wholesale Individual Investors

    You are an individual not in connection with a business, who can submit an accountant’s certificate to verify that you:
    • Have earned a gross income of $250,000 or more in the last 2 consecutive years
    • OR — Own net assets of at least $2.5 million"
     
    Last edited: 25th Jan, 2016
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  2. Ace in the Hole

    Ace in the Hole Well-Known Member Premium Member

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    I'd reckon that sophisticated investors can probably source more sophisticated investments...
     
  3. Cactus

    Cactus Well-Known Member

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    Bahahaha I have $2.5m in assets and want to buy $66 worth of resi IP in a fractional investment.

    Would only be relevant to retail investors who are struggling to buy an IP on their own.
     
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  4. Scott No Mates

    Scott No Mates Well-Known Member

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    Purchase at a discount to NTA (like most reits), gross return of 2-3%, higher compliance costs as the trust will be held to a higher standard than mum & dad investors.
     
  5. The Falcon

    The Falcon Well-Known Member

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    Fractional shares in ungeared resi ..sign me up!

    The punters are better off with a basket of A-REITs, at least they employ some leverage, running yield 5-6% and some growth...just watch the gearing levels of course, we don't want a GFC Mk2 scenario :)
     
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  6. Foreshadow

    Foreshadow Active Member

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    Now open to Mum and Dad investors

    You don’t need to buy the whole house

    BrickX works by buying a property, then splitting it into 10,000 ‘bricks’. Prospective investors can go onto their website to check out the properties (currently there are five, including in Sydneys Enmore, Mosman and as of last week, Double Bay, and Melbourne’s Prahan, and the aim is to have 100).
     
    Last edited by a moderator: 20th Sep, 2016
  7. DaveM

    DaveM Adelaide Buyers Agent & KFC Strategist Business Member

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    Can you redraw equity on your brick to buy another?
     
  8. Foreshadow

    Foreshadow Active Member

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    Good point.

    Do i need a pest and building just for my 1 brick?
     
  9. Michael V

    Michael V Well-Known Member

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    I saw a few articles about this new service last week. Founded by same people who run Amaysim and another big company.

    I've bought two Bricks purely just to see how it is going to pan out - but I don't plan on spending big on this - just to make some small part-time returns if possible :)
     
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  10. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

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  11. Michael V

    Michael V Well-Known Member

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    Fairly easy BUT it will only sell if another investor buys it from you.

    However every 5 years there is a mandatory vote for the investors of each property if they want to sell or keep the IP. Otherwise at any time a vote can be had an if majority vote to sell, you all get your share of the profits.
     
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  12. Scott No Mates

    Scott No Mates Well-Known Member

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    So this is a residential syndicate which makes a great return for the manager.
     
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  13. Michael V

    Michael V Well-Known Member

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    Indeed it probably does.. They make 1.75% per transaction of bricks plus they also charge a 6% PM which is deducted from the costs of course.
     
  14. Colin Rice

    Colin Rice Mortgage Broker Australia Wide Business Member

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    Can you sell roof tiles as well?
     
  15. Scott No Mates

    Scott No Mates Well-Known Member

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    I prefer to micromanage sites more at the molecular level.

    Is anyone interested in some SiO2 or Al2Si2O5(OH)4?
     
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  16. DaveM

    DaveM Adelaide Buyers Agent & KFC Strategist Business Member

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    I would like to purchase 3m of split system copper tubing and cross collateralise that to buy a roll of that electrical cable from china which catches fire
     
  17. Scott No Mates

    Scott No Mates Well-Known Member

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    Over insure to the hilt, get a qs to back your insurance replacement value....Sounds like Alpine Offset Printing.
     
  18. Sea Eagles88

    Sea Eagles88 Well-Known Member

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    So the price to buy/sell is dictated by the property valuation ? (that how I read it on their website)
    so it has nothing to do with supply and demand for a unit of brick. It does not look like they have acquired too many properties as yet.
     
  19. Michael V

    Michael V Well-Known Member

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    Yep! The price of the brick is equated to Property Value - Remaining Debt / 10,000.

    Example 1 - Remaining Debt
    PV = 1,000,000
    Remaining Loan = 200,000
    Brick Value = $80

    Example 2 - No debt
    PV = 1,500,000
    Brick Value = $150

    It's a brand new startup so they only have 5 initial properties to choose from, more to come soon as they have very strict IP requirements.
     
  20. Sea Eagles88

    Sea Eagles88 Well-Known Member

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    how are these guys making money ? based on their 5 properties with $4.470M value (according to website) and assume a gross yield of 4% they would only rake in $10,728 for property management. The second stream of their income is Transaction Costs 1.75% for people buying and selling units of Brick. I don't know how much transaction they have in turns of people buying or selling, let's assume their portfolio is turned over 100% so they only make $156,450 in transaction revenue. These guys need a massive scale to make it viable for themselves. Unless they have intention of flogging off this business to potential suitors and highlight their future earning potentials (they seem to project expected annual returns in excess of 10%).

    If they have 100 properties on their book as they state they want then it would be viable.


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