What's the deal with brickx

Discussion in 'Innovative Property Investment Techniques' started by scientist, 14th May, 2017.

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  1. scientist

    scientist Well-Known Member

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    Why don't people just buy a REIT?

    Same with things like Spaceship Super and other scammy things. I saw a banner ad on this site for investment grade diamonds haha.
     
    scientist, 14th May, 2017
    #1
  2. bob shovel

    bob shovel Well-Known Member

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    I think there's another thread on brickx

    .... however while we're here what's reit?

    Also was brickx in the shark tank last year? They all gave it thumbs down quite quickly
     
    bob shovel, 14th May, 2017
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  3. Zoolander

    Zoolander Well-Known Member

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    REIT = Real Estate Investment Trust.

    A REIT is a type of security that invests in real estate through property or mortgages and often trades on major exchanges like a stock. REITs provide investors with an extremely liquid stake in real estate. They receive special tax considerations and typically offer high dividend yields.

    More info: Real Estate Investment Trust - REIT

    Meanwhile, Brickx hold just 6 houses in Sydney and 2 in Melbourne. There are young individuals who have bigger portfolios, and they don't need to share their bricks with anyone*

    *except lenders
     
    Zoolander, 14th May, 2017
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  4. Zoolander

    Zoolander Well-Known Member

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    I can see its value as a tool to help cope with the frustrations of never being able to save up enough to buy a whole IP. Spending $100 to feel like you're in the property game sounds mighty appealing.

    You buy some bricks for a few hundred bucks, can tell your friends you own houses in Mosman and Double Bay and watch their mouths drop, get featured on Domain next to investors who own every brick of their dozen or so IPs. Not bad at all for a few hundred quid.
     
    Zoolander, 14th May, 2017
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  5. mouseburger

    mouseburger Well-Known Member

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    brickx has found a great market gap - an exchange-traded fund for residential property, whereas REITs focus on commercial. It's attractive for people who think they can't afford to buy a home so the next best thing is to own part of one.They can also see exactly what they've bought whereas shares and units are less tangible.

    And let's face it startups are sexy and REITS are for boring old farts. Much sexier to show friends the $1M house they "bought" for a few $100 than a form letter showing 100 shares in a REIT.
     
    mouseburger, 14th May, 2017
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  6. Nattl3s

    Nattl3s Well-Known Member

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    Brickx = Looks too risky for me.
     
    Nattl3s, 14th May, 2017
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  7. bumskins

    bumskins Well-Known Member

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    REIT's have a lot of advantages, I would assume they end up paying much higher yield and offer far greater diversification for one.
    There is a decent variety when it comes to REIT's too.

    Something important to remember with BrickX is that it has no leverage, so your still going to fall behind the general property market investor who are generally utilising anywhere from 2x to 10x Leverage.

    What I don't like about BrickX is:
    * No Easy Access to Leverage.
    * Diversification isn't there, which I would want for this kind of hands off investment.
    * I'd prefer to invest in a more actively managed, where they are going in and creating value, realising different development opportunities, and diversifying the risk.
     
    Last edited: 14th May, 2017
    bumskins, 14th May, 2017
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  8. scientist

    scientist Well-Known Member

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    That's exactly what I'm getting at - it's all marketing and manipulation. A REIT gives exposure to higher yielding and better diversified portfolios. This market gap theoretically shouldn't exist at all. Its existence relies on ignorance.

    Also... nothing sexier than a dividend statement with a princely sum topped with franking credits.
     
    scientist, 14th May, 2017
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  9. dabbler

    dabbler Well-Known Member

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    That seems like a good idea, do you think it will work ? what numbers should I use ? or I guess they never forensically check anyways, so all good. :)
     
    dabbler, 14th May, 2017
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  10. Ted Varrick

    Ted Varrick Well-Known Member

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    Hopefully this is not a stapled security attached to AsbestosX...

    And is a PDS or Financial Services License required if they are marketing to the mums and Dads?
     
    Ted Varrick, 14th May, 2017
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  11. Zoolander

    Zoolander Well-Known Member

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    Been trying to connect this to my original post with my original post to no luck.
    *Hanson voice* Please explain?
     
    Zoolander, 14th May, 2017
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  12. dabbler

    dabbler Well-Known Member

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    Means, what's the point anyway ? apart from those launching a business, why bother ? And you could just lie anyway, you could have bugger all property and make out that you have heaps, how would anyone know.

    So yeah, if you want to boast, just boast away......get a few brickx, and off you go, prob get a great write up too boot :)
     
    dabbler, 14th May, 2017
    #12
  13. Zoolander

    Zoolander Well-Known Member

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    Ah right. Yeah, that's true. Anyone can lie and fluff and gloat about their exploits- if it fills an emptiness in their hearts for as long as their mouths are moving then it's a victimless crime.

    There was a tradie who photoshopped his bank account to show he had half a billion$. Got some good press coverage which fizzled when the disappointment of Photoshop surfaced. Fun times.
     
    Zoolander, 14th May, 2017
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  14. dabbler

    dabbler Well-Known Member

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    Yeah, I saw that guy....what a flash in the pan........the definition of 5 mins of fame.

    But I think the stories could do more harm rather than be totally harmless, as some people look up to this and want to emulate but have no experience at all and could really bugger themselves up and or be fleeced badly.

    They were putting up the mining town buyers on a pedestal, for the un informed, any that followed would have done a lot of money.
     
    dabbler, 14th May, 2017
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  15. Simon Hampel

    Simon Hampel Founder Staff Member

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    To be clear, brickx isn't an "exchange traded fund" ... an ETF is a specific vehicle which is traded on the stock exchange and has a market maker whose job it is to ensure liquidity.

    "bricks" can be traded - but only via their own exchange and there's no guarantee of liquidity as far as I'm aware.

    Brickx is basically a Managed Investment Scheme.
     
    Simon Hampel, 15th May, 2017
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  16. Simon Hampel

    Simon Hampel Founder Staff Member

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    Yes - https://www.brickx.com/pds
    AFSL number: 230920
     
    Simon Hampel, 15th May, 2017
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  17. Simon Hampel

    Simon Hampel Founder Staff Member

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    Some more information (from the PDS):

    What is the price of a Brick?

    The initial price of a Brick is determined during the Pre-Order Phase and is calculated as follows:

    (acquisition price + stamp duty + cash reserve - debt + other fees) / 10000

    After Settlement, the Brick valuation will be revalued regularly, and published on each property listing. By reference the updated brick valuation is determined as follows:

    (latest property value + unamortised acquisition costs + cash reserve - debt) / 10000

    Seller determined pricing

    When buying and selling Bricks between Members, price is driven by availability of bricks for sale, of which the price is determined by the seller.

    Price determination is assisted by semi-annual independent valuations, availability of property related documents and industry data made available on the BRICKX Platform.

    Note that a Sell Order will not be accepted at a price that is more than 20% lower than the latest Brick valuation.​

    Interesting points:
    1. the value the property regularly and set a "floor" price - but this valuation seem arbitrary
    2. you can sell your bricks for any price, but not more than 20% below their floor price
    So I can forsee a situation where you simply won't be able to sell your bricks - if the market has dropped significantly, yet their valuations don't reflect this and nobody is willing to pay 20% less than their valuation ... you simply won't be able to sell.

    Debt and gearing

    A BRICKX Trust’s property purchase will be funded either solely with equity or with a combination of equity and debt finance arranged by BRICKX.

    Costs associated with each property

    If a BRICKX Trust’s expenses relating to a property cannot be funded from the gross income of the BRICKX Trust and the cash reserve, a short-term loan may be provided to the Trust from an external third party provider to ensure that it can continue to meet its obligations. The loan will be paid back from future distributions.

    If a BRICKX Trust’s expenses cannot be funded from the gross income of the trust, and the cash reserve and short term loan (if any) have been exhausted, Theta (as trustee) may choose to issue additional Bricks in the relevant BRICKX Trust. If so, existing Brick Holders will be given an
    opportunity to subscribe for such Bricks pro rata to their existing holding in the relevant trust.

    Alternatively, in certain circumstances, the Responsible Entity may cause the relevant BRICKX Trust to sell the property.​

    So, in the case where they can't pay to hold the property, they have the choice to:
    1. take out a short term loan, and/or
    2. dilute the holdings of existing investors by issuing additional bricks, or
    3. sell the property
    Gearing levels will not exceed 50%.

    Brick price

    Some aspects of the formula used to calculate the Brick valuations may involve the Responsible Entity exercising discretion in accordance with the Corporations Act. The Responsible Entity has a policy regarding its use of discretion in Brick pricing.​

    Okay then. I read that as "we'll set the price to whatever suits us". Haven't yet found the wording of the "policy" that the Responsible Entity has.

    Brick ownership

    on each 5th anniversary of the relevant Settlement date, Theta will request that Brick Holders consider passing a resolution (approved by Brick Holders in the holding at least 50% of the Bricks on issue) to wind-up the trust and sell the property. In the event that the vote to sell does not exceed 50%, BRICKX will maintain the property on the BRICKX Platform. ​
     
    Simon Hampel, 15th May, 2017
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  18. Ted Varrick

    Ted Varrick Well-Known Member

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    @Simon Hampel , sounds like it should hoover up some cash from a bunch of SMSF investors that like shiny interesting things, and those more sophisticated, rather than those who are fans of the word "Simple".

    Your comment about dilution by bricks is one of the more unusual and unique that I have heard in recent times.

    And thanks for the detailed post, I certainly found it worthwhile.
     
    Ted Varrick, 15th May, 2017
    #18
  19. Ted Varrick

    Ted Varrick Well-Known Member

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    @Simon Hampel Amazingly, ABC Media Watch ( Media Watch (ABC TV)) just gave the networks inc Lateline a pasting not 2 minutes ago in relation to this BrickX about the lack of independence in their coverage, and the Barefoot Investor chucked his 2 cents worth in as well.

    Uncanny.
     
    Ted Varrick, 15th May, 2017
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  20. tommo c

    tommo c Well-Known Member

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    Has anyone taken notice of the price of the bricks for the most recent purchase in Darlinghurst?

    They were listed at pre-sale on the 28th of April for $57 each. Curretnly (as of 17.05.17 9.53am) they;re trading at $69 each. 21.05% gain (less in/out costs) in 19days.

    They've just listed a new property for pre-sale this Friday the 19th of May.

    I'm not at all interested in holding for the long term, but if this property was to rise to a similar amount in a similar amount of time due to demand/popularity, a 21.05% increase on funds, less 1.75% in and out costs, still nets you a 17.55% ROI.. in 19days.

    Interesting...
     
    tommo c, 17th May, 2017
    #20
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