Earlier this year, REBAA member Performance Property Advisors was appointed the sole buyer’s agency for a new residential investment platform called BRICKX. REBAA talks to Performance Property Advisors’ Ramon Mitchell about the new venture:
How does the BRICKX Platform work?
BRICKX allows all Australians to be able to invest in residential investment property without the requirement to buy the entire house. BRICKX and the buying team carefully select properties for the website, acquire them, and then put each property into an individual trust. The trust is split into 10,000 units (or Bricks as they are known on the website). Individual investors (this is open to retail investors) are able to buy as little as one Brick or as many as 500 Bricks (5%) in each property, for which they will earn their share of the monthly rental income, and also have investment exposure to earn Capital Returns.
What is your role as part of the BRICKX buying team?
I, along with my colleagues at Performance Property Advisors, are part of the BRICKX Property team which also include BRICKX management and industry experts including Tim Lawless from CoreLogic and Nerida Conisbee (Chief Economist of REA). Our role in the buying team is to draw on our extensive experience and deeply minded data to come up with different investment ideas to pitch to the wider team. The investment ideas which are selected (including which suburbs and types of properties) then form the mandates, which I and the other buyers try to source properties that fit the investment profile. I cover the Sydney market, with my colleagues covering the other capital cities.
How did you get involved with BRICKX?
Performance Property Advisors was selected from a panel of possible partners due to our data driven approach in identifying trends and strong track record in execution. We’re thrilled to be involved in such an innovative approach to property investing. As investment in property becomes increasingly difficult for so many, we see initiatives like this gaining increasing traction and becoming a future way that people will achieve investment exposure. The benefits speak for themselves.
What are the benefits?
For an investor there are many benefits including accessibility and affordability – investments start from under $100. The website is very easy to use, and can allow you to become an investor in minutes – no more open houses and disappointment at auctions for investors. Also the ability to diversify your investment across a number of properties (of your choice) allows you to manage investment risk much more easily than via the traditional method of property ownership. Some of the properties also have debt, so investors can get the benefits of amplified returns. And once you want to exit your position, you put your Bricks up for sale on the Brick Exchange (much easier than selling a house).
Who are the best type of buyers for this type of investment?
This really could suit anyone who wants to get investment exposure to blue chip residential property without requiring the funds to acquire the entire property. BRICKX is seeing great traction with first home savers who are using the website to save in line with the housing market right the way through to more experienced and sophisticated property investors including Self Managed Super Funds, who see this as an opportunity to invest $5k-$25k in a particular property where they otherwise wouldn’t be able to .
Can anyone invest?
Yes, BRICKX is open to anyone (who is an Australian tax payer). Its a very inclusive platform that is really democratising the property investment opportunity.
What type of properties are you looking for?
Currently we are focused on more blue chip suburbs – these types of properties and suburbs are becoming increasingly unattainable not just to first home buyers, but also existing property investors due to the scarcity of stock. We’ve seen a huge drop in the number of listings in Sydney and Melbourne in the second half of 2016 which has made property investment difficult for everyone. The suburbs BRICKX currently has properties in are Double Bay, Bondi Beach, Annandale, Enmore, Mosman (all Sydney) and Prahran in Victoria. We are looking for smaller units and houses, and are focused on those areas which are not in oversupply, there is ongoing strong tenant demand, and limited opportunity for over development to flood the local market.
Who lives in the property?
Each property is rented out. BRICKX appoints professional property managers to ensure suitable tenants are selected and well looked after. Part of the attraction of the BRICKX model is that as a property investor there is a no hassle approach to investing, and you don’t get involved in dealing with day to day maintenance etc.
Do you invest all over Australia?
At the moment BRICKX has investment opportunities in Sydney and Melbourne. We’re monitoring opportunities across Australia and aim to help BRICKX create a diverse set of investments.
How do I sell my Brick/s?
Selling your Bricks is easy. You select the quantity and price at which you wish to sell, and they are listed on the exchange. To sell your Bricks they must be acquired by someone else, but the exchange is pretty liquid thus far. The average time to sell your Bricks in October was 14 hours – which is pretty good when compared to the time it takes to sell your house. Alternatively, every five years there is a vote amongst all Brick Holders as to whether they wish to carry on with the investment or wind up the trust (sell the property) and return funds to investors.