Kareene Koh, the new chief executive of NAB and Westpac-backed fractional property investment start-up BrickX, has permanently cut the company’s service fee from 1.75 per cent to 0.5 per cent.
This means investors can acquire a $50 share, or ‘brick’, in a property, and pay a 25 cent commission – down from 88 cents.
Established in 2014 and launched in late 2016, BrickX promises to “democratise the process of owning property” by selling one dwelling to 10,000 small investors, who each bank the rental return and capital gain – but pay maintenance costs and repairs which aren’t covered by insurance.
BrickX manages a portfolio of 19 residential dwellings controlled by 13,500 members.
This time last year, the company owned 15 homes and was promoting that it just hit 10,000 investors. It had also just received a $9 million Serie A capital injection from NAB Ventures following an investment, for an undisclosed sum, by Westpac Reinventure.
BrickX markets the 10,000 shares of each property as ‘bricks’.
Investors share in the rental return of the property, which is managed by BrickX.
Investors also profit from any capital value growth – with each property valued every six months.
‘Bricks’ can be acquired from $33.
The most expensive, for a $1.7 million Mosman apartment, costs $167.
BrickX’s portfolio includes assets in valuable suburbs like Port Melbourne and Brunswick West in Melbourne, and Balmain, Bondi Beach, Darlinghurst, Double Bay, Manly, Potts Point and Surry Hills, in Sydney.
It also controls two homes in each of Adelaide and Ballarat and one in Perth.
According to its website, a $1.2 million Prahran investment, where each brick is valued at $122, returned investors 23 cents a month – an approximate 2.3 per cent yield.
Ms Koh, who was appointed three months ago, said that “with property prices on the rise and the idea of owning an investment home becoming less feasible, BrickX is an affordable alternative that redefines the entry hurdles of property ownership”.
“Our vision is to make property accessible for all Australians by providing a simple way for our growing community to share in the Australian residential property market”.
Last April, former company chief executive Anthony Millet told smartcompany.com.au in this item that the property market represents a $7.5 trillion opportunity in Australia and BrickX is one of the few operators attempting to solve housing affordability.
Mr Millet added the company’s potential customer numbers could be in the millions.
He said some millennials have invested as little as $100 on bricks while others, including self-managed super fund operators, have purchased stakes worth $30,000.