New breed of house buying: No inspection, no auction, $100 a brick

LOCKED out of the property market? Why buy the whole house, or attend the auction? You just need $100 for a brick.

WANNABE property investors now have another option for getting a toehold in the booming Sydney property market. A new company is selling houses just one brick at a time.

There’s no need to attend a single open inspection or auction, pay stamp duty, or deal directly with tenants.

And you can do it all in 10 minutes, online, and sell whenever you want.

The BrickX investment scheme which launched officially today is billed as Australia’s first stock exchange for residential property, offering part ownership via buying single ‘bricks’, which start at $67, under a system called ‘fractional ownership”.

While it’s open to anyone, since it’s soft launch a month ago, the bulk of the earliest stakeholders are those in the under-34 year old age group.

BrickX CEO Anthony Millet said it’s early days, but the investor breakdown so far indicates 60 per cent of those buying in are in that age group: the one most likely to be feeling frustrated at not having the funds to get a foothold in the market.

Alyssa Raymundo, 20, of Blacktown, is one of them.

She graduated from university last year, is now working full time and can’t afford to move out of her parents’ home “anytime soon” and had no idea how to get into the market,.

“I just know that if I want to, I have to start now”.

She found out about BrickX via a Google search.

“I’m a first-time investor and I had no idea really about the whole housing market or investing and I had no idea how to go about it,” she said.

Alyssa Raymundo Googled ‘first homebuyer’ and ‘investment property’ and ended up buying her first bricks. Picture: Supplied

Like any tech-savvy 20-year-old worth her salt, she typed “first homebuyer” and “investment property” into a Google search, and BrickX came up in one of the results.

Her investment in three bricks — costing a total of about $300 in two properties in Mosman and Annandale — was completed online, and while it’s modest to say the least, she says it’s a start as she tries to get the feel of the market.

“I am saving for an investment property — I wasn’t to own my own, and this is a start,” she said.

“I just got out of university so I don’t really have a stable savings account — there are things like car payments and a uni loan to take care of, so this was a way to put just a little bit away.”

“I’m not expecting a huge return. To me it is a set and forget kind of thing, I’ll buy some more bricks when I can and it’s a way of learning about the market. So it’s a learning curve and savings account as much as anything,” she said.

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).

“We provide as much information as we can to empower investors to choose what they want to buy into,” said Millet.

Bricks start at less than $100. Investors can buy and sell whenever they like, and can own up to a maximum of five per cent of any single property’s bricks.

Investors get a proportional share of any monthly net rental income.

One of BrickX’s first properties was this sone in Parriwi Road, Mosman. Picture: Supplied

Until recently the scheme was open only for wholesale investors under the Corporations Act, but has now received approval from ASIC to open to regular “mum and dad investors”.

As for BrickX’s cut: “When you buy in you pay 1.75 per cent and when you sell you pay 1.75 per cent,” said Millet.

“There are no funds under manage. The only other expenses are the specific expenses that would relate to any standard property. like strata, water, council rates etc, and these are administered before investors get their dividend.”

“We also revalue the bricks every six months so people can follow what us happening with their capital returns.”

The scheme was inspired by crowd-funding models, with the aim of tackling what have become the biggest hurdles to buying into property: Affordability, big initial costs, loan requirements, exit and commission costs and long investment periods.

Asked why would-be owners wouldn’t just keep saving a deposit or invest in shares, Millet said “without comparing this to shares, I wouldn’t say whether this is any better or worse. they’re just different”.

“This can provide a way for investors to get their foot on the ladder, to it could be an interesting tool for saving a deposit because you are investing in line with there housing market.

“We have a mix of investors from first-timers dipping into the water and getting comfortable with investing to the sophisticated investors who are putting in larger amounts and enjoy the ease of getting into this without the traditional hassles of investment properties.

“What this does is it doesn’t over-complicate things. you invest where when and how much time you want to invest for.”

BrickX CEO Anthony Millet Picture: Supplied