With interest rates so low, many first time property buyers feel like they will never be able to amass a big enough deposit to purchase their first property.
Young prospective home buyers who want to inch into the market with an investment property are increasingly finding that house prices are growing faster than their deposit savings can keep up.
Enter Brickx. Brickx is a new investment platform that allows investors to purchase a small share, called a brick, in a property at a much more affordable price than the going rate for a house deposit. Each property is divided into 100,000 bricks so for example, a brick in a million-dollar home will set you back a mere $100.
You can manage your mini investments using the website and buy and sell bricks at any time, however, there is a 1.75 per cent transaction fee for each buy and sell transaction.
You will earn money from your bricks in two ways: through monthly rent distributions and capital returns. Monthly rental income is not guaranteed as it relies on the property being tenanted that month and, if it is tenanted, the property’s expenses not exceeding the rental income for the month. There is also a 6 per cent plus GST property management fee deducted from gross rental income before it is passed on to brick holders. Capital returns are earned if the value of your brick has increased by the time you sell your brick.
Of course Brickx is only one of many new developments in the digital investment space that aim to simplify the process and encourage amateur investors. Other such examples include Acorns and Stockspot with many more planned for the future.
For nervous first time investors, it would seem there has never been a better time to take advantage of the resources available and dip your toe into the investing pool. As the traditional investment method of buying a single property seems to slip further from the reach of young Australians, it would seem that alternatives are worth investigating.
Remember, before putting any amount of money into an investment it is advisable to read as much as you can about the way it works including the product disclosure statement.