Consider BrickX, a new way of fractional home ownership in Australia, brick by brick, literally.
Can’t afford a home? BrickX will let you buy a single “brick” of a designated house for a mere $100 or so. You pay $1.75% buying bricks and another $1.75% when selling bricks.
Fractional Home Ownership
Please consider New Breed of House Buying: No Inspection, No Auction, $100 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.
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”.
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).
Inquiring minds are diving into the BrickX Model.
Example BrickX Property
The Rent per week on this property is currently $750 per week, $39,000 a year. The last brick dividend was $0.24.
Assuming the house is rented every week of every year, at $750 per week, property taxes do not go up, and there are no expenses, one would recoup a $100 investment in 34.7 years and still own the brick.
BrickX CEO Anthony Millet says “There are no funds under management. 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.”
Excuse me, what about maintenance costs?
Expect maintenance costs to rise over time. Expect property values to sink over time.
Who’s buying? “The bulk of the earliest stakeholders are those in the under-34 year old age group,” said Miller.
- BrickX makes 1.75% upfront on each house.
- If the property has debt, the first x% of rental income goes to interest on the debt. One BrickX property did have debt (very dangerous in this model IMO).
- The next 3% of rental income goes to property taxes, based on a CNBC Property Tax Report that covered Sydney.
- The next x% goes to maintenance, local fees, water, utilities, etc.
- The next x% goes to BrickX and/or a third party for management fees.
- Whatever is left is divided up by brick.
- When you sell, BrickX takes another 1.75%.
Mike “Mish” Shedlock
Sounds like another suckers game to promise a lot, and deliver much less than ever expected.
doesn’t even promise anything moderately worthwhile in the first place
Fractional reserve bricks.
“recoup a $100 investment in 34.7 years”
you mean in 34 years
when it needs a new roof, driveway
heating and A/C system
and to get renters interested new kitchen and bathrooms ?
Another con game is now afoot. Sounds great on the outside; but just like all things in life, it is the details that matter.
Sounds like a great deal to me. But I want the ability to take delivery on my brick.
Chip it out of the house and send it to me, please.
You don’t get the capital gains exemption either as your principal place of residence which is seen as Australia’s best way of avoiding tax.
Bricks for Brains said:
How long before Central Bunks begin buying bricks? (Quantibrickive easing.)
Paul Johnston said:
Expect property taxes to increase over time.
“recoup a $100 investment in 34.7 years” PE >35? Before extra expenses. Yep, not for me…
On the other hand, when single houses become so expensive that one needs to “invest” in them brick by prick…uups…brick, than we might call the as well companies. Company house?
I find it ridiculous that through all kind of planning regulations the prices are hiked to ridiculous levels. It’s after all just a place to live with ones family. Not an investment per se.
How does that differ from a REIT?
Stuki Moi said:
It’s hipper. ‘Cause it has an app.
This is really getting BIZARRE!!! You’ve got to realize the economy is really going to h#!! in a hurry.
Just another scheme to separate fools from their money.
As if there aren’t enough already.
Curious how this pops up just after the door to the Vancouver RE market was slammed shut. This “investment” is almost certainly targeting Chinese nationals.
Using their example, the property has 10,000 bricks, or $1,000,000, and generates $39,000 in gross rents. Minus the management fee, the property is only generating roughly a 3.5% return, best case. That’s fully rented, no major expenses, and no increases in taxes. Either the property is way overvalued or rents are way undervalued. It’s not a bargain in either case.
It’s worse than that – brick price was $121 so we’re talking $1.21m imputed price. Article mentions the last dividend (monthly) was 24 cents/brick (after prop taxes, maintenance, utilities, management fees, etc). We’re looking at 42+ years just to get principal back assuming no increase in taxes, no major expenses, etc. Just stupid.
This is the latest in a line of schemes to separate fools from their money.
STEPHANE CAUSSADE said:
GOOD PIECE OF NEWS BUT DID YOU SEE THE LATEST IVANKA TRUMP HOTEL ON FOX NEWS IT WAS BUILT IN A FORMER POST BUILDING
I LIKE TRUMP SKYSCRAPERS HOTELS AND PROPERTIES OR GOLF RESORTS
IT IS THE AMERICAN DREAM ISN T IT ? GREAT
As it becomes harder and harder to make a buck in this rigged global economy you’re going to see more and more of these shell-game financial scams.
There’s a new sucker born every minute.
Watch from a distance.
I’d rather use $100.00 to fund the neighborhood lemonade stand. Great markup, immediate returns on investment, and it’s all in cash.
Brick shares are bad idea. Time shares are the way to go if you want a fractional part of real estate.
Here in the US wouldn’t you also be able to deduct 3%/year of depreciation from ordinary income? That’s another 1% in cash flow.
Why not just go to Home Depot and buy a load of bricks and stick ’em out behind the shed. When they go up, sell them. Better to hold physical Mc Nears than paper, no?
Old Guy said:
What is sad professor I can buy a pallet of bricks for 270.00 per thousand. Instead of going to a home center head to a brick manufacturer’s store or find their rep for your local community.
Wow I could make some darn good money just selling the fools new brick. Lets say one buck per brick, I could make 730.00 in profit off these fools.
Stuki Moi said:
That’s illegal. Zoning laws and CC&Rs ban adding additional building materials to your lot.
brick fast said:
new career path: brick repo man.
Financial creativity happens at the end of trends.
Stuki Moi said:
This is exactly the kind of “innovation” encouraged and cheered on by central banks.
Take something completely pointless, whose theoretical benefits are already available in REITs (Another form of silly sans asset pumping, but at least a bit less so), double down on the silliness of mutualizing ownership of a highly maintenance intensive and dependent asset, in effect supercharging tragedy of the commons effects, so that the real value of the asset in question undoubtedly depreciates faster than it otherwise wold.
But, in an infinite money-for-nothing-for-nonsense world, wrap the whole scam up in skinny jeans, black turtlenecks and an app allowing people to spend even more time pecking on their phone feeling innovativey, and you’ve just introduced another few billion of market value you can lend fresh print into being against. “Increasing wealth”, as seen by the yahoos running the racket and their sycophants.
If you want it bad, you’ll get it bad, the worse you want it, the worse you’ll get it.
CzarChasm Reigns said:
Note to investors: “All in all you’re just another brick in the wall” — Pink Floyd 1979
And it’s just a matter of time…
“When the walls come tumblin’ down” — John Cougar Mellencamp 1983
Ron J said:
“WANNABE property investors now have another option for getting a toehold in the booming Sydney property market.”
Booming is followed by busting.
Zero Hedge headline: “US Think Tank Warns That Australia Is About 6 Weeks Away From Housing Collapse”
chris m said:
when you start to see gimmicks like this,
you know you’ve reached the top of the bubble.
i remember Japanese promoting 50 year mortgages in 1989/90
at the top of their property bubble.
(i’ve still got the newspaper cuttings from the same period.)
The customer’s heads are thick as a brick and the scheme may as well be named as such …
“Thick As A Brick”! 🙂
😀 haha, as if MBS wasn’t enough.