Property & Infrastructure Funds BrickX vs REIT

Discussion in 'Shares & Funds' started by Simon Hampel, 4th May, 2017.

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  1. Simon Hampel

    Simon Hampel Founder Staff Member

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    With all the recent media hype about BrickX fractional investing in Australia real estate (Property ownership for millennials; one brick at a time and You can buy a piece of this Sydney apartment for $57 )

    ... I'm wondering if anyone has done any research into the product and compared it to a more traditional REIT - or even a simple ETF for investment purposes?

    My main concern is the potentially illiquid nature of the BrickX investments and the fact that you get practically zero control over the investment - you are completely relying on the management to do the right thing (you can't sack them and replace them with your own manager), and they get paid a huge chunk of your money, which you can't negotiate on or shop around to get the best deal.

    You can't even sell the underlying property unless more than 50% of the unitholders also want to sell, and with a maximum of 5% ownership (?) you can't gain effective control anyway.

    I understand the value in the product - I just fear that the media hype (coupled to the property boom plus the scarcity of units with only 7 properties currently available) will drive after-market prices sky high and this will drive an even greater frenzy and lead to inevitable losses for the more naive investor who buys in too late.

    It's all sunshine and roses while the property market is growing - but if prices drop, how liquid is the after-market for this investment going to be?

    Would be interested in everyone else's thoughts - especially in comparison to other investments we have available which have far greater liquidity.
     
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  2. bundy1964

    bundy1964 Well-Known Member

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    I see they ended up having to go down the FSL path, first launch was for sophisticated investors only who would of avoided something like that. I got the spiel at a SMSF seminar a few years ago.

    I would prefer investing in LEP or SLF on the ASX.

    I put it in the same basket as the phone app that rounds up purchases to make set investments, more a fun thing than a serious investment.
     
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  3. twisted strategies

    twisted strategies Well-Known Member

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    Simon ,

    I have several reservations on BrickX , and much prefer an entire property , or REIT .

    a property you can value-add when wished ( I put solar-arrays on mine , am improving the rest of the properties in a gradual fashion , as inflation works for me ),

    and REITs are fairly well regulated ( I hold a selection of those ) I used to hold SLF but exited in a modest profit , the rationale was SLF wasn't achieving what I wanted from it , and I had already 'cherry-picked' the best of the portfolio ( MGR @ $1.10 , SGP at a nice price , SCP as a WOW divestment etc. )
     
  4. larrylarry

    larrylarry Well-Known Member

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    So what REIT would you recommend?

    I have similar reservations that @Simon Hampel has. Some PCers have already jumped on to the Brickx bandwagon.
     
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  5. god_of_money__

    god_of_money__ New Member

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    I would use REIT for investing in commercial prop.. for residential prop, I will buy physical property itself..
     
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  6. Hodor

    Hodor Well-Known Member

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    Sounds like taking the worst properties of a number of investments and lumping them together.
     
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