BrickX Review; A smart way to invest in property?

BrickX allows people to invest in a property and receive income from rent without owning that property. BrickX buys the property and allows people to buy a small percentage of ownership. Read on as I explain further..

Verdict: Some risks involved, but could be a great way to get into the property market without investing large sums of money.

Introduction

Many people with good incomes are unable to afford to invest in real estate. BrickX is a company that helps people to start investing in real estate. They can earn money from their share of the rent that is received or by selling their share of the property if the value increases. BrickX provides a number of different ways to invest including giving investors a chance to rent the property they have invested in.

BrickX divides each of the properties into 10,000 parts, so investors with only a small portion to invest, have the option of buying. For these investors, it may be the only way that they can earn passive income from real estate.

What is BrickX?

BrickX is a company that allows people to invest in real estate when they don’t have enough money for a whole property. BrickX buys properties and then allows people to buy as little as 0.01% of any property which means that even people with only a small amount of money can start investing in real estate. In actual fact, BrickX owns the property, not you.

Who owns BrickX?

BrickX is owned by Thundering Herd as it was acquired in 2019. Thundering Herd is an Australian venture capital and private equity company which was founded in 2015. It also owns Domacom which is one of the competitors of BrickX.

How does it work?

BrickX buys each property and then divides it into 10,000 units that they call ‘bricks’. These bricks are offered for sale on the website and Investors can buy one or more bricks in a property or they can choose to buy bricks in different properties. The people who use BrickX can choose their own property from the ones listed on the website, but they can also allow BrickX to choose the property for them.

BrickX has also introduced two new products: Smart Renter and BrickX for Minors. Smart Renter allows you to move into the property whose bricks you buy. BrickX for Minors allows you to make an investment for children.

In addition to these, there are special investment opportunities for Professional Investors who have an Australian Financial Services licence and for Sophisticated Investors who want to invest large amounts of money. These types of investors will pay different fees from normal investors.

“With Australian property prices growing over 40% within the last 10 years*, the dream of owning a home continues to be a dream for many. That’s why we created BrickX. We enable you to invest in the property market with as little as $250 in as fast as a few minutes from signup to purchase.To date, we have helped to make property possible for thousands of Australians and are eager to continue this journey!”

brickx.com/about

Can you make money on BrickX? How?

There are two ways that you can make money using BrickX. First of all, hopefully, you can receive money from rental income. Any expenses that are incurred by the property will be taken out of rental income, so you may find that you don’t actually receive much income from rental.  

Secondly, if the value of your property increases, you can earn money when you sell your brick. There is, of course, a chance that the value of your brick will decrease and you will lose money when you sell.

What is ‘Smart Invest’ vs ‘Build my Own’?

If you choose Smart Invest, then all you have to do is to invest at least $50 a month. The BrickX team will choose an investment for you. You don’t have to do anything other than pay. If you don’t feel confident about making the right investment decision then Smart Invest is for you.

People who choose Build My Own make their own choices and they don’t have to commit to any fixed amount of money. You can choose the property you want to invest in and then buy bricks.

“Smart Invest doesn’t buy Bricks across all BrickX properties. Under the current investment strategy, it buys Bricks in properties our property team has selected for their growth potential, with an objective of generating returns that outperform the Australian property market (judged annually against the CoreLogic Hedonic Home Value Index). Each year we review which properties are included in Smart Invest, to ensure they still meet the selection criteria.”

brickx.com/support/solutions/articles

What is the minimum investment for BrickX?

The minimum investment is different depending on whether you use Smart Invest or Build My Own. For Smart Invest, there will be a minimum investment of $250 and then a monthly payment of $50. When you use Build My Own, there is an initial deposit of $250, but then you need to buy a whole brick. Bricks are not very expensive.

At the time of writing, you could pay between $32 and $380 for a brick. For both Smart Invest and Build My Own a one off $10 fee will be taken out of your initial payment before you can start investing.

What are alternatives to BrickX?

There are not many alternatives to BrickX at the moment, but as people find it more and more difficult to invest in real estate, fractional property investment is likely to become more common. There are 2 main alternatives to BrickX at the moment:

●    DomaCom is also owned by Thundering Herd. You can also invest in properties with Domacom, but it is not as straightforward as BrickX.

●    CrowdProperty is a UK company that is now available in Australia. The minimum investment is much higher than for BrickX at $2,500.

There are also other companies like Proppie and Bricklet which involve a much larger investment. They are different because the property is owned by the investors, so you will have to find investors to join you in purchasing the property.

What are the fees for using BrickX?

BrickX doesn’t seem to have a lot of fees. There are transaction fees of 0.5% for both buying and selling. That means that each brick will cost you a total of 1% of its value. Of course, if there are capital returns and the value of the brick changes, you will pay a different amount in fees when you sell.

How do you exit BrickX?

In theory, it is very easy to exit BrickX. All you need to do is to sell your bricks and transfer out your money. Hopefully, you do not have to wait too long to sell them.

Advantages of using BrickX

• You can invest in real estate and receive rental income even if you don’t have enough money for a whole property.
• The Build My Own product is very flexible allowing you to buy bricks whenever you like.
• Once you have bought your bricks, you will receive any income after the expenses have been paid, so you don’t have to do anything.
• BrickX allows you to invest for minors, so you can set up an investment for your children. Once they turn 18, you can transfer ownership to them.
• If you have enough money to buy 5% of the bricks, then you can move into the property and pay rent. You will have security as you will have the option to extend your lease and you can even offer to buy the property.
• The BrickX platform is easy to read, navigate and understand.

Disadvantages of using BrickX?

• You do not own the property and you do not have any decision making powers.
• Some investors have complained that they have not received any rental income from their bricks as the expenses are too high.
• If you don’t want to continue your investment, you will have to sell your bricks. It may be difficult to find a buyer. You may also find that the value of your bricks has decreased.
• There are not many investment properties available on this website. You would need to trust the BrickX’s property team to select properties.
• Although the cost of bricks is not high, you will have to pay 0.5% on each purchase and sale. That means that each brick will cost you 1%. It all adds up over time. 
• It could be complicated doing your tax return since investing with BrickX could result in owning parts of a number of different properties.

Is investing through BrickX worth it?

BrickX has a lot going for it. For many people, acquiring an investment property is just a dream that they will never be able to achieve, but BrickX makes it possible to a certain extent. At the very least, you will be able to invest in part of a property and if you decide to invest in Smart Renter, then you will be able to move in and know that you will not have to move unexpectedly.

If you want to make money from rental income, you need to do your research on the property market first, since there are reviews where BrickX investors claim that they have not made any rental income and that the fees seem to be quite high. On the other hand, there are also a lot of positive reviews, so some people are making money, either through rental income or capital growth.

Conclusion

For people who do not have a large amount of savings, BrickX is a good opportunity to get into the property market. While you do not actually own the property you have invested in, you will receive your share of any rental income that is received after the expenses have been paid. BrickX provides different types of investment opportunities.

There are not a lot of properties to choose from when you see the BrickX website, but there is a good range of prices. You can easily stop investing with BrickX by selling any bricks that you have bought. If the value of your bricks has increased, then you will keep any of the profit that you make. If you are looking at different investment options and you’re interested in making some passive income but you don’t have a lot of money to spend, BrickX is definitely worth checking out.

For more info on property investment, you can listen to my podcast with Amy Lunardi HERE.