Most millennials will have heard about BrickX by now. Some say it is a scam, some say it is too good to be true, other think it is great. I suppose there is such a great divide on this.
For me, I am an early adopter of BrickX. I will be honest, the marketing of BrickX is great. The graphics fantastic. They really are appealing to their target market – millennials.
For a quick run down, BrickX is one of the latest FinTech platforms that is enabling people to get into the property market through a fractional investment. BrickX purchases the properties which are held in a trust, this property is then divided into 10,000 bricks and you can purchase 1 brick up to 500 (limit of 5% per person per property). In return what you get is a fraction of the house and a fraction of the rent. To learn more check out BrickX – How it works.
Now for most of the properties, and in an ideal world, it will take you 7.5 – 30+ years to make your initial investment back in rental returns. This is banking on that the property is continuously rented. Now your thinking this is ridiculous, but this is where capital returns appear. This comes in two ways with BrickX. The first way is the property increase in value, saying that the property can also take a negative turn and decrease. The second way is through the BrickX platform, as users buy and sell bricks, this two can see an increase in the value of your bricks. The Brick is then priced at the lowest priced brick that is available for sale, for example, Brick DBB01 is valued at $95.00 but the lowest Brick for sale is $117 this now makes your bricks in this property have a capital return thus a premium on the initial purchase price (a return of 23.16%).
So you get your rent, and then the capital gain as the value of the property increases.
It is worth noting there is also a Fee to purchase and sell your Bricks at 1.75%. There is a fair amount of talk about this fee been exorbitant but the way I see it, if I hold my Bricks for 12 months this cover’s the fee from the rental return. After that, the rental return starts paying me back my initial investment. The real gain will hopefully be in the Capital Return, and from either selling my Bricks or if I hold the Bricks to the point the property is then sold.
Now I said I was an early adopter here, and I will also be honest I could have put my money into shares which is what my blog is about, or I could have used this to tackle some of my debt but life is for fun as well, and the excitement, joy and thrill of trying something new just could not be helped.
This is my BrickX holding at the moment:
Since my first purchase, I have been lucky, always seeing green (a positive result). Now the current result at the time of this posting is not the best I have seen it. A few weeks back the capital return had me seeing a 25% return, and it was exciting to see this. It is interesting to note this was mainly due to media attention, as well as a couple of users bumping up the price. BrickX quickly fixed this with a disclaimer when you buy and sell Bricks explaining the difference between the brick value and the premium on the brick. Media attention still plays a big role though, with the latest property Darlinghurst been released to pre-order and seeing all bricks sold within 1 hour.
At this stage I am not worried about losing money in the system, it is proving to provide a decent return. My investment to date has been $2,641, my current value is at $3,001 which is an increase of $360, plus my share of the rent of $39.73. Total return $399.73 or 15.1% increase on my initial investment.
For now, I am just going to sit and monitor my Brick’s, any significant changes and I will be sure to update my Blog.