Money Hack: Invest in property on the cheap

Posted: 10 May 2017 12:00 pm

house coins and papers1How to get a foot on the property ladder for under $100.

Property prices in Australia are getting out of control. The median dwelling price in Sydney at the moment is $860,000, according to CoreLogic. That’s a spicy meatball.

So, for those of us who want to get into the market as investors, what hope do we have other than living at home until we’re 85 and eating nothing but two-minute noodles? Luckily, you can become a property investor for less than $100.

The hack

The trick is a model called fractional investment. The idea behind fractional investment is that a number of investors pool together to buy a property, then they each share in the capital growth and rental returns.

The platform
One of the leading fractional investment platforms in Australia is a company called BrickX. BrickX buys properties, then sells shares of the properties. Each property purchased by BrickX is split into 10,000 shares, called Bricks. You can currently buy a Brick for as little as $72.

How it works
Once you own a Brick, you’ll generate returns in two ways. First, you receive part of the property’s rental income proportionate to the share you own. Second, you can earn money on the change in the property’s value when you choose to sell your Brick.

Bricks move up and down in value much like stocks on the sharemarket. BrickX values its properties semi-annually, and the value of each property’s Bricks changes accordingly. When you want to cash out, you simply put your Brick up for sale and another investor can buy it.

Investing in property can seem like a difficult task as house prices move further out of reach. But fractional investment platforms like BrickX allow you to get a foot in the market without paying an arm and a leg.

finder money hacks is a bi-weekly roundup of the latest tips and tricks to improve your finances. Check back every Wednesday and Saturday for new hacks.

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