- Bricklet is a fragmented property platform, allowing buyers to purchase only part of a property
- Property ownership has become within reach for more Australians
- Why consider buying into the fractional property market?
Purchasing property in parts might be a foreign concept to some but with the fragmented property market gaining evermore traction it may not be a niche for much longer.
What is the fragmented property market and why are people buying in?
We spoke to Bricklet CEO, Darren Younger, who believes bricklets are the future of how property is traded.
“Bricklet is a marketplace for buying and selling property fragments,” Mr Younger explained.
“It means that you can buy property in smaller pieces known as ‘bricklets’. The owners of those bricklets are all on the title, which means they actually have a direct asset. If you buy multiple bricklets, you are effectively buying a direct property portfolio.”
A single bricklet is a minimum of 5% of a property’s value, it is usually on the market for around $20,000 to $25,000.
Founded in 2019, Bricklet is the brainchild of Mr Younger who came up with the concept while observing people around him, including his kids, struggle to enter the property market.
“The whole world is just trying to battle to try to buy property. We explored how we can fix this challenge,” he explained.
“The biggest problem was the price, and we had to bring the price down, so we decided – let’s cut it up into smaller pieces.”
Getting your foot in the property market door
Entering the property market has become a major challenge for many prospective first home buyers. According to research by Finder, it takes the typical household just under six years to save for a home in an Australian capital city.
“Bricklet has an audience of people that want to try the property ladder for the first time.”
Darren Younger, Bricklet CEO
Mr Younger explained that these first-time buyers tend to be younger people and might be trying to save a deposit, but with increasing property prices, it never seems to be enough.
Putting savings for a deposit into an asset like the property market means that its value is going to follow the same trend as property rather than sitting in a bank account.
Bricklet owners also benefit from their share rental income generated by their property.
The fragmented property market allows young people to build a property portfolio before even owning their own home, thereby potentially building savings more quickly.
Of course, investment always comes with risk and no guarantees. Bricklet investors should consider that they may face the realities of a fluctuating market.
Diversify your investment profile
Bricklets allow investors to avoid putting all their eggs in one basket.
As Mr Younger explained, a fragmented property market allows investors to build a diverse portfolio more easily.
“For example, a self-managed super fund looking to invest in direct property can build a portfolio that includes Sydney, Brisbane and Melbourne with less than $100,000.”
“We are finding a lot of traction with self-managed super funds. They are looking at Bricklet as a way to purchase direct property into their fund.”
Fragmented property can be used as security
Of course, the fragmented property market is not the only alternative to property investment to consider.
Unlike a real estate investment trust (REIT) or the fractional property market, bricklet owners have their name on a title rather than holding shares.
“Leverage can be important when it comes to property investing. Bricklets allows people to have that direct ownership but also to use it as an asset to then leverage later on,” Mr Younger said.
Bricklet owners have the ability to use their property as security for further loans.
Mr Younger said there is an exciting year ahead for the Australian company, with plans to become listed on the ASX.
Disclaimer: This article contains general information and should at no time be considered financial advice to the reader. The reader should always verify their situation with their financial advisors before taking any further steps.