With parliamentary inquiry into housing affordability ongoing and Australia’s property boom showing few signs of abating, the ‘rentvesting’ trend is going from strength to strength.
Brokers will be well aware of this by now: young people, priced out of the cities where they live for work and lifestyle purposes, buy investment properties to get themselves onto the property market while continuing to live in rented accommodation.
It’s a trend that has taken over in the last 12 months, and could now go to the next level as one of the biggest barriers to property ownership among young people, the inability to save for a deposit, is removed.
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Bricklet are looking to lower that barrier by offering the chance to buy a percentage of a property outright rather than taking on a full mortgage.
This is not a new idea – it has long been possible to buy a share in a property via a holding company – but the new innovation is to do it via direct ownership, with accompanying title rights.
“Bricklet is a marketplace for trading property fragments, which are pieces of property that are on title,” said Darren Younger, CEO of Bricklet.
“If you take a property that is $400,000, there might be 20 Bricklets of $20,000 each, and each Bricklet is a property fragment.”
“They’re traded separately to each other: you can own one, I can own one and we can sell ours at any time. They’re recorded on the land title and you own a real piece of property.”
“The fundamental difference is that previous fractional property ownership models have been financial services models, which means that a company or unit trust structure that owns the property, and you own shares in that – it’s an indirect ownership model.”
“What Bricklet does is allows you to have direct ownership of the property. You can build a portfolio of property right across Australia. You can have Sydney, Brisbane and Melbourne for less than $100,000 and it’s all direct ownership.”
“You get all the benefits of direct ownership, like a rental return, with the main difference being smaller pieces and the ability to build that portfolio.”
Bricklet seems perfect for the rentvesting model, where the owner never has any intention of living in the property that they have bought. Major lenders such as MoneyPlace and Wisr have already inked deals that can see $80,000 available unsecured to buy portions of properties.
“The reason that rentvesting is becoming so popular is that you can rent where you want to live and then still invest in property,” said Younger. “You rent in the area where you want to be and still have a portfolio across Australia.”
“At some point eventually, you can own your own home by using that property as a way to take it to the next level.”
“For a broker, it can be people trying to get a home loan for a place that they’re looking to buy, or it could be that they’re looking for the next investment and they don’t quite have enough.”
“Whatever the circumstances are, they know that there’s another option around borrowing smaller amounts to buy smaller amounts, or buying outright.”
“It’s another option in the market for people looking to have property as part of their portfolio.”
