BrickX v DomaCom: How they compare
20 Apr 2022
Looking for a low-cost way to enter the property market, then you may consider fractional investing. Here’s a look at how the two main options compare.
Residential property has a track record of healthy long-term returns across much of the country, and that’s made it a favourite investment among Australians. The key stumbling block for many is that buying property calls for plenty of upfront cash. But there is a way to score a slice of property market action, even if you don’t have much capital to invest.
Two fractional investing platforms, BrickX and DomaCom, make it easy to buy a small stake in a property – maybe 10%, 5%, or as little as 1/10,000th of a place.
When you invest with either BrickX or DomaCom, it is similar to buying into a managed fund. This means pooling your money with other like-minded investors.
Sure, it’s not the same as having your name on the title deeds. But it is a way to tap into property market returns if you have limited cash.
Fractional investing also offers a way to diversify across multiple properties and locations, something that can be challenging for direct investors.
BrickX
The BrickX platform lets you buy a stake in a predetermined selection of rental properties, with as little as $250. As of mid-April 2022, 25 different properties were available to invest in on the BrickX website.
DomaCom
DomaCom works by crowdfunding investment properties. You’ll need at least $1,000 to get started, and from there you can invest in available properties. Alternatively, you can use the ‘Family and Friends’ option to team up with mates, relatives, co-workers and even social media contacts, to set up a new sub-fund that invests in the property of your choice. This option has a minimum investment of $2,500.
How does it work?
BrickX
The property team at BrickX selects and buys properties, then divides the value of each property into 10,000 “Bricks”. The price of a Brick is determined by the supply and demand of Bricks in that property.
You’re free to choose which property you’d like to buy Bricks in using the ‘Build my Own’ option. You’ll need a minimum initial deposit of $250 to get started and after that, the minimum investment is the lowest available price of one Brick.
There’s also a ‘Smart Invest’’option and the BrickX team selects the properties for you. You’ll need at least $250 to get started and then invest at least $50 a month to use this option. BrickX says you have the option of skipping a month or cancelling.
Each month, investors receive a share of the property’s net rent (rental income less expenses) in line with their proportionate share. If you own 10% of the Bricks in the property, you’ll receive 10% of the net rent.
You can cash in your investment at any time by offering your Bricks for sale on the BrickX site at the price you choose.
DomaCom
DomaCom lets anyone who is interested in a property, pledge how much they’d like to invest. Once sufficient funds have been raised, DomaCom purchases the property, places it in a sub-fund, and issues each investor with fund units in line with the amount invested.
From here, you’ll receive a share of the property’s net rent. When it comes to possible capital gains, investors can cash in their units in one of three ways – at expiry (typically five years), via DomaCom’s online trading platform where you set your own price for the units you hold, or if the unitholders vote to sell the property and wind up the sub-fund.
How much does it cost?
Brick X
Each time you buy or sell a Brick, a 0.5% transaction fee applies. So, if you buy $5,000 worth of Bricks, the transaction fee will be $25. Then, if you sell those Bricks for $5,000 (we’ll ignore capital gains for the sake of simplicity), you’ll pay another $25.
DomaCom
You’ll pay annual management fees of between 0.44% and 0.88% of the gross asset value of your investment.
What are the available investment options?
BrickX
As of April 2022, BrickX offered a set menu of 25 different residential properties, with a mix of houses and apartments spread across different states including some regional locations.
DomaCom
DomaCom offers a variety of investment options. Buy units in an existing property (commercial or residential) or form your own group and choose from DomaCom’s selection of residential properties.
How have they performed?
Brick X
The estimated net rental yields for each property are listed on the BrickX website. They range from around 0.20% on a unit in the Sydney suburb of Bondi to 6.32% for a house in Clayton North in Melbourne. Remember it is the return after costs like rates, insurance and property management have been deducted from rent.
Capital gains are harder to gauge. BrickX provides a valuation per Brick based on the current property market. But investors are free to set their own price. On some properties, Bricks are listed for sale at more than 4% above valuation.
DomaCom
It’s a similar situation with DomaCom – the rental yield and capital growth will vary according to the property. The suburb yields are noted for the available properties, with many in the 3% to 5% range.
In terms of capital growth, DomaCom values the sub-fund units annually. Here too though, you’re free to set your own price when selling units via the DomaCom platform.
How do the two services differ?
BrickX’s minimum investment of just $250 means makes it easier to get started as an indirect property investor.
DomaCom calls for a bigger upfront investment and it charges a higher percentage fee, which applies annually rather than being transaction-based. The upside is that you have a chance to get together with people you know to invest in your preferred property from DomaCom’s selection.
The verdict
Fractional investing is a low-cost way to tap into the returns of the property market.
The biggest drawback could be that when you want to cash in your investment, you’re chiefly relying on finding a buyer among other investors who’ve signed up to the platform. That may be a much thinner market than if you sold the property directly on the open market.
For all its pluses, indirect investing lacks the personal touch of property ownership. If you want to be a hands-on investor free to pick your own property, or if you’re keen to roll up your sleeves and add value through renovations, an indirect investment may not be for you.
| Provider | Fee for $15K trade* | Ongoing fees# | Trade with live prices^ | |
|---|---|---|---|---|
  |
 |
$15.00 | Yes | Yes |
 |
|
$7.50 | Yes | Yes |
 |
|
$14.98 | Yes | Yes |
View all Canstar rated Online Share Trading products. View Disclosures.
* Online brokerage fee for a $15,000 trade based on the number of transactions specified in the search inputs
# Ongoing fee for the account. There may be waivers and discounts subject to account use
^ The ability to view and trade on live prices
Main image source: maradon 333/Shutterstock.com
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This article was reviewed by our Content Producer Marissa Hayden and Content Producer Isabella Shoard before it was updated, as part of our fact-checking process.
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