Brickx is an Australian startup that lets you invest in property with as little as $75. On the surface that sounds like a great way for the non-baby boomer crowd to get access to the property market. But is it really a good investment? Find out if you should be investing in Brickx with our review.
What is Brickx
Brickx is a marketplace to buy “bricks” or shares in a property. It’s basically a fractional investment platform for property in Australia. You can browse through the properties listed and purchase a share based on the value of the property.
Why you shouldn’t invest in Brickx
Before you sign up to Brickx make sure you’re aware of these things:
Weak Property Market
The property market is currently very weak. For the past few years the word “bubble” has been tossed about and over the last few months property values have been declining. If you’re a young person, you may also take issue with property being treated as an investment and not as a home. Property is not affordable for young people and this app is certainly not going to help.
$10 Application Fee
When you signup you pay a $10 application fee. This is refunded into your account when your account is successfully created. This is dodgy AF and not a standard practice within the financial services industry. This is a big red flag.
If you invest through an app like Spaceship or Raiz. You can withdraw your money at anytime. It may take a couple of days for it to hit your account, but it’s always there and accessible. When you invest in Brickx you can’t just cashout your investment. You need to sell your brick. If there isn’t significant demand (such as in a housing downturn…cough cough) you’re going to struggle to offload your investment.
And remember you’re relying on Brickx staying in business. When you own a property you can sell it anyway you want. With Brickx you’re stuck in their ecosystem.
Lack of Compounding
If you’re invested in a fund or an app like Spaceship, you’ll receive dividends. These are automatically invested back into your investment. This means your investment will continue to grow at an exponential rate. On Brickx you do receive rental returns. That return might be around 1.69%. Basically the same or less than inflation. Your investment will compound slower than better alternatives. You’re really relying on capital gains, but that relies on the property market not having a downturn.
No matter how I run the numbers, I can’t see how this will be more profitable than a diversified portfolio of stocks and bonds.
Brickx might be fun for an experiment but I don’t believe it’s a serious investing option. It’s bad for our economy and the young people who can’t afford a house. It’s an illiquid asset that could be difficult to shift in the future and even now. If I was you I would stick with something more liquid and more trustworthy like Spaceship or Raiz.