Fractional Property Investment is relatively new to Australia and there are a limited number of platforms available.
The platforms essentially use a buyer’s agent and property market experts, to find properties with positive rental returns and strong capital growth potential.
The platforms purchase these properties and divide the cost into 10,000 shares or “Bricks”.
Investors can buy and sell Bricks via the platform and receive monthly rent payments in proportion to their investment.
Some platforms pool investor funds, to purchase properties and enable users, to commit funds with other investors toward a property that is for sale and also allow investors, to sell their shares to other investors.
Investors receive income from rent charged on a property and can also get capital returns, on the property when it is sold, or if they sell their shares.
Once enough investors have committed, a property is purchased and is operated as a Managed Investment Scheme.
Fractional Property Investment is not like Real Estate Investment Trusts, in that fractional investment, lets investors choose which properties that they would like to invest in.
Investors can build a portfolio of individual properties rather than buying into a collection of preselected investments.
An advantage of fractional property investment, is that the barriers to entry are much lower and it is a liquid investment, which means that investor funds are not tied up for a specified amount of time.
Fractional property investors can sell their shares whenever they like and receive a return, in proportion to the increase in the value of the property.
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