This post will be a comparison between buying Brick X “bricks” or buying one of my favourite REIT’s (Arena REIT).
If you don’t know what Brick X is… ” BrickX is a fractional investment platform that focuses on residential property. The company buys residential properties and splits the cost of the properties into 10,000 “Bricks”. Investors can then purchase Bricks at a price based upon the value of the property. “
Basically, you can purchase one or more of these “bricks” (basically shares of unlisted company) and you get paid a rent from owning these “bricks”.
I’ll be using this property as an example. In Adelaide. As you can see it has a net rental yield of 1.3% and “historical growth” of 7.39%.
Some information on the property and how it was purchased.
A graph of previous sales and purchases of properties in this suburb in Adelaide.
A detailed breakdown of how they calculate the investment return. As you can see, only a small amount actually comes from distributions. Most of it comes from estimated growth. Ouch.
A breakdown of the rental yield.
Distribution history. Distribution is paid every month. This was started in October in 2018.
Share performance of Arena REIT (listed around 2014).
Last years performance of Arena REIT.
Dividend payment history of Arena REIT.
So we can calculate a fair assumption of the two businesses we will assume a couple things. We will assume both purchasing fees non-existent and we will buy some bricks and some shares with $1000 that was lent to us by granny. Thanks granny.
Without going into too much detail. It is hard to see the benefits of Brick X. You spend $1000 to get back $10 a year. Very low yield and some speculation on the potential growth. Everyone in Australia knows that the housing price in Australia is ridiculously high and will not (most likely) see the same growth over the next 20 years. It just isn’t possible. I would much rather something like Arena which has returned close to 30% p.a total return to shareholders including dividends. I think Brick X is an OK idea for people wanting a little bit but I don’t see my self investing in any ever.
Arena wins in every aspect. Yield is better. Dividend growth is attractive and overall a better investment. Almost all the Australian REITS (AREIT) would be similar. Thanks for taking a look.