Well, now you can. Learn about ‘Fractional Investing’ with this Australian Case Study.
Before moving to the Sunshine Coast and joining Omnia Group, our compliance manager David Heycock spent some time working in real estate in Melbourne. Whilst there he decided to take a closer look at a brand new way of investing in property called ‘fractional investing’. This case study shows how David’s clients purchased a high-value, investment grade property with each of them only investing small amounts of cash and with no borrowings.
So what is Fractional Investing?
In simple terms, Fractional Investing involves buyers purchasing a fraction of a property rather than the whole property. It’s really not much more complicated than that.
To test the idea, David selected a new property, a brand new apartment at 55 Gaffney St in the growing suburb of Coburg just outside the Melbourne CBD.
GXC Apartments – Coburg
The property David chose:
- A 2 bedroom apartment with 1 bathroom and 1 car park and nearing completion
- Sale Price $440,000.
- Overall design, the layout and the finishes were excellent
- Located directly across the road from Batman train station – a short ride to the Melbourne CBD
- Potential up to 5% pa gross yield and net 3.2% pa
- Similar property had recently sold just up the street for more
- Developer personally known to David and was of sound reputation
- Vendor threw in a 6 month rental guarantee @ 4.5%pa and also included $5,000 worth of extra fittings.
David arranged a standard real estate agency sales agreement with the vendor and then went to DomaCom, an Australian public company which has established a property listing exchange which in some ways is similar to the Stock Market. The property is listed on their exchange and investors can buy and sell their share of a property by trading their units
DomaCom only accept properties which meet their strict criteria so they checked out the Gaffney Street property thoroughly before they agreed to list it.