Once purchased by CoVESTA, the property is held in a trust for five years, during which time buyers can trade shares to other investors. After five years, investors vote to either retain or sell the property. DomaCom and BrickX offer more flexibility, with investors able to sell their shares or sell the property at any time so long as all investors are in agreement.
However, there is some hesitation towards these platforms with some experts believing that the restrictions on investors’ ability to make decisions about their investment requires some caution, especially as Australia’s house values are starting to drop and are predicted to shrink even further in many markets. If investors are relying on strong rental yields and capital growth in the short term, then falling prices could deliver poor, if any, return if other investors in a syndicate wanted to sell the property.
David Johnston, managing director of Property Planning Australia, says “You have to be in a position to hold that asset for seven to 10 years to allow compound interest to take effect and to ride out the property cycle because you can’t avoid the costs of getting in and out of property, particularly government taxes.”
