Brickowner property investment platform review
Brickowner is a relatively new property crowd investing platform in the UK. With just 100 GBP, it lets you own a portion of property investment in the UK.
The interesting thing about Brickowner is that they invest in institutional grade real estate projects small investors wouldn’t have access to under normal conditions. They act as an aggregator of investors funds, and with these funds, it invests in parts of large property development projects.
The projected returns on the investments start from around 8% and go up to 20% per year. Typical investment periods range from 1 to 5 years.
- invest in institutional level real estate development projects
- returns from 8% to 20%
- loan terms from 1 to 5 years
- minimum investment 100 GBP
My Brickowner portfolio
Started investing: January 2019
Deposits: 100 GBP
Current value: 100GBP
I’ve invested in a second charge secured development loan in central Liverpool that still waits to be fully funded. The loan period is 5 years and the interest rate is 12%.
I’ll receive my payments on this loan only once a year, so there won’t be too many changes in 2019 for this one.
Who can invest in Brickowner
Anyone in the world (except US residents) can sign up on Brickowner. At the time you actually want to do an investment, they’ll ask you for a proof of identity (passport or ID card copy).
How do you fund your account
You’ll need to fund your account either by bank transfer or debit card. Credit cards, like the cards from Revolut, don’t work.
Is it safe to invest
Brickowner is authorized and regulated by the Financial Conduct Authority (FCA) from the UK. So far, the UK is the only country in the EU that has specific regulations for crowdlending and crowdfunding, the others have generic rules that apply to crowdlending platforms as well.
Your investments are kept separate from Brickowner in a UK limited company (Special Purpose Vehicle), specially designed for these types of investments. This means that if Brickowner goes bankrupt, your investment will be managed by a different entity and your investments won’t be tied to Brickowner.
The money you have in your account is kept in a separate online wallet by MangoPay, an electronic money institution from Luxembourg.
So, the main risk is the actual investment you make in the real estate project. In the investment documents, each property is ranked with a risk level from 1 to 7, based on how illiquid your investment is and how much your capital might be affected by market fluctuations.
Are there any fees
Brickowner states that each property investment has its separate fees. The only property I’ve invested in had a 3.5% funding fee and a 0.75% yearly management fee. There’s no fee applied when you exit your investment.
Exiting your investment
You can only exit your investment at the end of the investment term. There’s no secondary market or the option to sell your shares to Brickowner.
Investing on the Brickowner website
There’s no secondary market or auto-invest tool, so in this matter, the platform is rather simple. You can view the current and previously funded investments, pick the ones you’re interested in, and dive deeper.
So far, I’ve only invested in 1 project, a real estate development project in Liverpool. I can exit my investment after 3 years and receive a 10% per year return or wait until 5 years pass and receive a return of 12% per year.
My investment is categorized as “5-year 12% bonds” issued by Investably Limited. It’s a fixed income real estate bond secured by a second charge against land and property.
Second charge means that if there are problems with the investment and the property needs to be sold in order to recover any loans, the second charge receives money only after first charge (mortgage) is cleared in full. It’s not ideal. Also, the risk level of the investment is at 6 out of 7, this being because my investment is illiquid until the property is sold (in 5 years) and that the investment might be affected by market movements in the meantime. High risks, high rewards.
Conclusions on Brickowner
There’s more to Brickowner than meets the eye. I was thinking at first that it’s just another UK property crowdfunding platform, but it turns out it’s more than that.
Unlike Property Partner or British Pearl, other UK real estate crowdfunding platforms I’m invested in, they don’t invest in small residential or commercial properties, but they participate as institutional investors in large projects I’d normally not have access to and they offer higher returns.
They have some rather high fees and they take it even if the investments are not profitable. In contrast, British Pearl has a 20% success fee on exit, but only on the profit you gain from capital appreciation of the property. Property Partner has no fee on exit.
Also, the projects I’ve seen so far pay out investors only at the end of the investment term. There’s no monthly, or at least quarterly dividends paid that you could cash out or reinvest. Your investment is locked for the entire period.