Brickowner is a property investment platform that lets investors invest as little as £100 into institutional grade property investment opportunities which would not otherwise be available to them. Brickowner achieves this by aggregating their investments into a single larger investment.
The platform provides investors with the ability to diversify their investment over multiple properties, covering different property subsectors. Brickowner intends to achieve this by working with different best in class property asset managers.
The platform lets people invest into real estate investments which previously might only have been available to institutions and high net worth investors.
Brickowner users will be able to benefit from any income and capital growth generated by the assets they invest in. We intend to also launch a secondary market which will enable Brickowner property investors to put their shares up for sale to other Brickowner users. The platform is fully automated for investing, and we also plan to offer automated selling of shares when the secondary market opens
The key issues faced by investors are : -
• The most attractive property investment opportunities are sometimes only accessible to people able to invest larger sums. A minimum of £50-250k can be required.
• Many smaller investors may be unable to find and assess the suitability of the best property asset managers.
• Many property asset managers work with closed-end structures which can typically have a 5-7 year lock-in and no liquidity.
• In the present low interest rate environment it can be increasingly hard for investors to find returns that will keep up with inflation, let alone make a return in excess of inflation.
The Brickowner platform aims to resolve these issues for the investors. Our intention is for Brickowner users to be able to access investments that could generate returns not previously available to them.
The benefit for the asset manager is that they receive:-
• New investors.
• Ability to aggregate their own existing investors with smaller sums into a single larger investor.
• In the future, a secondary marketplace for these investors.
Substantial accomplishments to date
In 2016 we successfully raised 2 seed rounds and received a Government R&D grant, raising over £280k in total, of which £28,000 worth in the form of services provided by Innovify.
Our team have produced a platform that in our view is able to take on the market and scale into the future
We launched the platform in December 2016, and have since funded the first property on the platform.
New investors with no previous knowledge of Brickowner have invested in the first Brickowner property, which has acted as validation for the platform, and the business.
In 2016, we developed a strong team and advisory board, and have recently employed Gareth Ship, formerly at Deloitte, as COO.
We have built up relationships with a number of property asset managers that we will work with to provide a steady supply of investments.
We have started testing different user acquisition channels
Brickowner charges 2 fees:
1. 3% of the amount being invested at the point of investment.
2. 1% per annum of the amount invested.
Investors buying on both the primary and the secondary markets will pay the same fees.
There is no fee for selling property shares.
Use of proceeds
Having built the product we are now ready to take it to market and scale the business. Work includes:
• Refining and developing the tech platform based on user feedback and feature requests.
• Introducing further planned features to the platform.
• Implementing existing marketing strategy to acquire new users and an ongoing strategy as defined by our growth hacker.
• Working capital for the business including office costs and staff.
• Legal work associated with potential new products such as offering ISAs on the platform.
We see the target market for our platform users as being those : -
• Who wish to invest in property but are unable to find high quality investments themselves.
• Who are looking for asset backed investments that might generate income and potential growth above standard bank interest and consumer products.
• Who want to create a diversified portfolio with a sum not large enough to buy multiple properties, or invest in multiple managed funds.
• Who are looking to invest in property across different areas of the UK and within different sub sectors of the property market and wanting to benefit from the knowledge and expertise of local experienced partners.
• Who were previously Buy to Let landlords and, after the recent negative tax changes, consider themselves better off investing into property through platforms rather than directly.
• Who want to save for a pension.
• Who are saving for a first home and want their investment to track property markets.
• Who want returns on cash savings potentially greater than banks' interest or standard consumer products.
The target for property asset managers is: -
• Managers who already work with third party investors, but in larger tranches, typically £50-£250k.
• Managers whose deals have a lock-in of 3-7 years, and who cannot offer a secondary market to their investors.
• Managers who have a strong existing brand and track record, and have investors wanting to invest smaller sums than their minimum investment.
• Managers who want to increase their funds under management from a new source of investors.
Characteristics of target market
UK private rental sector is now worth £1.29 trillion.
£483 billion is invested in UK commercial property.
There are 2 million Buy to Let landlords in the UK, many of whom may have been negatively affected by recent tax changes. We believe that these property investors will be looking for a new way to invest that is more tax efficient.
Since 2001 1.8m 25-34 year olds have been locked out of home ownership. We believe many of these people are interested in investing in property but cannot get a mortgage, or struggle to save a deposit. This is supported by statistics:
- according to the Government’s English Housing Survey, the rental market has been growing by 17,500 households a month over the 10 years to 2014.
- before the 2007 crash 30% of first time buyers were helped by their parents, whilst by 2014 this had increased to 64%.
Since 2007 we believe investors want more control and transparency when it comes to investing, and we believe an online platform like Brickowner offers that.
We believe the existing asset managers we are working with see us as a way to aggregate their own smaller investors into a single larger investor. We anticipate that they will promote each investment on the platform to their own network alongside our own marketing.
We chose to use crowd funding for our seed investment as we believe that this builds a number of engaged future users, which has already proved to be the case with our first property.
We have taken on a growth hacker to analyse the best strategy for online marketing. We will be implementing our online marketing based on this strategy and other professional advice.
As well as PR, we will implement a strong social media strategy to reach the market. Online and social media marketing strategies will be implemented which specifically target people who fit our core investor profiles.
We believe that the low investment entry point of £100 will encourage many more new investors to try the platform to establish trust, after which we believe they may become repeat investors and invest larger amounts. We hope that this will also create a larger and more diverse pool of investors. We also plan to incentivise users to make referrals to new investors.
Our aim is for Brickowner to create business for companies selling property, and property service companies. We will look at ways of working with these companies to promote the Brickowner platform, including cross marketing techniques, and strategic partnerships.
We are looking at building strategic partnerships with companies that could lead to us having access to their clients or users.
The equity crowd funding model for direct property investment is less mature, and has fewer competitors in our experience than the P2P market. So in that respect we are an early entrant to what we see as a very large market.
We have built our platform from scratch after undertaking user studies, whilst a number of platforms seem to be using white label solutions whose “one size fits all” approach means they don’t cater to the specific needs of the user, and we expect will limit their scalability.
At present, to our knowledge, there is no other property investment platform in the UK which is accessible to everyday investors and specifically targets properties managed by established asset managers, as opposed to offering individual properties.
We hope that over time many investors that presently invest into property through listed property funds, will find the Brickowner platform a more attractive way of investing into property due to the greater control and transparency over their investment we intend to provide them with.
We believe the market will end up with a number of property crowd funding platforms, each with minor differentiators, developing into the same sort of market place currently seen with estate agents or fund managers. Investors often look for diversity rather than settling with just one option. We intend for our place in this market to be distinguished by the high quality of our technology, and our relationship with the property asset managers we work with, allowing us to offer a distinct product intending to generate attractive and competitive returns.