One of a kind SMSF property investment program launched

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A unique fractional property investment internet platform that could be a global first has recently been launched in Australia with more than 18,000 properties on the books.

DomaCom, which offers unique opportunities for Australian advisers and their SMSF clients, is an internet-based platform for fractional investing in property and is seeking independent financial advisers to partner with.

The operator of the trading platform, built around an ASIC registered Managed Investment Scheme, is an Australian first and probably also unique globally, DomaCom’s general manager of sales and marketing Warren Gibson told Wealth Professional.

“It’s very new, and it’s an intermediated solution so we only deal directly with advisers. They must be accredited to use the product,” he said. “DomaCom is a unit trust we’ve created because we wanted to introduce property to the 21st century and introduce equity concepts to the property market.”

It works by acting as a database for fractional investment in property, and interested clients in conjunction with their advisers can select a property they wish to buy a part of.

It lends itself particularly well to the SMSF sector, where the average fund at $500,000 is not normally enough to buy a complete property, said Gibson.

“The vehicle is a managed investment scheme that can be used by any planner. We use a book build process and this is all done online,” he said. “Any property that’s for sale can go into our platform.”

Once a complete property is bought by investors, it then goes into a subfund. Of course, there’s no guarantee that the buyers’ agent will be able to secure each property, or that there will be enough investors to buy it, but in these cases investors only stand to lose the normal property due diligence costs that are then shared across the people involved.

“The whole process simulates the experience of buying a property,” Gibson said. “As the book build grows, and gets to 30% we engage a conveyancer. At 50% an inspector is sent to physically look at the property, and at 100% the buyers’ agent represents the fund.”

He said the concept offers new opportunities for advisers to tap into the property market. As law stands, in Australia you can’t recommend real estate unless you are a real estate agent, but with DomaCom advisers would be recommending a structure through which the client can choose the property themselves.

“The opportunity for advisers is that it affords them a degree of protection against property marketers,” said Gibson. “They can now say ‘find the property you want and we’ll fractionalise it through this fund’.”

He said DomaCom puts advisers in a better market position, offers them greater protection and revenue, and the ability to deliver to their clients.

“The best risk asset strategy is diversification, and through this trust you can do exactly that,” he added. “For SMSF it gives them what they want – choice, control and transparency. Under FoFA you have to charge a fee, so advisers need a strong value proposition for their clients. This helps them do that as part of the property area.”

DomaCom, which is approved by the AIOFP filtered research committee, is also set to launch an online trading platform for users to buy and sell their units in May.

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