MyBrix is a peer-to-peer funding platform that enables property owners to sell their mortgage debt to investors, who, in turn, acquires fractional stakes in the property.
With the arrangement, property owners get to payout their bank loan and together with the investor, they share in the capital growth of the property.
How does MyBrix work?
When a property first lists on MyBrix, it is called an Initial Brix Offer (IBO), where it is divided into 10,000 Brix.
In essence, each Brix represent a share in the property. In the platform’s case, each provides a fractional right to the future proceeds of the specific property.
Property owners retain at least 20% of the Brix issued while investors acquire and can trade their Brix.
There are three types of Brix: standard, silver, and gold — each refers to a specific property type and equity situation.
Registrations for property owners and investors are now open. MyBrix will then launch a trading platform in 2024 where owners and investors can buy and sell their Brix.
In this sense the trading platform will operate like other fractional property platforms including BrickX.
Once the property is registered and listed on the property, owners can now sell up to 7,500 Brix in their home to investors via the platform. When all of the property's Brix are sold, MyBrix will reach out to the owner’s current lender to pay off their home loan.
It is unclear whether this type of investment will be considered as a derivative by regulators, or how vendors will be treated at tax time.
For owner-occupiers
Standard Brix applies to owner-occupied properties and are able to fund up to 65% of the current market value of the property.
This means that for owner-occupiers who want to list their property under MyBrix platform, they must have at least 35% equity in their property.
With Standard Brix, there are no repayment obligations, nor interest and monthly fees.
There is an option for owners to enter into fixed buy-backs should they wish to increase their share of sale price during the funding term.
Standard Brix offer investors immediate returns of up to 15%, primarily driven by the property's capital growth for the long term.
Further returns could stem from structured buy-backs initiated by the property owner.
The arrangement for Standard Brix has a maximum term of 10 years.
For rental properties
Silver Brix can fund up to 70% of the current value of a rental property.
This means that the rental property owner must have at least 30% stake in the property in order to list their property in the platform.
Similar to the Standard Brick, rental property owners can opt to enter fixed buy-backs.
Silver Brix generates immediate returns for investors of up to 10% and have both capital growth and rental returns.
Additional returns may come from structured buy-backs initiated by the property owner.
This also has a maximum term of 10 years.
For low equity owners
Gold Brix is the option for owners with low stakes in their properties. It can be used by owner-occupiers and rental property owners.
MyBrix investors can get higher returns for their investment with Gold Brix.
Upon the commencement of the funding term, an issue price and a buy-back price are already set. The property owner commits to buy back 1/60th of all Gold Brix issued each month for the agreed buy-back Price for a term of five years or 60 months.
Examples of how the funding works:
Example 1: An owner-occupier wants to list their property with an estimated value of $850,000. They currently own 38% equity in the property, which means that they owe their lender around $530,000.
For this example, MyBrix investors will fund the $530,000 and will get 7,195 Standard Brix (72%). The remaining Standard Brix will be owned by the owner-occupier.
Example 2: A rental property owner is listing their property with an estimated value of $1m. Their current loan-to-value ratio is 85%, which means they only own 10% equity in their property.
In this arrangement, Silver and Gold Brix will apply given that this is a rental property, and the owner has less than 30% stake.
$700,000 will be under Silver Brix, where investors will share 7,500 Brix.
Meanwhile, the remaining $150,000 will be funded using Gold Brix, where 1,125 shares will be distributed under investors.
For this one, the owner must pay $4,125 monthly under the buyback program.
Who owns the property listed on MyBrix?
Owners retain ownership of their property even when they list under MyBrix. However, owners must take note that they do not own 100% of the sale proceeds of the property.
When the property is sold or refinanced by an external provider, all Brix holders are paid proportionally based on their Brix holdings.
It is also crucial to take note that MyBrix will place a first ranking mortgage on the property on behalf of all Brix investors.
The mortgage will only be removed at the completion of the MyBrix funding term or when the owner sells their property.
What are the fees involved in using the MyBrix funding platform?
MyBrix fee structure includes property assessment fees, property listing fees, and property funding fees. These are once-off fees paid at each stage of the process.
While there are no ongoing fees for using the facility, there will be selling fees involved when the property is sold for the owner by MyBrix.
What happens at the end of the funding term?
The maximum term for the use of MyBrix facility is 10 years from settlement.
After the period, the property must either be sold or refinanced.
The property can be refinanced again by MyBrix via a new 10-year facility. It will be revalued, and all original investors will be paid out based on the new valuations.
When refinancing with another provider, all investors must be paid based on the current market value as determined by MyBrix valuation.
When can owners commence a buy-back?
Owners can do a compulsory buy-back of all Brix from all investors at a price set at the current market valuation plus 10%.
To do this, owners must provide necessary evidence that they have access to funds needed to commence the buy-back process.
The owner can also sell their property any time during the term. However, it must be noted that MyBrix will be fully in-charged of the sale process — it will enlist a local licensed agent and conveyancer.
MyBrix will also implement a marketing campaign with the aim of maximising the sale price of the property.
Photo by Andrii Zastrozhnov on Canva.
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