Home' Forge : Vol 2 No 2 Contents Unique property model opens doors for investors to build real estate portfolio.
DomaCom's innovative crowdfunding
platform is changing how people invest
in real estate -- and helping more Australians
climb the property ladder.
This world-frst platform potentially allows
investors to buy an interest in any property
for sale in Australia, and later sell that interest
to another buyer. This includes residential,
commercial, retail, leisure, land or rural/
'DomaCom's ultimate goal is to be the
property equivalent of a stock exchange,'
says Sales & Marketing General Manager
Warren Gibson. 'Just as investors buy a
fraction of a company through its shares, so
too can they buy a fraction of a residential
property through DomaCom.'
DomaCom solves several problems
for property investors. The frst is size:
through DomaCom, investors who cannot
afford full ownership of a property can
buy a fraction of it with like-minded
investors. This problem extends to
Australia's self-managed superannuation
fund (SMSF) sector. The average account
balance for an SMSF member was almost
$553,000 at December 2015, Australian
Taxation Offce (ATO) data shows – not
enough to buy a house (based on median
prices) in Sydney and Melbourne.
With DomaCom, individuals or a SMSF
with a minimum $2,500 to invest could
buy 1 per cent of a $200,000 property.
They receive a proportional share of the
property's rent, and do have not to borrow
heavily to gain exposure to it.
The second beneft is choice. Investors
usually have to buy the whole property or
nothing. Alternatively, they can buy units
in an Australian Real Estate Investment
Trust via the ASX, but most invest in
industrial, commercial or retail property.
With DomaCom, investors choose which
properties to part-own, rather than
rely on (and pay for) fund managers to
choose for them.
Diversifcation is another beneft. Share
investors are regularly advised to spread
their investments to reduce risk. But many
real estate investors put their life savings into
SMSF trustees also struggle with
diversifcation. Their funds collectively
had $24 billion in residential property
assets at December 2015, using ATO data
-- a small slice of the total SMSF pool, and
about one-third of that invested in non-
With DomaCom, investors can spread their
funds across a range of properties, or put
it all into one. They can build a portfolio of
investments across different property types
in different cities to reduce risk and achieve
different goals, such as earning income or
deriving capital growth.
Liquidity is another feature of DomaCom's
platform. Property transactions can be
'lumpy' because there is one seller and
sometimes only a few buyers, or none at
all. The owner has to sell all the property,
pay real estate fees, and hope that there is
a buyer at the right price.
DomaCom allows investors to sell their
interest in a property through its platform --
assuming there is a buyer.
Investing in property via DomaCom
necessitates understanding this unique
product. Investors can engage a licensed
and DomaCom-accredited fnancial adviser,
or access general advice at no cost via
DomaCom. Investors open an account with
DomaCom and deposit how much they
want to invest into an ANZ account. They
bid through a book-build process for each
property offered through DomaCom.
DomaCom engages third-party providers
to value the property and conduct due
diligence when enough bids have been
received to buy 30--50 per cent of the
property. The book build closes when it
has attracted enough bids to match the
sale price, and the property is purchased.
DomaCom creates a sub-fund for each
property held, and issues proportional
units to investors. The fund is registered by
the Australian Securities and Investments
Commission, and DomaCom's corporate
governance provides other benefts for
investors compared with investing in
Strong early reception
A dozen properties have been bought via
DomaCom's platform, and another eight
have nearly fnished their book builds.
There are another 30 properties about
to launch; the fund is on the approved
product list of 36 fnancial advisory dealer
groups; and research houses have given it
an approved rating.
DomaCom has launched several property
investment models for income or growth
investors and high-profle crowdfunding
campaigns, including to buy Kidman
Station, Linton Estate and the Pajingo
To learn more about DomaCom, visit
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