DOMACOM posted an 11.2% increase in funds under management for the June quarter, which saw the fractional investment platform provider buy an apartment in Melbourne’s Moonee Ponds as its first rent-to-own acquisition.
FUM lifted from $64.2 million to $71.4 million during the period, and the ASX-listed company has $1.45 million in cash.
“While the current environment is a challenging one, we are pleased that several of our key products are starting to gain traction in this environment. In particular, the ability to complete our first RTO syndication in the middle of the pandemic is a promising result,” DomaCom chief executive officer, Arthur Naoumidis said.
“Encouragingly, we have seen significant investor interest in further RTO syndications and we are currently assessing potential acquisitions in Sydney.”
The one bedroom apartment in the Mason Square development was acquired for $447,000, and property manager, Rent Exchange, has been seeking a tenant.
The rent-to-own model allows investors to make fractional investments in property, with DomaCom enabling investment in an make fractional investments in a range of asset classes including property-related investments, mortgage-backed securities renewables, affordable housing, disability accommodation and debt securities via trust structure.
Retirees can sell a fraction of their house to investors.
DomaCom runs a crowdfunding campaign process in which investors can commit as much as they want towards the purchase alongside other investors. On completion of a campaign, DomaCom purchases the asset, places it in a sub-fund, and issues the investors with units in proportion to the amount they invested.
Tenants pay rent on a commercial basis and after costs and interest on any loans, the rent is shared between unit holders in proportion to their investment. Any increase in capital value over time is also shared.
Rent-to-own tenants receive 1% equity each year for a maximum of five years, and they can also acquire additional equity over time from investors to increase their share in a property as and when they can afford to do so.
DomaCom is progressing its essential worker affordable housing product with a community housing providers, aiming to leverage the government’s affordable housing lending facility to deliver rent-to-own product for essential workers such as nurses, firefighters, teachers, and police with a 25% discounted rent.
The platform is also working on a Shariah-compliant mortgage product that is targeting Australian Islamic communities who, in accordance with their religion, are prohibited from borrowing money.
DomaCom said the product is “believed to be less exposed to the current negative property environment”.