Australia’s housing market is so expensive crowdfunding might be the only way millennials can buy a home without a huge mortgage.

That’s why DomaCom (ASX:DCL), which specialises in crowdfunded — or “fractional” — investment, has launched crowdfunded property syndicates, allowing small groups to cobble together the funds to buy a single property.

A new deal with Fairfax’s real estate website Domain means buyers can crowdfund any property listed on that site.

CEO Arthur Naoumidis told Stockhead the system was an investment syndicate where shareholders own units in a fund — not a direct alternative to a mortgage.

But they are pitching it as a way for young people to buy a property — many will have to go to the Bank of Mum and Dad anyway, so why not formalise it?

“The… proprietary crowdfunding campaign technology the DomaCom platform brings, combined with Domain’s extensive property listing data, will enable Gen Y and Millennials to get on the property ladder by crowdfunding a property of their choice with their friends or family,” Mr Naoumidis said.

Domacom shares over the past year. Source:
Domacom shares over the past year. Source:

Crowdfunding your first home

A prospective buyer can launch a campaign and pitch it on social media to friends and family, who add their deposits to the pot.

DomaCom will represent the investors in the syndicate and appoint a manager once a deal is done.

Mr Naoumidis says they start doing due diligence on the investment once the deposits hit 30 per cent of the property price.

At 50 per cent, DomaCom gets an independent valuation and building inspection, and once the full amount is reached the company buys the property — not the person who launched the campaign.

Anyone who wants to live in the property has to apply – as any renter would – to DomaCom’s property manager.

Mr Naoumidis says they started out as a platform for financial advisors to create campaigns.

But after running the $410 million crowdfunding campaign to keep the Kidman Station in Australian ownership in 2015, he realised that many investors don’t want advice, they are happy to do their own research instead.

This is not Australia’s first property crowdfunding business.

CrowdfundUp, BrickRaise and VentureCrowd all allow crowdfunded property investment syndicates.

DomaCom closed on Monday at 12.5c, up 4.17 per cent and valuing the company at $10.72 million, but at the bottom of its 52-week trading range of 6.4c-23.5c.