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Taking the LongView on investing in family home markets
By Leon Gettler, Talking Business >>
IMAGINE a fund that allows property investors to invest in a slice of the more lucrative/better-performing family home market – without either the hassle of being a landlord or owning the entire property outright.
That describes LongView, a fund partly set up by Evan Thornley.
Mr Thornley, who is also the chair of LongView, said every property market in the world is a trade-off between capital growth and rental yield. 
It turns out that Australia has the best capital growth market in the world “which means as a matter of mathematical certainty it’s one of the worst rental yield markets in the world”.
He said despite this, people kept focusing on rental yields when the real game was capital growth.
“Let’s put this in context. The capital growth on Australian residential property … this year, and pretty much every other year, will be roughly the same size as the entire Federal Government budget,” Mr Thornley told Talking Business.
“$680 billion – roughly four times the size of the earnings of all the companies on the ASX combined.
“The biggest wealth engine in the country – by the length of the strait – is capital growth on residential property and yet there is no way to participate in that other than being a home owner or a landlord.”
LongView provides an opening
This is why Longview was established a decade ago – as a platform for people to invest in home equity as an asset class.
“We’re equity investors, we’re not debt providers, we’re not lenders, we’re not in the mortgage value chain,” Mr Thornley said. “We’re about investing in properties that will have good capital growth and giving investors access to and exposure to a diversified portfolio of high capital growth properties.”
One mechanism to do this is by co-investing with homeowners and home buyers.
“We give them a portion of the equity in their home and they give us a share of the capital growth,” Mr Thornley said.
“But we only do that on properties which we think are highly likely to get very strong capital growth.
“That effectively gives the investors access to high capital growth properties in a diversified portfolio across Sydney, Melbourne and Brisbane. These are all quality family homes typically in the $1-4 million range.
“We give them equity equivalent to roughly 10 percent of the value of the home and they give us a third of the upside.”
Starting from $100,000
Mr Thornley said investors could come in “from as little as $100,000”.
“Most people can find that more accessible than even a single investment property,” he said.
In another part of the business, LongView is the top-ranked rental manager in the country, managing about 4000 rental properties.
In effect, LongView operates much like a managed fund.
“It’s must remarkable to me that there is no managed fund environment in the quality family homes of Sydney, Melbourne and Brisbane. It’s remarkable,” he said.
“The entire managed funds industry in this country has roughly a trillion dollars in it. The landlords of Australia have roughly $2.2 trillion invested in this asset class, most of it badly, so we’re starting to find landlords looking to invest through a fund as well as, or in addition to, or instead of direct investment property ownership.”
Hear the complete interview and catch up with other topical business news on Leon Gettler’s Talking Business podcast, released every Friday at www.acast.com/talkingbusiness
