An innovative real estate industry leader is looking to help as many as 200 homebuyers get their foot on the property ladder over the next 12 months through a new shared equity fund for residential property.
LongView Executive Chair and entrepreneur Evan Thornley said he’s looking to raise about $30 million to help regular folk “get a leg up” on the property market by providing them funds for their deposit in exchange for a share of any capital gains.
Mr Thornley said many people could afford mortgage repayments, but the hurdle to property ownership was saving for a deposit, especially with rising property prices.
“There’s one-third of a generation that doesn’t have the bank of mum and dad,” he said.
“Many of those people could service a mortgage, but they can’t get one because they don’t have a deposit.
“When a set comes through, the hardest thing is paddling to the top of the wave, and as the waves get bigger, you paddle as hard as you can, and half the time you still fall off the back of the wave.
“That’s what it’s like for this generation with rising house prices; as the house prices get higher, it gets harder and harder to paddle to the top of the wave.
“But if you can get there, you can ride it all the way into shore because then, the moment you are an owner, rising house prices are your friend.
“So we want to give people a leg up to the top of the wave.”
Mr Thornley said the fund had already helped a handful of homebuyers enter the market, and that had been “transformative” for them.
He said the average co-investment was about $150,000.
“So if we did raise $30 million, we’d be able to assist about 200 clients across Sydney, Melbourne and South East Queensland,” Mr Thornley said.
“Over the next 12 months, as we deploy that first fund, we’ll be building our scalability and our capacity to serve a lot more clients in a much shorter period of time.
“Our hope is that we will raise a second fund a year or so from now that will be significantly larger, it might be $100 million or $150 million.”
Mr Thornley said there were other government, private and philanthropic shared equity schemes, but this one differed because it also tapped into LongView’s buyers’ advisory knowledge to help homebuyers purchase “the right home”.
“You can do all that work to get to the top of the wave, but if you buy the wrong asset, it won’t be right for you and your family, and it won’t create the financial security that you have had if you had bought the right home,” he said.
“We really think the money is important, but so is the advice and support to help you buy the right home.”
Mr Thornley said LongView’s buyers’ advisors had purchased thousands of homes over the years for clients and the agency also managed thousands of properties for investors.
“Every home is different, every client’s needs are different, and while the financial engineering might be common, and is something that a number of companies can and no doubt will do, marrying that with real property expertise on the ground, we think is really important,” he said.
Under the fund, buyers are required to put in two-thirds of the equity, and the fund will recover the remaining one-third, which Mr Thornley said cut anywhere from three to five years off the time it would take to save the full deposit.
“If we put in one-third of the equity, they give us one-third of the capital growth,” he said.
“We don’t want the client to ever feel like they’re buying our home – it’s their home.
“If we don’t put in more than one-third then, by definition, the only way the investors can make any money is if the client makes at least twice as much money.”
Mr Thornley said there had been significant interest from wealthier families with intergenerational wealth and patient money that’s looking for long-term returns.
“And high net worth individuals, folks who have a bit of money, and want to invest in property because it’s safe and non-volatile,” he said.
“If they invest in shared equity, they’ll end up getting significantly better returns than if they bought property direct.
“They all want the security, stability and long-term growth of property, and if they can get a better return and have no landlord hassles, it’s better for them, and it’s better for the clients because they’re buying and not renting.”
