1 00:00:04,240 --> 00:00:07,040 Speaker 1: Welcome to the Fast five Sunday interview by Fear and Greed. 2 00:00:07,080 --> 00:00:10,200 Speaker 1: I'm Sean Almer. With house prices rising and the rental 3 00:00:10,240 --> 00:00:14,280 Speaker 1: crisis continuing, there's one option largely I've looked until now, 4 00:00:14,640 --> 00:00:17,360 Speaker 1: called build to rent. Matthew Berg is the founder and 5 00:00:17,400 --> 00:00:20,640 Speaker 1: co CEO of Local Residential, a great supporter of this podcast. Matt, 6 00:00:20,680 --> 00:00:23,640 Speaker 1: Welcome to the Fast five. Thanks for having us explain 7 00:00:23,720 --> 00:00:24,319 Speaker 1: bill to rent. 8 00:00:25,239 --> 00:00:29,040 Speaker 2: Build to around is simply institutionally owned housing. And you know, 9 00:00:29,120 --> 00:00:32,360 Speaker 2: when a single investor owns an entire let's call it 10 00:00:32,440 --> 00:00:35,479 Speaker 2: apartment block, so you can do some really cool things. 11 00:00:35,720 --> 00:00:38,400 Speaker 2: And those sort of things sort of center around offering 12 00:00:39,320 --> 00:00:43,000 Speaker 2: long term leases, which is obviously something that's very highly 13 00:00:43,080 --> 00:00:46,240 Speaker 2: valued by tenants right now and something of a high 14 00:00:46,280 --> 00:00:48,199 Speaker 2: value to millennials who have been crying out for this 15 00:00:48,240 --> 00:00:50,560 Speaker 2: sort of product for a long time. An on site team, 16 00:00:51,640 --> 00:00:58,240 Speaker 2: additional amenities such as coworking, gym, pool, cinema rooms, all 17 00:00:58,280 --> 00:01:00,880 Speaker 2: these sorts of things. We allow you to kind of 18 00:01:00,880 --> 00:01:04,559 Speaker 2: rent the entire building to residents rather than just say 19 00:01:04,640 --> 00:01:05,920 Speaker 2: a single apartment within it. 20 00:01:06,200 --> 00:01:09,000 Speaker 1: Okay, and the thing you did mention that sort of 21 00:01:09,000 --> 00:01:12,080 Speaker 1: the rental terms though there six months to five years 22 00:01:12,160 --> 00:01:12,959 Speaker 1: or so, is that right? 23 00:01:13,120 --> 00:01:14,760 Speaker 2: Exactly right? You hit the nail on the head. So 24 00:01:15,400 --> 00:01:18,840 Speaker 2: rental terms and we offer a minimum six months, but 25 00:01:18,920 --> 00:01:20,480 Speaker 2: up to five years. You know, we have a lot 26 00:01:20,520 --> 00:01:23,440 Speaker 2: of people taking us up somewhere between one and two years. 27 00:01:23,520 --> 00:01:26,560 Speaker 2: We also offer a fixed rental increases for anyone that 28 00:01:27,880 --> 00:01:30,640 Speaker 2: goes up to two years, which is obviously you're getting 29 00:01:30,640 --> 00:01:33,479 Speaker 2: security of tenure, but you're also getting security of budgeting 30 00:01:33,560 --> 00:01:35,800 Speaker 2: and cost of living crisis at the moment. That's obviously 31 00:01:35,920 --> 00:01:37,119 Speaker 2: very important to a lot of people. 32 00:01:37,240 --> 00:01:39,520 Speaker 1: Okay, so this whole idea that institutional money is building 33 00:01:39,560 --> 00:01:43,120 Speaker 1: an apartment and people can rent from that. It's Europe 34 00:01:43,640 --> 00:01:46,080 Speaker 1: does it, the US does it? We haven't done it 35 00:01:46,200 --> 00:01:48,760 Speaker 1: very much. Why not? In the next part of that 36 00:01:48,880 --> 00:01:50,720 Speaker 1: question is do you think we're going to see more 37 00:01:50,720 --> 00:01:50,960 Speaker 1: of it? 38 00:01:51,920 --> 00:01:54,520 Speaker 2: Yeah, I think, like a lot of things in Australia, 39 00:01:54,560 --> 00:01:57,160 Speaker 2: we sort of see how things go overseas before we 40 00:01:57,200 --> 00:02:00,240 Speaker 2: really test it hard here. And of course you have 41 00:02:00,280 --> 00:02:02,600 Speaker 2: to have the capital to do it. But in the 42 00:02:02,680 --> 00:02:05,840 Speaker 2: UK about ten to sort of fifteen years ago, you 43 00:02:06,200 --> 00:02:09,360 Speaker 2: build to rend emerged as an asset class. We've got 44 00:02:09,360 --> 00:02:11,919 Speaker 2: a very similar real estate market in the way we function, 45 00:02:12,760 --> 00:02:14,760 Speaker 2: and so just viewing that, I think a lot of 46 00:02:14,760 --> 00:02:17,960 Speaker 2: the groups, including US, saw Australia as the next possible 47 00:02:18,000 --> 00:02:20,960 Speaker 2: place to have it, and given the sort of what 48 00:02:21,000 --> 00:02:23,680 Speaker 2: I would describe as a bit of a broken rental 49 00:02:23,680 --> 00:02:27,079 Speaker 2: system at the moment in Australia, we think it was right. 50 00:02:27,160 --> 00:02:32,920 Speaker 2: But we also have no government really led supply, so 51 00:02:32,960 --> 00:02:35,440 Speaker 2: the only way you really create supply in Australia is 52 00:02:35,480 --> 00:02:38,120 Speaker 2: selling apartments or houses off the plan and that market 53 00:02:38,160 --> 00:02:39,280 Speaker 2: at the moment is fairly dead. 54 00:02:40,000 --> 00:02:44,799 Speaker 1: So who are your typical customer slash at renters who 55 00:02:44,800 --> 00:02:45,360 Speaker 1: does suit? 56 00:02:46,440 --> 00:02:49,960 Speaker 2: I'd say, the risk of sounding too broad, it's a 57 00:02:50,000 --> 00:02:53,040 Speaker 2: lot of people, Sean, you know, I think it's anyone 58 00:02:53,200 --> 00:02:55,960 Speaker 2: from you know, say a millennial that has been in 59 00:02:56,080 --> 00:02:58,359 Speaker 2: sort of three to five rental properties, is getting sick 60 00:02:58,400 --> 00:03:02,040 Speaker 2: of getting kicked out, is really not finding that the 61 00:03:02,040 --> 00:03:05,359 Speaker 2: rental market suits them well in terms of what they're expecting, 62 00:03:05,400 --> 00:03:08,200 Speaker 2: and is looking for something a little bit more grown up, 63 00:03:08,680 --> 00:03:12,840 Speaker 2: professionally managed, but also importantly having the security. You know, 64 00:03:12,960 --> 00:03:15,280 Speaker 2: we also have a lot of young people, even students, 65 00:03:15,280 --> 00:03:17,400 Speaker 2: that are very interesting in it because of the social 66 00:03:17,400 --> 00:03:20,320 Speaker 2: aspect of say the events that we help hold on site. 67 00:03:20,760 --> 00:03:23,200 Speaker 2: But we do have actually downsizes as well. You know, 68 00:03:23,240 --> 00:03:25,120 Speaker 2: we've got people who have holiday houses down at the 69 00:03:25,160 --> 00:03:27,480 Speaker 2: beach and they need a crash pad in the CBD 70 00:03:28,120 --> 00:03:31,840 Speaker 2: because they've perhaps got grandkids. So it is very broad 71 00:03:32,080 --> 00:03:34,880 Speaker 2: and you know, and I think it's really anyone who's 72 00:03:35,040 --> 00:03:37,160 Speaker 2: interested in a better rental product. 73 00:03:37,400 --> 00:03:40,240 Speaker 1: I'm interested in the business site of the model. So 74 00:03:40,600 --> 00:03:46,760 Speaker 1: you can our institutional investors increasingly interested in providing you 75 00:03:46,800 --> 00:03:47,680 Speaker 1: with funds to do this. 76 00:03:48,560 --> 00:03:51,480 Speaker 2: Yeah, absolutely, you know, I think it's perhaps you know, 77 00:03:51,560 --> 00:03:54,080 Speaker 2: one of the fastest growing, if not the fastest growing 78 00:03:54,120 --> 00:03:57,040 Speaker 2: form of institutional property in Australia right now. There's a 79 00:03:57,040 --> 00:04:01,160 Speaker 2: lot of interest in Australian residential apartment they've offered over 80 00:04:01,240 --> 00:04:06,400 Speaker 2: twenty thirty years, very durable, resilient income growth. But likewise, 81 00:04:06,480 --> 00:04:10,080 Speaker 2: you know, not as opposed to commercial office or retail 82 00:04:10,120 --> 00:04:14,520 Speaker 2: for example, no incentives or low incentives, and also a 83 00:04:14,640 --> 00:04:17,719 Speaker 2: very broad addressable market like the rental market in Australia 84 00:04:17,839 --> 00:04:21,400 Speaker 2: is huge, and you obviously have those issues around the 85 00:04:21,440 --> 00:04:24,039 Speaker 2: market too. So it's solving a problem and it's creating 86 00:04:24,040 --> 00:04:26,080 Speaker 2: an opportunity at the same time, and that's always a 87 00:04:26,120 --> 00:04:26,839 Speaker 2: good business plan. 88 00:04:27,240 --> 00:04:29,400 Speaker 1: So where do you think this goes in the future. 89 00:04:29,960 --> 00:04:32,120 Speaker 2: Look, I think it could go, you know, in a 90 00:04:32,120 --> 00:04:34,200 Speaker 2: lot of different directions. For us as a business, the 91 00:04:34,200 --> 00:04:36,960 Speaker 2: future is very bright. We're opening a building in box 92 00:04:37,000 --> 00:04:39,880 Speaker 2: Hill in two weeks. We've got about three thousand, two 93 00:04:39,920 --> 00:04:43,440 Speaker 2: hundred departments in our pipeline Melbourne primarily. We do have 94 00:04:43,480 --> 00:04:46,920 Speaker 2: some in Gold Coast as well, but we are you know, 95 00:04:46,960 --> 00:04:49,960 Speaker 2: we're very interested in scaling this. But at the same 96 00:04:49,960 --> 00:04:54,680 Speaker 2: time there's obviously issues around affordability, attainability. We provide ten 97 00:04:54,680 --> 00:04:57,359 Speaker 2: percent impact housing and all our developments to cater to 98 00:04:57,400 --> 00:05:01,919 Speaker 2: affordable social and NDIS housing. Yeah, because we recognize that 99 00:05:01,960 --> 00:05:04,560 Speaker 2: the problem is broader than just simply stock on the market. 100 00:05:04,960 --> 00:05:07,240 Speaker 1: Fantastic Matt, thanks for talking to Fear and Greed. Fast 101 00:05:07,320 --> 00:05:08,239 Speaker 1: five Pleasure. 102 00:05:08,279 --> 00:05:08,760 Speaker 2: Thanks Sean. 103 00:05:08,880 --> 00:05:12,480 Speaker 1: That was Matt Berg, founder and co CEO of Local Residential, 104 00:05:12,520 --> 00:05:14,400 Speaker 1: a great supporter of this podcast. To find out more, 105 00:05:14,480 --> 00:05:18,160 Speaker 1: visit Local Residential. That's all one word Local Residential, dot com, 106 00:05:18,200 --> 00:05:21,240 Speaker 1: dot au or clink or click the link in the 107 00:05:21,240 --> 00:05:23,760 Speaker 1: show notes. I'm Sean Elmer and this is the Fast 108 00:05:23,760 --> 00:05:24,919 Speaker 1: five by Fear and Greed.