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Speaker 1: Welcome to Fear and Greed Q and A. I am

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Speaker 1: Adam Lang.

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Speaker 2: Today's episode is part of a commercial partnership with class

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Speaker 2: Ignite twenty twenty five.

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Speaker 1: Who are proud supporters of this podcast.

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Speaker 2: We are here at the conference in Sydney talking about property,

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Speaker 2: obviously a key area of concern for self managed super funds.

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Speaker 1: Please note that this is.

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Speaker 2: General information only and you should seek professional advice before

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Speaker 2: making any investment decisions. My guests are Shelley Horton, executive

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Speaker 2: manager of Mortgage Solutions, and Gary Cox, general manager at

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Speaker 2: class Shelley, Gary, welcome, great to be here. Shelley can

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Speaker 2: ask you a question first please. Property is a big

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Speaker 2: focus for many self managed super funds. What is driving

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Speaker 2: this appetite for direct property investments?

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Speaker 3: Well, I think property has always held a special place

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Speaker 3: in the strained psyching. People love property. It's often referred

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Speaker 3: to as a national sport. But to put that into perspective,

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Speaker 3: track are being part of the raa group. We see

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Speaker 3: in any given mark of twelve million people coming to

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Speaker 3: visit real estate dot com doo au either looking to buy, finance,

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Speaker 3: celele rent property.

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Speaker 1: That's a staggering number.

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Speaker 3: It's a huge number. And that audience is growing. I

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Speaker 3: think actually last month it was just under thirteen million,

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Speaker 3: so it's growing by the day, by the month. And

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Speaker 3: in addition to that, there are now maybe one in

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Speaker 3: three people tracking their property king to know what it's worth.

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Speaker 3: So over four million people tracking their property across the

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Speaker 3: relevant experiences keen to know what that's worth, and so

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Speaker 3: I think that speaks volumes for the interesting property. I

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Speaker 3: think for self managed super fun trustees, there's probably two

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Speaker 3: things when it goes to property. One is the ability

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Speaker 3: to directly control that asset and to be able to

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Speaker 3: play a role in that. And the second one is

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Speaker 3: that probably compared to shares or manage funds and other

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Speaker 3: asset classes, it feels more real and I think because

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Speaker 3: it's part of the trands psyche, people feel more comfortable

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Speaker 3: with that set class and so it's more relatable I

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Speaker 3: think to investor. So that's that I think is key.

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Speaker 3: The performance of property over time again has been really consistent,

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Speaker 3: so that gives people a level of confidence that they

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Speaker 3: can invest in property, and so that's another thing that's

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Speaker 3: really sort of driving that attention. And for business owners,

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Speaker 3: so Australia has got a very active self employed population.

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Speaker 3: So being able to own a property and pay rent

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Speaker 3: back through your retirement savings and have that for that

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Speaker 3: asset there at the end of your time is also

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Speaker 3: very attractive to business owner as well instead of paying

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Speaker 3: somebody else's rent. So we're seeing alone of that as well.

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Speaker 4: So that sort of.

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Speaker 3: Sees, you know, it new from more just residential property,

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Speaker 3: but now into sort of commercial and other asset classes

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Speaker 3: as well.

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Speaker 2: Yeah, so it's something you can see, it's something that's

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Speaker 2: important to us and it has meaning to everyone. Really

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Speaker 2: good points scary valuations have become a key issue. Property

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Speaker 2: valuations are healthy, shall we say, especially with the ATO

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Speaker 2: Australian Tax Office pushing for more frequent checks. How is

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Speaker 2: class helping accountants, advisors and trustees to manage that?

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Speaker 4: This spot on In March twenty twenty four, the ATI

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Speaker 4: actually called out sixteen and a half thousand properties within

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Speaker 4: sub many superfunds had not had evaluation the last three years.

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Speaker 4: This coincize would did two nine to six and three

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Speaker 4: million dollars, so of course got message out there to

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Speaker 4: look for trustees to value their property more regularly. What

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Speaker 4: classes doing this really integrating with professional providers to bring

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Speaker 4: that valuation forward due in the timing manner rather than

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Speaker 4: winning weeks or months sometimes to get that done as

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Speaker 4: well in order to meet the ATO guidelines, to make

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Speaker 4: sure that that valuation does meet the requirements waders up

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Speaker 4: on top of that, using these professional partners, you're taking

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Speaker 4: the workway from what might be a related party. So

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Speaker 4: the real sat age was reaping out the property would

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Speaker 4: kind of do the evaliation on the side, hasking out,

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Speaker 4: take it all away and it's independent.

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Speaker 1: Shelly back to you.

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Speaker 2: From a lending and mortgage perspective, what are some of

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Speaker 2: the challenges that you see self managed super funds trustees

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Speaker 2: when they're investing in property.

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Speaker 1: What challenges are they facing.

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Speaker 3: Well, it's a very different piece to residential and standard lending.

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Speaker 3: Our internal sort of brokerage arms within the area group

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Speaker 3: have firsthand experience and there's a couple of things. One

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Speaker 3: it is the complexity that's associated with self managed super

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Speaker 3: fund lending. So there are more rules, there are more

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Speaker 3: loopholes to jump through, often lower LBRs, which means are

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Speaker 3: higher contributions needed less the lenders of dissipating, so the

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Speaker 3: competition isn't necessarily there. It's considered to be a more

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Speaker 3: complex space the regulatory and compliance milestones and require elements

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Speaker 3: with that. BATO banks are regular regulated by approsoa is

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Speaker 3: the superannuation industry. It's not necessarily straightforward. It's really important

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Speaker 3: that you've got great people in your can professionals, accountants

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Speaker 3: and auditors who know what they're doing and can give

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Speaker 3: you good advice in terms of establishing that finance. So

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Speaker 3: it's not as easy to get. It's something that you've

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Speaker 3: really got to be invested in and understand world to

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Speaker 3: be able to participate. So a lot more compliance, a

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Speaker 3: lot more loopholes, a lot as easy, higher interest rates,

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Speaker 3: you know that sort of thing. So a very specialist

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Speaker 3: niche space.

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Speaker 1: Gary back to you.

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Speaker 2: How can technology and cloud based systems make the valuation

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Speaker 2: in compliance process perhaps even a bit simpler and all

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Speaker 2: more reliable or both all of the above.

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Speaker 4: So to me, it's about consistency through the automated valuation process.

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Speaker 4: Do a title search. You can have multiple titles on

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Speaker 4: same property, even good lots of things to see if

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Speaker 4: there's parable sales to make that valid. If there isn't,

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Speaker 4: then you can go to the next stage where you

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Speaker 4: can allow or someone to do a visit to the

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Speaker 4: property and perhaps pay for a specialist valuation. You can

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Speaker 4: also look beyond just residential property. You're looking into commercial

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Speaker 4: properties too, and even some farming type properties or agnate

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Speaker 4: business as well. So that consistency is really really important.

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Speaker 4: If there is some kind of standard deviation or something

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Speaker 4: that doesn't look quite right, then you go to the

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Speaker 4: next level and prompts you what to do, so you

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Speaker 4: can keep the trustee and the property own up to

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Speaker 4: date all the time and take that information. We store

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Speaker 4: that all the DMS as well, which means that it's

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Speaker 4: easy there to retrieve and from order to someone with

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Speaker 4: that information. The key thing yearies. We can also add

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Speaker 4: additional specialist values in over time through open APIs, so

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Speaker 4: we can broaden that ecosystem in terms of collecting data.

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Speaker 2: That sounds like you're making technology do a lot of

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Speaker 2: heavy lifting for people. I'm almost relieved to hearing you

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Speaker 2: talk about it, Shelley. Looking ahead the trends, what do

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Speaker 2: you see as trends in self managed super funds approach

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Speaker 2: to property investment in the coming years.

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Speaker 3: I think we'll still continue to see strong interest in property.

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Speaker 3: I think that's so well ingrained for short of it,

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Speaker 3: right there's a housing supply issue partuckarly with residential property.

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Speaker 3: We may start to see and we're starting to see

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Speaker 3: an increase in commercial lending, so I suspect there'll be

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Speaker 3: more participation with commercial as the MEATSEF investment, potentially even

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Speaker 3: fractional investing getting back to their ownership and affordability sort

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Speaker 3: of challenges and just not having supply. So what are

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Speaker 3: the different ways that someone can still participate if it's

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Speaker 3: not direct investment, indirectly through shared sort of structures, those

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Speaker 3: sorts of things. And I think, you know, the watch

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Speaker 3: this space thing is always interest rates and financial markets

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Speaker 3: and how they play out. You know, we do see

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Speaker 3: things shifts and have seen them shift over time as

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Speaker 3: borrowing costs go up. We've now had a couple of

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Speaker 3: rate drops. So let's hope that sort of stays, but

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Speaker 3: that could shift at any time, or you know, things

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Speaker 3: could say stagnant for a while. But then there's the regulation,

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Speaker 3: which we've spoken about, you know, ato changes and other

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Speaker 3: regulatory changes that can increase the cost of maintaining that

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Speaker 3: asset and complying. And so I think that's sort of

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Speaker 3: a space to sort of watch and see over the

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Speaker 3: cunning period, but we're certainly not seeing a slow down.

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Speaker 3: I think, if anything, we'll probably see people more carefully

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Speaker 3: venture in to selp many super funds.

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Speaker 2: Gary, if you had one piece of advisory accountants and advisors,

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Speaker 2: I know it's.

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Speaker 1: Hard to boil it down, but if they are.

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Speaker 2: Working with self any superfund clients on property, what would

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Speaker 2: that one tip be.

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Speaker 4: Well, the first thing in the obvious thing is comply,

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Speaker 4: absolutely need to do that.

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Speaker 1: They're there for a reason, right.

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Speaker 4: That's in laser focus right now. But really I would

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Speaker 4: work with the fund auditor and make sure they're happy

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Speaker 4: with your process. Then today they're working. It's a sign

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Speaker 4: up for the data. Yes, So if you can bring

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Speaker 4: your order to here on that journey early, then you're

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Speaker 4: not going to have any problems. So work with your order.

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Speaker 4: This is what I would do.

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Speaker 1: Terrific advice, Shelley Gary. Thank you.

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Speaker 2: Property valuations are clearly a critical part of self managed

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Speaker 2: super funds, and your perspectives shed light on those challenges

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Speaker 2: and opportunities.

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Speaker 1: Thank you for joining us today. Thank you very much.

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Speaker 2: We're talking to you from Classic Night twenty twenty five.

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Speaker 2: A proud supporter of fear and greed, and we're delighted

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Speaker 2: to partner with them to bring you this discussion. If

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Speaker 2: you've got something you'd like to know, send you a

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Speaker 2: question via LinkedIn, Instagram, Facebook, or headover to Fearangreed dot

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Speaker 2: com dot au will be delighted to provide an answer.

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Speaker 1: My name is Adam Lang and this has been Fear

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Speaker 1: and Greed Q and a