EP. 1436 Super Powered Property - What you can Buy in Australia

Have you ever wondered what to do with your growing superannuation balance? You're not alone. With Australia's super pot now totalling a staggering $4.2 trillion – dwarfing our $2.9 trillion stock market – Australians are increasingly looking beyond traditional investment avenues for their retirement savings.

The property market has always been a favourite for Aussie investors, but now we're seeing a fascinating trend: savvy investors using their self-managed super funds to purchase commercial properties, particularly storage units. These are flying off the shelf, with our northern beaches office reporting an unprecedented 10 storage unit sales in just one week. Why the sudden interest? Storage units offer an affordable entry point (starting from just $49,000 for smaller units up to around $220,000 for larger ones), minimal outgoings, and steady returns above CPI – making them an attractive alternative in a market with historically low residential stock.

What many don't realise is that property purchased within super sits in a separate financial universe from your personal assets. This means you can pursue investment through your super while simultaneously working toward upgrading your family home or building a personal property portfolio without the two affecting each other. For first home buyers, there's another golden opportunity – salary sacrificing additional funds into your super at a lower tax rate, then withdrawing those voluntary contributions specifically for your home deposit. This strategy can get you to homeownership 30% faster than traditional saving methods.

With residential listings across the northern beaches nearly halving in six months (from 1,200 to just 620 properties), these alternative investment pathways through super are capturing serious attention. As we potentially move toward easing interest rates, could we be entering a new boom time for property investment through super? Listen in as we explore the untapped potential sitting in your retirement fund and practical ways to make it work harder for your future.

Episode Transcript

Speaker 1 (00:01):
$4.2 trillion dollars in superannuation.
We don't know what to do withit anymore.
There's so much comparativelyagainst the stock market, the
property market, even the stockmarkets 2.9 trillion cap.
What people are doing withtheir super, with property?

(00:24):
We're going to tell you whatwe're seeing.

(00:55):
Stay tuned.

Speaker 2 (00:58):
I'm the ringleader, so let's go.
State extraordinaire man of thepeople.

Speaker 1 (01:02):
That's right.
How are you today?
How was the long weekend?

Speaker 2 (01:07):
Yeah, good, good, Ended up doing a bit of work
over every day, but that's whatkeeps you up right and happy.
So yeah, it was a good longweekend.
Back in the office early thismorning getting it all started
for a big week Yourself.

Speaker 1 (01:23):
I went to Coffs harbour oh beautiful yeah, I
just watched lisa on hertelephone for six and a half
hours.
It was really interesting justsitting as you do as you do.
It's interesting, beautifulplace, nice and sunny.
Um, happy birthday to the king.

(01:45):
Um, now, josh, you're um likewe're doing a lot of sales in
different, in a lot of differentareas, fortunate for our office
on the northern beaches.
Yes, we're commercial.
Yes, we're residential off theplan.
Yes, we're industrialcommercial off the.
Yes, we're bread and butterreal estate houses.
Yes, we're bread and butterunits.

(02:07):
We sort of operate beautifullyacross and equally across all
these different markets in theoffice.
We're a team of 50.
So we've got, you know, big,big, big like for real estate
agency in Sydney, we've got someof the bigger numbers to
actually report back on whatwe're seeing.
Main Street media normally getsit after.
But what are you seeing rightnow with people buying with

(02:30):
super?
Are you seeing any?
Are you seeing a lot?
What are they buying?

Speaker 2 (02:35):
Yeah, I am seeing a lot.
To put it this way, guys,french, as far as you would have
seen the storage andwarehousing we have up there at
Rodber Road.
You would have seen the storageand warehousing we have up
there at Rodber Road.
In the last week I've sold ortaken deposits for 10 separate
storage units, one warehouse,and I'm actually meeting a
gentleman up there this eveningfor looking at a second

(02:58):
warehouse.
So crazy when you think of it,a lot of volume.
To put it in perspective,there's 150 storage units in
there.
So over the past week I sawalmost 10% of their full
capacity.
So there's definitely been arecent jump in activity and also
people open to the fact ofpurchasing this in their
self-managed super fund.

(03:19):
Mark, do you want to elaboratefurther on that?

Speaker 1 (03:23):
Is super too big.
It's like $ point two trilliondollars, like they've just.
You know, these people startedpaying into mandatory to their
superannuation, you know, whichis for their saving for their
retirement, since 1992.
So it's pretty much thebeginning of my working career.

(03:44):
I started in 1993.
The government said, hey, putsome of that money from your
wage into your super.
So I've been working for 32, 33years.
That's 32 years.
33 years of saving.
That's that's a hell of a lotof money.
And I don't think people haveworked out how easy it is to buy

(04:05):
a property in their super.

Speaker 2 (04:09):
No, I think it is still one of those things that's
hidden away or people aren'tfully educated on the idea, and
it seems like they're onlyallowing more and more
possibilities with the way toaccess deposit schemes using
your super now in the resimarket.
So it seems to be like they'reopening the lid more and more as

(04:29):
time progresses.
Mark, like you said, it's alarge pot of money that's
probably not being as utilisedas much as what it could.

Speaker 1 (04:36):
Our national debt's $2.9 trillion.
So what are we doing with allthis money?
You brought up a little secretthere that you need to share
with everyone, Josh how canfirst home buyers use their
super to buy a first homeproperty?

Speaker 2 (04:55):
Well, I believe you introduced this idea to me when
I was looking through propertiesfor myself, but it's like
sacrifice celery sacrificethrough your supermarket.
Do you want to elaborate more?
Because you you actually taughtme this little little okay.

Speaker 1 (05:11):
Um?
So, guys and girls, if you're afirst-time buyer and you want
to save a deposit faster, allowme to give this example.
Um, people are going to have ago at me for using a hundred
grand as a first-time buyer, butI'm just going to use that
number because it's round.
So, $100,000, normally you'd beable to put 11.5% in, which is

(05:33):
$11,500 of your earnings.
That's what the governmentmakes you do, but you actually
have.
You can voluntarily put inanother 10 grand on top.
Now, if you put another 10grand on top, you're sitting in
a different tax bracket when itsits in your super as opposed to
when it sits in your pocket oryour savings account.

(05:54):
So you can actually salarysacrifice $10,000 or $20,000 at
a much, much, much lower taxrate to get around your income
tax, and you can throw it into abucket, a separate bucket.
So there's the 11.5% bucket andthen there's your voluntary
contributions bucket, which allsit inside your super, so you

(06:17):
can actually use that money.

Speaker 2 (06:19):
You can then make an application to government saying
, hey, I want, I want to justpull out that those monies in
that bucket as savings, I wantto pull that out and use it as a
deposit for my first home well,and and like you said, mark,
it's a, it's a marginal tax ratethat you, that you're paying on
on those funds, and they'veactually calculated it's going

(06:41):
to get you to your deposit 30faster than doing it the
traditional way.
So definitely a very handy toolto be, uh, to be utilizing in
this ever-growing market.

Speaker 1 (06:53):
It's a whopper, that's a whopper, um.
So what else?
Why?
What else you're seeing?
So are you seeing people buyresidential units in their super
mr wapshot?

Speaker 2 (07:05):
I'd probably say they tend uh, they tend to be more
commercial, based from what I'veseen so far.
Um, I think the the idea of um,you know your commercial
tenants, your your annualreviews and things like that.
If you, if you're getting atenant in there for quite a long
time, you've got a healthyincome there that's growing
above CPI.

(07:25):
So I really think that it's hitcommercial first.
Just seeing that return and andobviously a recovery in the
commercial market.
We've sort of seen a phasewhere the worst is has passed
that sector and I really dothink we're on the way to a
recovery and hopefully a bit ofgrowth and prosperity for the
commercial side.

(07:45):
So it makes sense why peopleare positioning themselves there
.

Speaker 1 (07:50):
What people don't know when they're buying in
their super.
What they don't know is it'squarantined away from them.
So people are worried aboutgoing to buy a property in their
super if they're consideringupgrading their home.
Um, so what they'll actually dois they will, um, they'll they

(08:15):
go.
Look, I'm not gonna, I'm notgonna actually do anything at
all with an investment propertybecause I really want to do the
house first.
And often I'd say to people look, you've got to realise that if
you have a loan in your super,it's almost like a separate
entity or a separate person andit's treated financially

(08:38):
separate separate entity or aseparate person.
And it's treated financiallyseparate so often because your
deposit needs to be so largewhen you're buying a.
You need about a 20 or 30percent deposit to buy
residential property cash inyour super and then, if you have
that and you don't just haverent coming in, you've got you

(09:07):
and your wife potentially, oryou 11.5% of your wage slam
dunking it.
So there's two or three thingsthat are slam dunking A big
deposit plus your super money,plus your rent paying it off.
So if you're buying a propertyin your super, most of the time
most, if not all of the timeit's actually positively geared
and and it's quarantined awayfrom you so you can actually go

(09:29):
and buy another investmentproperty in your personal name
or upgrade your family home inyour personal name and it's
completely independent from yoursuper your personal name and
it's completely independent fromyour super.

Speaker 2 (09:43):
yeah, well, big a big factor there.
But yeah, definitely, um,definitely have started to see
more people come aware of thisand and sort of starting
somewhere small, which isprobably why we're seeing the
storage units go so hard.
Um, but we've been doing thatfor for several months now and I
haven't really had a week likethe previous week with people
buying multiple, two at a time,three at a time.

(10:06):
So I had a gentleman buyingthree on Friday night, two on
Saturday, and then I had a lateappointment on 4.30 on the
Saturday and me and thepurchaser were speaking all day
yesterday and he decided look,I'm going to grab two as well.
So buys are out there Just likehot dogs.

(10:27):
Just like hot dogs, exactly.

Speaker 1 (10:29):
This people can sell.

Speaker 2 (10:31):
And I think it's something that you know.
It's at that 200,000, 300,000level and you're comparing it to
offices per se with the limitedoutgoings around storage units.
I think it really is lighteningup to people as a no-brainer
these investments.
So I'll put it to a few thingsMark Market, improving new ways

(10:55):
to buy property.

Speaker 1 (10:57):
Ah right.

Speaker 2 (10:58):
New options yeah.

Speaker 1 (11:00):
Yeah, Before we go, hi Jahali, from your wife
Storage units.

Speaker 2 (11:07):
Yes, yes, something special.

Speaker 1 (11:10):
Can you tell me what's the cheapest property
you've ever sold to someone intheir super, or you know for
people that can buy in theirsuper?
How much do they actually needand what sort of property is
sort of what's entry level looklike?

Speaker 2 (11:27):
well, entry level down there looks at about 209
plus gst, so circa 220 um.
So so quite low um when you,when you think about your usual
unit, your average around that800 to a million mark.

Speaker 1 (11:41):
So yeah, very honest and john, if you haven't looked
at the new price list well,that's right, oh, sorry.

Speaker 2 (11:49):
Yeah, new, uh, we've got three to ten squares, that's
right.
Hard, your harley.
Um.
In relation to these new littlestorage units, we've got
towards the end of the projectwe've put together so very
exciting, where you've got thesesmaller spaces five metres by
four metres guys and I believethey're starting from around

(12:09):
49,000, making their way up toaround that 100 and a half mark,
or even less mark.

Speaker 1 (12:14):
There you go, there you go, that's what it is.
Go there you go, that's what itis.
Why would you go and rent fromuh, someone like storage king or
ken arts, when you can justhide the harley uh and buy a
storage unit?

Speaker 2 (12:27):
um so, and yeah, and lisa lisa adding in there too,
definitely something I waslooking at this morning.
Guys, I think we're about 620properties across the northern
beaches.
When you compare that to this,uh, the time of around christmas
six months ago, we're sittingabout 1200.
So exactly right, lisa, sayingthat people are looking for

(12:48):
other, other or newopportunities because stock is
so low at the moment.
So definitely, definitely the aright point to to bring out
there, lisa.

Speaker 1 (12:59):
Snack pack storage.
Listen to Lisa.
I like to know people's vote.
Do they like hide your Harleyfrom your wife's storage units
or do they like snack packstorage units?

Speaker 2 (13:12):
Interesting They've got a bit of a ring to it, don't
they?
Interesting, interesting.

Speaker 1 (13:17):
All right, well, that's a wrap.
That's what's happening outthere with super Australian
super guys.
That's how big it is.
The headline numbers before Igo.
You know I love these headlinenumbers, josh 4.2 trillion.
Super Australian assets, asxmarket 2.9 trillion, residential
property 11.3 trillion andhousehold debt $2.6 trillion.

Speaker 2 (13:39):
Who could say, maybe this is the uh, the next growth
period into the, the propertymarket mark, with all these
unlocked funds for for purchasesboom time.
Maybe it's boom time couplethat with interest rates, it
looks like we're in for aninteresting uh couple of months,
years ahead what's this space,josh, thanks, thanks, so much

(14:00):
legend for coming on.
No problem, Thanks.

Speaker 1 (14:03):
Mark, thanks guys, take care, bro, take care.