The PROPERTY DOCTORS, Sydney Australia Novak Properties
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The PROPERTY DOCTORS, Sydney Australia Novak Properties
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.
$4.2 trillion dollars in superannuation. We don't know what to do with it anymore. There's so much comparatively against the stock market, the property market, even the stock markets 2.9 trillion cap. What people are doing with their super, with property? We're going to tell you what we're seeing. Stay tuned.
Speaker 2:I'm the ringleader, so let's go. State extraordinaire man of the people.
Speaker 1:That's right. How are you today? How was the long weekend?
Speaker 2:Yeah, good, good, Ended up doing a bit of work over every day, but that's what keeps you up right and happy. So yeah, it was a good long weekend. Back in the office early this morning getting it all started for a big week Yourself.
Speaker 1:I went to Coffs harbour oh beautiful yeah, I just watched lisa on her telephone for six and a half hours. It was really interesting just sitting as you do as you do.
Speaker 1:It's interesting, beautiful place, nice and sunny. Um, happy birthday to the king. Um, now, josh, you're um like we're doing a lot of sales in different, in a lot of different areas, fortunate for our office on the northern beaches. Yes, we're commercial. Yes, we're residential off the plan. Yes, we're industrial commercial off the. Yes, we're bread and butter real estate houses. Yes, we're bread and butter units. We sort of operate beautifully across and equally across all these different markets in the office. 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 some of the bigger numbers to actually report back on what we're seeing. Main Street media normally gets it after. But what are you seeing right now with people buying with super? Are you seeing any? Are you seeing a lot? What are they buying?
Speaker 2:Yeah, I am seeing a lot. To put it this way, guys, french, as far as you would have seen the storage and warehousing we have up there at Rodber Road. You would have seen the storage and warehousing we have up there at Rodber Road. In the last week I've sold or taken deposits for 10 separate storage units, one warehouse, and I'm actually meeting a gentleman up there this evening for looking at a second 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 saw almost 10% of their full capacity. So there's definitely been a recent jump in activity and also people open to the fact of purchasing this in their self-managed super fund. Mark, do you want to elaborate further on that?
Speaker 1:Is super too big. It's like $ point two trillion dollars, like they've just. You know, these people started paying into mandatory to their superannuation, you know, which is for their saving for their retirement, since 1992. So it's pretty much the beginning of my working career. I started in 1993. The government said, hey, put some of that money from your wage into your super. So I've been working for 32, 33 years. That's 32 years. 33 years of saving. That's that's a hell of a lot of money. And I don't think people have worked out how easy it is to buy a property in their super.
Speaker 2:No, I think it is still one of those things that's hidden away or people aren't fully educated on the idea, and it seems like they're only allowing more and more possibilities with the way to access deposit schemes using your super now in the resi market. So it seems to be like they're opening the lid more and more as time progresses. Mark, like you said, it's a large pot of money that's probably not being as utilised as much as what it could.
Speaker 1:Our national debt's $2.9 trillion. So what are we doing with all this money? You brought up a little secret there that you need to share with everyone, Josh how can first home buyers use their super to buy a first home property?
Speaker 2:Well, I believe you introduced this idea to me when I was looking through properties for myself, but it's like sacrifice celery sacrifice through your supermarket. Do you want to elaborate more? Because you you actually taught me this little little okay.
Speaker 1:Um? So, guys and girls, if you're a first-time buyer and you want to save a deposit faster, allow me to give this example. Um, people are going to have a go at me for using a hundred grand as a first-time buyer, but I'm just going to use that number because it's round. So, $100,000, normally you'd be able to put 11.5% in, which is $11,500 of your earnings. That's what the government makes you do, but you actually have. You can voluntarily put in another 10 grand on top. Now, if you put another 10 grand on top, you're sitting in a different tax bracket when it sits in your super as opposed to when it sits in your pocket or your savings account. So you can actually salary sacrifice $10,000 or $20,000 at a much, much, much lower tax rate to get around your income tax, and you can throw it into a bucket, a separate bucket. So there's the 11.5% bucket and then there's your voluntary contributions bucket, which all sit inside your super, so you can actually use that money.
Speaker 2:You can then make an application to government saying, hey, I want, I want to just pull out that those monies in that bucket as savings, I want to 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 rate that you, that you're paying on on those funds, and they've actually calculated it's going to get you to your deposit 30 faster than doing it the traditional way. So definitely a very handy tool to be, uh, to be utilizing in this ever-growing market.
Speaker 1:It's a whopper, that's a whopper, um. So what else? Why? What else you're seeing? So are you seeing people buy residential units in their super mr wapshot?
Speaker 2:I'd probably say they tend uh, they tend to be more commercial, based from what I've seen so far. Um, I think the the idea of um, you know your commercial tenants, your your annual reviews and things like that. If you, if you're getting a tenant in there for quite a long time, you've got a healthy income there that's growing above CPI. So I really think that it's hit commercial first. Just seeing that return and and obviously a recovery in the commercial market. We've sort of seen a phase where the worst is has passed that sector and I really do think we're on the way to a recovery and hopefully a bit of growth and prosperity for the commercial side. So it makes sense why people are positioning themselves there.
Speaker 1:What people don't know when they're buying in their super. What they don't know is it's quarantined away from them. So people are worried about going to buy a property in their super if they're considering upgrading their home. Um, so what they'll actually do is they will, um, they'll they go. Look, I'm not gonna, I'm not gonna actually do anything at all with an investment property because I really want to do the house first.
Speaker 1: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 and it's treated financially separate separate entity or a separate person.
Speaker 1:And it's treated financially separate so often because your deposit needs to be so large when you're buying a. You need about a 20 or 30 percent deposit to buy residential property cash in your super and then, if you have that and you don't just have rent coming in, you've got you and your wife potentially, or you 11.5% of your wage slam dunking it. So there's two or three things that are slam dunking A big deposit plus your super money, plus your rent paying it off. So if you're buying a property in your super, most of the time most, if not all of the time it's actually positively geared and and it's quarantined away from you so you can actually go and buy another investment property in your personal name or upgrade your family home in your personal name and it's completely independent from your super your personal name and it's completely independent from your super.
Speaker 2:yeah, well, big a big factor there. But yeah, definitely, um, definitely have started to see more people come aware of this and and sort of starting somewhere small, which is probably why we're seeing the storage units go so hard. Um, but we've been doing that for for several months now and I haven't really had a week like the previous week with people buying multiple, two at a time, three at a time. So I had a gentleman buying three on Friday night, two on Saturday, and then I had a late appointment on 4.30 on the Saturday and me and the purchaser were speaking all day yesterday and he decided look, I'm going to grab two as well. So buys are out there Just like hot dogs.
Speaker 2:Just like hot dogs, exactly.
Speaker 1:This people can sell.
Speaker 2:And I think it's something that you know. It's at that 200,000, 300,000 level and you're comparing it to offices per se with the limited outgoings around storage units. I think it really is lightening up to people as a no-brainer these investments. So I'll put it to a few things Mark Market, improving new ways to buy property.
Speaker 1:Ah right.
Speaker 2:New options yeah.
Speaker 1:Yeah, Before we go, hi Jahali, from your wife Storage units.
Speaker 2:Yes, yes, something special.
Speaker 1:Can you tell me what's the cheapest property you've ever sold to someone in their super, or you know for people that can buy in their super? How much do they actually need and what sort of property is sort of what's entry level look like?
Speaker 2: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 that 800 to a million mark.
Speaker 1:So yeah, very honest and john, if you haven't looked at the new price list well, that's right, oh, sorry.
Speaker 2:Yeah, new, uh, we've got three to ten squares, that's right. Hard, your harley. Um. In relation to these new little storage units, we've got towards the end of the project we've put together so very exciting, where you've got these smaller spaces five metres by four metres guys and I believe they're starting from around 49,000, making their way up to around that 100 and a half mark, or even less mark.
Speaker 1:There you go, there you go, that's what it is. Go there you go, that's what it is. Why would you go and rent from uh, someone like storage king or ken arts, when you can just hide the harley uh and buy a storage unit?
Speaker 2:um so, and yeah, and lisa lisa adding in there too, definitely something I was looking at this morning. Guys, I think we're about 620 properties across the northern beaches. When you compare that to this, uh, the time of around christmas six months ago, we're sitting about 1200. So exactly right, lisa, saying that people are looking for other, other or new opportunities because stock is so low at the moment. So definitely, definitely the a right point to to bring out there, lisa.
Speaker 1:Snack pack storage. Listen to Lisa. I like to know people's vote. Do they like hide your Harley from your wife's storage units or do they like snack pack storage units?
Speaker 2:Interesting They've got a bit of a ring to it, don't they? Interesting, interesting.
Speaker 1:All right, well, that's a wrap. That's what's happening out there with super Australian super guys. That's how big it is. The headline numbers before I go. You know I love these headline numbers, josh 4.2 trillion. Super Australian assets, asx market 2.9 trillion, residential property 11.3 trillion and household debt $2.6 trillion.
Speaker 2:Who could say, maybe this is the uh, the next growth period into the, the property market mark, with all these unlocked funds for for purchases boom time. Maybe it's boom time couple that with interest rates, it looks like we're in for an interesting uh couple of months, years ahead what's this space, josh, thanks, thanks, so much legend for coming on. No problem, Thanks.
Speaker 1:Mark, thanks guys, take care, bro, take care.