These clients started with $100,000 – $200,000 from their Super – invested into property. They added between $146,000 and $260,000 equity to their Super funds in 1-3 years. (Orange numbers indicate growth figures)
The annual growth rate of their Super equity is between 24% and 43%
In comparison, the ATO reported the average Industry Super annual growth rates ranged from -19.6% and 15.5% between 2005 & 2021.
Scroll down to dive deeper into each of these client results.
Skip to the end to uncover why these client results are so different to typical Industry or Retail funds.
The average Super balance at retirement is around $350,000
These clients are achieved that in around 3 years
Client 1
Client 1 purchased a property in Coomera during March 2021. They used $195,100 from their super as the deposit.
The property has grown in value from $435,000 to $695,000. That’s $260,000 growth in equity.
The growth for this property has been 59.77% over 3.2 years. An outstanding result, and well above average. That’s equivalent to an approximate 17% annual growth rate. Stunning!
When you consider that the client used $195,100 from Super as their deposit, and now have an additional $260,000 in equity growth, their super investment grew by 133%. That’s equivalent to a 32.5% annual growth over 3.2 years.
When was the last time you saw that kind of growth in a traditional super fund in one year, let alone averaged over 3 years?
But this story doesn’t stop here!
When the client purchased the property they rented it out for $470 per week. The current rental estimate is now $670 per week. That’s an additional $200 per week or $10,400 per year in rental income.
To put an additional $10,400 a year into Super via your personal income – you’d need to receive a pay rise of approximately $94,000 per year*.
This is an extra-ordinary result. But as you’ll see in our other client results – the research our team has done has been well worth the result for all clients.
*Based on 11% Superannuation contribution rate
14 other clients
With that deep dive into client 1 – you can now view the comparison chart to appreciate the performance of the other 14 clients.
The property growth column shows the difference between purchase price and current valuation (equity growth)
The Super Deposit is the amount used from the clients super savings as a deposit for the property. Under that figure is the original deposit amount plus the equity growth in the property. This figure is the effective wealth in the clients super fund. That figure could be greater if the client has been paying down the property loan with their rent and super contributions.
The annual growth figure can be compared to the annual growth figure from any super fund.
Why are these results higher than average super fund results?
Leverage
The ability to borrow money to purchase a more expensive asset. Because the asset is a higher value, the market growth rate applies to the higher valued asset.
To understand more about the power of leverage and see a year by year example of leveraged v non-leveraged growth – read our 7% growth comparison and client results articles.
Market Research
Our property research team works hard to identify opportunities that have stronger immediate growth potential. Property markets (like any market) go through seasons of fast and slow growth, so the ability to identify opportunities for high growth potential can make all the difference.
3 years ago, Queensland was identified as an area of strong growth potential and ranked very well when considering:
- Comparison to national average prices
- Migration to Queensland
- Local area sales
- Rental demand
- Population demographics
- Development costs
- Land costs
- Infrastructure
In the same period, there are areas of Australia that didn’t grow as well. Victoria for instance was a slower market due to higher national average property prices and high migration rates moving out of Victoria through Covid lockdowns.
Today, property markets around Australia are different. There are new areas of opportunity to research due to shifting market pressures all the time.
It’s common to want to buy in your local market or an area that you know. Unless you are accessing national research, a property purchase may not experience growth (like these client examples) for several years. This places unnecessary pressure on the cash flow and growth of an investment in property.
Compare Property in Super v Industry or Retail Super
The market growth of shares and property over a long period is fairly similar. You can make arguments for either, however there are two major differences between Industry or Retail Funds that are based on the stock market, and Property in a Self Managed Super Fund.
Volatile Markets
The stock market can certainly have good times, however the stock market is a great deal more volatile. Stock market crashes like the dot.com, Global Financial Crisis and the Global Pandemic have been devastating for Super accounts. Despite the recent crash, there always seems to be news of ‘looming stock market crashes’.
Property markets do have ups and downs, but generally not as violent on the downside.
Leverage
Industry and Retail Super funds don’t offer you the ability to borrow money to invest. Even if they did, it would be incredibly dangerous to borrow $100,000 to secure a $400,000 stock portfolio that could lose $200,000 in a GFC style crash.
SMSF’s do allow borrowing for property. While there is always risk in borrowing money, Australians are very familiar with the concept and risks. Large deposits and a management fund, many of these risks can be handled very well.
Australians using Industry and Retails Super funds are retiring with around $350,000 after 45 years of working. That doesn’t sound right – and it’s not working comfortably for retired Australians.
What’s going wrong with Super? Fee’s? Performance? A lack of active Fund Management or advice?
A well selected property purchased 10-30 years ago could easily match or exceed that wealth. The clients in this report are likely to achieve a great deal more than $350k in Super over the next 10+ years.
