W 6:56 e only had $126k as a couple to put into a SMSF which we did around 2015, bought two properties in Waverley tasmania prices went up so we sold one and bought another in Bunbury WA. Prices have continued to climb and we now have $1.1 million in assets with debt of $170k. A big improvement in our super balance!
Great video Ravi. Spoke to an accountant recently and it’s a couple k to setup a SMSF and 1-2k per year accounting fee but seems much better than just investing in my current fund
Well explained Ravi. Just wondering in 10 years time, are there still houses around $500k in Australia worth investing, in terms of growth and positive cash flow?
No, he didn't assume the conservative growth estimate of 5.6% like he did when calculating the income benefits. After 10 years each deposit would be roughly $170k, not $130k. Meaning you could only buy 1 additional property, not two.
I paid about $1800 to setup, I pay $170 a month accounting fee. If buying a property you need entities setup and trusts etc which was about another $2000 by memory. I use New Brighton Capital accounting to do it all but there are others cheaper out there. I had $100k to start combined (mine and wife's supers merged). For me was worth is as super has over doubled in 3 years but look into all the rules first and look at SMSF loans as there are limited borrowers and interest is higher. I think at moment mines about 8.5%
Nice video Ravi of explaining the calculation. It certainly looks promising on paper but I am facing the reality of no capital growth in property even after 8 years of investment. Very keen to know where ur focus areas are for property purchase
@@jem6411 not apartments but units even in good areas can be 500k ...there easy to rent and go up in value decently ...not the ideal obviously but still an option...plenty townhouses in outer suburbs for that price also ...by retirement age your still going to be well ahead no matter what so long as u get something
Hang on! Around the 16 minute mark you've fast forwarded 10 years and then suggested that you could find 4 properties worth $500,000 each to reinvest in? Did I miss something here or did you just use 10 year old property prices in your sum? Do you really believe there will be property worth only $500,000 in 10 years time?
I'm not sure that it suits me Ravi. I have a healthy super and the compounding interest I make by just leaving it there outweighs your example. Maybe beneficial if I had a lower super balance.
I think there is a comparison issue (28k vs 101k return). You should be comparing SMSF return with super account return. For this you should be showing compound return of 300k over 20 years. That is 1.4M after 20 yrs if that couple keep adding 12k a year as employer contribution. That deposit can give you 58k a year at 4% return at 60 yrs of age
By doing that you don't consider ongoing cashflow and instead use the returns to continue compounding whereas in my example you get best of both worlds with the properties increasing every year with compounding growth and still getting the cashflow + this would be in addition to the employer contributions. Hope that makes sense :)
The only reason property outperforms some assets is purely leverage. Despite what you property gurus say, you have a major concentration risk. BTW, my super uses leverage.
Hi Ravi. I did this in 2021 and bought 1 side of a duplex in elizabeth downs SA $205k now valued $360k had to do 30% deposit as they considered it outside metro ring. Interest rates for SMSF loans are higher and luckily rent kept up with costs just. Want to sell when value at $450k which will leave me approx $250k after fees to redeploy as next deposit. With the higher interest rates though it appears cash neutral from rent would be near impossible. Say 200k used and purchase at 650k the loan of $450k would need too high repayments. Are your examples taking this extra loan repayments into account or are you managing much higher rents?
That's cracker! Yeah rental growth + hard to include what employer contributions would actually equate to as its based on personal income and different for everyone.
As an owner of multiple rental properties, your rental yield estimates are excessive. My rental yield after costs is 2% I understand your promoting a business but try and be realistic.
I tried booking a call. I finalised the 7-minute form. Also provided my details to download the free book as a start but the links or your online bookings don't work. Unless it is something to do with me? Not sure.
Hmmm, I think in your example, assuming you can get 4 more properties @ $500k each after 10 years time (at age 60) is not realistic given the fact you've used the point that your property had capital growth. So by that time you reach age 60, that $600k may not be enough to "rinse and repeat" so easily because you've assumed properties have stayed at similar prices or maybe you can buy a shoebox with little yield in the sticks. You can probably get another 1 maybe, who knows? For me, at age 60yo, I would want my rent coming to me tax free, preserving my capital living my life in good health (hopefully), doing the things I want to and not needing to keep "waiting for growth".
Your assumption is not realistic to reflect today's super balance in general especially the couple example you mentioned. Also assumption you took for Australian owning home outright and no mortgage is rather a dream now.
In your example you talk about selling the 2 properties after 10yrs to pull out $600k equity. Then you talk about buying 4 properties using this $600k at the same $500k price from 10yrs earlier. Are you now trying to find even cheaper property of different type and market? Or am I misunderstanding?
Ravi, your assumptions are wrong. You can't "rinse and repeat" a process in 10 and 20 years. What your saying is that your $500000 homes purchased today will grow by 6% year on year. No problem with that. But your then saying that in 10 years time, while you homes are hitting the 1 million mark, there will be homes that have sat idle for 10 years that will be for sale at $500000 ready to all of a sudden start growing by 6%. When you then say you can do it again after 20 years...its complete nonsense. Remember those $500000 homes sitting on land that you believe are going to be there for $500000 in 10 years and 20 years time, have already been built.
Not sat idle. House prices will be higher which will force people to buy further from cities, so they create infrastructure like freeways and trains to go there and create new suburbs or subdivide existing ones. You can then have houses that are 500k
“In 10 years you’ll be able to buy 4 properties at $500k each, in locations that are going to grow 5% a year” 😂 Reverse engineering that to today that’s like saying you can find $200k properties in growth areas Comedy
I've gone through all your comments here this is your only response to the elephant in the room? Are you a snake oil salesman or genuinely don't understand what you're trying to sell? 😂 @PersonalFinancewithRaviSharma
Can you do a video on the stuff you need to go through for setting up a smsf
W 6:56 e only had $126k as a couple to put into a SMSF which we did around 2015, bought two properties in Waverley tasmania prices went up so we sold one and bought another in Bunbury WA. Prices have continued to climb and we now have $1.1 million in assets with debt of $170k. A big improvement in our super balance!
BOOM!! How good is that! Yeah when prices were lower - the balance needed to be lower. Well done, love hearing stories like this 🙌🏽
Very helpful visual explanation of purchasing property with a SMSF and how it can yield a great result in the future. Thank you Ravi.
Amazing video, thank you!
Glad you liked it!
Great video Ravi. Spoke to an accountant recently and it’s a couple k to setup a SMSF and 1-2k per year accounting fee but seems much better than just investing in my current fund
Hello, great video. May I know if i can use my super to buy a property and live in it?
Well explained Ravi. Just wondering in 10 years time, are there still houses around $500k in Australia worth investing, in terms of growth and positive cash flow?
No, he didn't assume the conservative growth estimate of 5.6% like he did when calculating the income benefits. After 10 years each deposit would be roughly $170k, not $130k. Meaning you could only buy 1 additional property, not two.
Hey Ravi great video - just a question is the $130k including your fee?
Yeah :)
Great video Ravi! Love the financial breakdown
Glad you liked it!
Hmm..
SMSF management/accounting fee?
Minimum balance to start SMSF?
I paid about $1800 to setup, I pay $170 a month accounting fee. If buying a property you need entities setup and trusts etc which was about another $2000 by memory. I use New Brighton Capital accounting to do it all but there are others cheaper out there. I had $100k to start combined (mine and wife's supers merged). For me was worth is as super has over doubled in 3 years but look into all the rules first and look at SMSF loans as there are limited borrowers and interest is higher. I think at moment mines about 8.5%
Nice video Ravi of explaining the calculation. It certainly looks promising on paper but I am facing the reality of no capital growth in property even after 8 years of investment. Very keen to know where ur focus areas are for property purchase
how is it possible to have no CG in 8 years? We saw multiple booms in this time...where did you buy?
Most likely flogging off new house and land packages
In 10 years time there won’t be any houses at $500k. In fact there aren’t that many now.
Exactly
lol. I was going to comment the same then saw your comment
Loads of units in Melbourne at that price it doesn't have to be a 3 bedroom house
@@Francie3183 1. why would you buy in a location where there are 'loads' of supply?
2. You sure they will be below 500k in 10 years?
@@jem6411 not apartments but units even in good areas can be 500k ...there easy to rent and go up in value decently ...not the ideal obviously but still an option...plenty townhouses in outer suburbs for that price also ...by retirement age your still going to be well ahead no matter what so long as u get something
Hang on! Around the 16 minute mark you've fast forwarded 10 years and then suggested that you could find 4 properties worth $500,000 each to reinvest in? Did I miss something here or did you just use 10 year old property prices in your sum? Do you really believe there will be property worth only $500,000 in 10 years time?
what do you mean 10 ex?
What about land taxes ?
That's a killer.
You're also assuming property prices will just continue to go up.
I'm not sure that it suits me Ravi. I have a healthy super and the compounding interest I make by just leaving it there outweighs your example. Maybe beneficial if I had a lower super balance.
Thats great! Always opportunities to diversify and take advantage of leveraged returns too :)
how much is your annual growth in last 3 or 5 years?
I think there is a comparison issue (28k vs 101k return). You should be comparing SMSF return with super account return.
For this you should be showing compound return of 300k over 20 years. That is 1.4M after 20 yrs if that couple keep adding 12k a year as employer contribution. That deposit can give you 58k a year at 4% return at 60 yrs of age
By doing that you don't consider ongoing cashflow and instead use the returns to continue compounding whereas in my example you get best of both worlds with the properties increasing every year with compounding growth and still getting the cashflow + this would be in addition to the employer contributions. Hope that makes sense :)
The only reason property outperforms some assets is purely leverage. Despite what you property gurus say, you have a major concentration risk. BTW, my super uses leverage.
Thanks Ravi!
My pleasure!
Hi Ravi. I did this in 2021 and bought 1 side of a duplex in elizabeth downs SA $205k now valued $360k had to do 30% deposit as they considered it outside metro ring. Interest rates for SMSF loans are higher and luckily rent kept up with costs just. Want to sell when value at $450k which will leave me approx $250k after fees to redeploy as next deposit. With the higher interest rates though it appears cash neutral from rent would be near impossible. Say 200k used and purchase at 650k the loan of $450k would need too high repayments. Are your examples taking this extra loan repayments into account or are you managing much higher rents?
That's cracker! Yeah rental growth + hard to include what employer contributions would actually equate to as its based on personal income and different for everyone.
Haha hey, I’m literally eating avocado on toast at a cafe lol. It’s a cheap joint though. 👌🏻
hahah love it!
Nice vid man
Thank you!
@@PersonalFinancewithRaviSharma I'm in Sydney , are we able to catchup for a chat ?
As an owner of multiple rental properties, your rental yield estimates are excessive. My rental yield after costs is 2% I understand your promoting a business but try and be realistic.
Depends where you invest. I would never invest for 2% returns no matter what the potential but not guaranteed capital return was.
He is being realistic based off the properties they look for for their clients. They wouldn't touch 2% yield properties
I tried booking a call. I finalised the 7-minute form. Also provided my details to download the free book as a start but the links or your online bookings don't work. Unless it is something to do with me? Not sure.
Damn thats annoying! Shoot me an email and I’ll get this sorted asap for you 🙏 ravi@searchpropertyau.com.au
Hmmm, I think in your example, assuming you can get 4 more properties @ $500k each after 10 years time (at age 60) is not realistic given the fact you've used the point that your property had capital growth. So by that time you reach age 60, that $600k may not be enough to "rinse and repeat" so easily because you've assumed properties have stayed at similar prices or maybe you can buy a shoebox with little yield in the sticks. You can probably get another 1 maybe, who knows? For me, at age 60yo, I would want my rent coming to me tax free, preserving my capital living my life in good health (hopefully), doing the things I want to and not needing to keep "waiting for growth".
Your assumption is not realistic to reflect today's super balance in general especially the couple example you mentioned. Also assumption you took for Australian owning home outright and no mortgage is rather a dream now.
In your example you talk about selling the 2 properties after 10yrs to pull out $600k equity. Then you talk about buying 4 properties using this $600k at the same $500k price from 10yrs earlier. Are you now trying to find even cheaper property of different type and market? Or am I misunderstanding?
Do ur maths again. 500k after 10 yrs, 50% increase means 500 + 250 = 750k not 1.5mil.
Ravi, your assumptions are wrong. You can't "rinse and repeat" a process in 10 and 20 years. What your saying is that your $500000 homes purchased today will grow by 6% year on year. No problem with that.
But your then saying that in 10 years time, while you homes are hitting the 1 million mark, there will be homes that have sat idle for 10 years that will be for sale at $500000 ready to all of a sudden start growing by 6%.
When you then say you can do it again after 20 years...its complete nonsense.
Remember those $500000 homes sitting on land that you believe are going to be there for $500000 in 10 years and 20 years time, have already been built.
Not sat idle. House prices will be higher which will force people to buy further from cities, so they create infrastructure like freeways and trains to go there and create new suburbs or subdivide existing ones.
You can then have houses that are 500k
leave the woke shit to yourself. my mum stayed at home, it's fine
What’s woke shit? 🤨
“In 10 years you’ll be able to buy 4 properties at $500k each, in locations that are going to grow 5% a year” 😂
Reverse engineering that to today that’s like saying you can find $200k properties in growth areas
Comedy
I’m a part time comedian 🫡
I've gone through all your comments here this is your only response to the elephant in the room? Are you a snake oil salesman or genuinely don't understand what you're trying to sell? 😂 @PersonalFinancewithRaviSharma