From $180K Super to $400K in 2 Years: The SMSF Strategy Most People Miss 📈🔥

In this episode, we sit down with Jase's accountant of several years to break down the structure decisions that can make or break your property portfolio — and the conversations most investors never have until it's too late.

From SMSF plays that doubled a super balance in two years, to why buying in a trust isn't always the smartest first move — this is the real advice that usually stays behind closed doors 🔓

We unpack:

• Why the duplex dream costs more than most people think
• Personal name vs trust vs company — and when each one actually makes sense
• How Jase turned $180K in super into $400K in under two years through SMSF 📈
• The land tax trap inside trusts nobody warns you about
• Why over-structuring early can lock you out of your own portfolio
• The client with $20M in property inside a trading entity — and the mess it created
• How Christian Gilmore built $80K passive income by 29 starting at 23 🔥

This episode is for anyone who:

• Has $100–200K sitting idle and isn't sure what to do with it
• Is wondering whether to buy in a trust, company or personal name
• Wants to build a portfolio the right way from day one

If you're serious about structuring your wealth correctly from the start — this episode gives you the clarity to make your next move with confidence 👊

👉 Book a strategy call: https://calendars.buyersedgeproperty.com.au/discovery

Transcript

SPEAKER_01 0:00

If you're investing 100,000, you're investing 100,000. If you're borrowing a property, you're not investing 100,000. You're actually investing half a million dollars. Your asset base is significantly higher. The amount that you've borrowed will always be 400,000 in your example. The value of the property will increase to 600,000, 700,000, 800,000.

SPEAKER_00 0:19

Townsville, after COVID, 140% growth. Rock and Enter, same thing. Turn out 180 into pretty much 400 in two years. Big task. Welcome to the studio, mate. Thanks so much for coming down. But you've been my accountant for a little while now.

SPEAKER_01 0:35

Yep.

SPEAKER_00 0:35

I wanted to get you in the studio to talk about a lot of this stuff that I'm not allowed to talk to. I'm not licensed to talk about. Right. Trust structures, you know, how to deploy capital SMSF, all of these things that people throw around in the property space. Perfect. But, man, could you give us a bit of a background into your story? My story. More importantly, when you're, I want to say fell in love, but you realize property is a serious vehicle in this country to build wealth.

SPEAKER_01 1:02

I probably realize property is a really serious vehicle to build worth very early on in my career. It was actually exciting to see something develop and grow and whatever else. Um, I've been an accountant for 30 years. Yeah, believe it or not. The gray hairs give you away. The gray beard. The gray beard. Yeah. Um, I've been an accountant for 30 years. It's and and one of my first jobs was um a tax guy. I was a tax guy at one of the big four accounting firms, and my clients were property development clients. But we're talking to large, well-known builders around the place that are still building. And um it was just exciting to be around them. And it was exciting to watch them create and build and obviously see the money that these guys were making as developers. Around Sydney? Around Sydney and the entire whole of Australia, actually. Wow. Yeah. We're talking, you know, I've I'd advised on you know, 30, 40 story towers in the city on residential development stuff. That was about 200 million. This is back in the 90s. Yeah, 200 million back then.

SPEAKER_00 2:09

What's that worth now?

SPEAKER_01 2:10

Oh serious build. Silly money. It'd be a serious build.

SPEAKER_00 2:13

Yeah.

SPEAKER_01 2:13

Um, so yeah. And so that got me in in interested in property.

SPEAKER_00 2:18

Yeah.

SPEAKER_01 2:19

Um, and a lot of my clients are property developers, um, they're in the property space, they're builders, all that sort of stuff. Yeah. So they've been around the traps and I enjoy talking to them. It's exciting. And obviously, I've done stuff myself because of it, outside of being an accountant, because it's quite boring being an accountant. I need something else to stimulate me.

SPEAKER_00 2:39

Um, but um, yeah. I think that's what's so interesting about your experience. You've got amazing business experience, property developing experience, property investing experience. Yeah, and that all rolls into servicing multitude of your clients and like, you know, just the mums and dads, the business owners, the builders, and how they can build wealth, right? Yeah, absolutely. There's this thing around the shire, right? Maybe I'll talk about this first. So many people, I'm at the coffee shop in the morning after we go for a run, and someone's saying, like, oh, you know, we need to make more money, and everyone instantly talks about, oh, mate, find a site, build a duplex. That seems to be the first thing that everyone wants to talk about. When a client comes to you and says that, normal mum and dad, maybe they got a couple hundred grand equity or funds around. What do you say to them when they ask you about this?

SPEAKER_01 3:28

Well, let's do the numbers. Well, let's let's actually do the numbers. I mean, this is all going to be driven by what the numbers are going to be and what your profit's going to be. Um, and obviously, um, you know, they need to understand what it's going to cost them to buy, what the holding costs are going to be, um, what it's going to cost them to build, the fact that there are going to be variations, the fact that there are going to be issues that they're going to come across between the time they buy it and the time they ultimately sell the property. Um, so they need to be aware that it's it is a financial thing, but there's a lot of emotions that go along with this. There's a lot, it's a massive roller coaster ride. Um, because you just can't sort of give the keys to someone and say, here's my duplex, build it and um come back to me when it's done so I can appoint an agent to sell it.

SPEAKER_00 4:23

People think that that's what it is. Like you've mentioned risk, you've mentioned delays, you've mentioned costs going up. I honestly think that the the average mum and dad, and by no fault to their own, that they think you build a duplex and they probably just hear so-and-so did one and they made a mil, mill and a bit out of it, we should do one. But you're right, the roller coaster ride is huge.

SPEAKER_01 4:47

And you've got to know this stuff up front. I haven't even talked about taxes. You know, I mean, in in what I just said to you, I didn't even talk to you about the fact that you're gonna pay GST when you sell these things. The fact that, you know, people think that, oh, if I hold them for 12 months um and then I sell them, I'm gonna be up for capital gains tax. No, if you're making, if you're doing a project and you're doing it for the purpose of making a profit, it's gonna be subject to income tax. And if you haven't set that up properly at the start, it can hurt.

SPEAKER_00 5:18

Yeah. And can you quickly talk about like so many people talk think of oh, we'll just live in one side or we'll we'll buy the site, we'll live in it for a bit, then we'll do the duplex.

SPEAKER_01 5:29

And then we'll move into the one next door. And yeah.

SPEAKER_00 5:33

Is there any myths there that we need a bust, or is it just like if if you're doing if you're doing this, be aware, you've got to be careful.

SPEAKER_01 5:41

Um, every circumstance and every situation is different. So, you know, make sure you talk to someone that knows. Um but if you're continually doing that sort of stuff, the tax office isn't stupid. The tax office is not stupid. They're gonna look at it and go, Well, you do this for a business. In the same way as if you buy a property and you renovate it and sell it, and you continually do that every three to five years. The pi the tax office is gonna say, Well, hang on a sec, that's your business. Yeah, it's not your principal place of residence. Let's let's have a look at taxing you.

SPEAKER_00 6:12

And the the method that we've been deploying for clients with buying growth assets, you know, in growth locations, stripping out the equity. Have you is there another vehicle that you recommend to clients for then average mum and dad that's got maybe 100, 200 grand? Let maybe let me ask you that. Yeah, average mum and dad's got 150, 200 grand lazy capital.

SPEAKER_01 6:36

Yes.

SPEAKER_00 6:36

What are you normally advising them or encouraging them to do?

SPEAKER_01 6:43

Well, there's two types of investments you can undertake. Something that's liquid, like shares and managed funds, yep, or property. And it really depends on your life cycle, where you're at in terms of your life. Like if you if you came to me and you're 60 years old and you're about to retire, um, leveraging into property may not be a great idea.

unknown 7:01

Yeah.

SPEAKER_01 7:01

Um, and obviously at that age, you've got to think about retirement and all that sort of thing. So you want to be a bit more liquid. But for someone in their 20s or 30s or even 40s, you know, and 50s, um, why wouldn't you deploy a strategy of leveraging to buy into property? Property's traditionally gone up, um, and using that leverage to create greater wealth.

SPEAKER_00 7:24

There's I don't feel like enough people see the path to that being the case. I think shares is preached about a lot in this country. Correct. And I think it's mainly pushed by the financial planners in that type of space. But let's say I've got 100 grand, that's my deposit plus closing cost on a $500,000 asset.

SPEAKER_01 7:46

Yep.

SPEAKER_00 7:47

And it does some of these markets are doing you know, 10%, 15%, 20%. Let's just say it does 10% growth. I've made a 50 grand return, but cash on cash, I'm up what, 50% cash on cash return? I put in 100.

SPEAKER_01 8:01

If you invested in SP 500.

SPEAKER_00 8:02

If I put in SP 500, what you'll get 10%, 12% on average for 10 years. And so you're making the first year you're making 10 grand, 12 grand. Yep. To me, it just becomes an absolute no-brainer.

SPEAKER_01 8:16

But see, what you've got is if you're investing 100,000, you're investing 100,000. But if you're buying a property, you're not investing 100,000. You're actually investing half a million dollars in your example there. So your asset base is significantly higher. Your the amount that you've borrowed will always be 400,000 in your example. Um, but the value of the property will increase to 600,000, 700,000, 800,000, you know, and then you've shown me examples of properties that you've picked for clients that have, you know, pretty much doubled in price in a very short period of time, um, which is phenomenal. Now, you're not going to do that unless you pick a stock on the share market that someone's giving you a tip on, and you might as well go to the horses.

SPEAKER_00 9:01

Yeah.

SPEAKER_01 9:02

If that's the case. It's because it's a bit like that.

SPEAKER_00 9:05

And yeah, I I I I might be biased, and that's why I want to I'm trying to almost debate you, but I feel like you're agreeing with me.

SPEAKER_01 9:11

But I no, I'm I I think there's a place for both. There has to be a place for both. You have to be liquid because if you needed a quick $50,000, you can't sell a portion of a house. And to redraw on your loan, sometimes it's a pain in the neck. The banks will not allow that to happen. So you need to be a bit liquid as well as um being property. Like a good financial advisor or someone that talks to you about money will tell you to diversify.

SPEAKER_00 9:38

Yeah. And coming back to that, like mum and dad, they got 100, 150 grand, bang, they go out and buy a property, right? Everyone, I don't know if it's just me with my the algorithm on social media, trust structures, personal name, company structures. Like there's so much conflicting advice. Some people listen to like a thousand podcasts. They come to me and they're like, Jace, we know exactly what we want. We know the market we want, we've already set up the trust, we're going to do all these things. And they've never bought a property in the like they're renting somewhere, which is what I advise for most people to do as they're starting out. Rent first, build your wealth, and then come back and buy the owner occupy house what you want. What do you normally talk to clients about when they talk about structuring? Because there's some amazing things you can do.

SPEAKER_01 10:23

There are amazing things you can do, but again, you've got to look at every case separately. Now, if you came to me, go, let's go back to your $500,000 property, first time, first time mum and dad bought into the market and they want to buy a half a million dollar property and they've got $100,000 there. I'd I'd tell the mum and dad, look, buy it in your own names. Keep life simple for yourself. Um, because to set up one of these structures, is if you want to set up a trust, um, you want a corporate uh trustee, it's gonna cost you the better part of three to three and a half thousand dollars to set that up. Okay, that's the one-off costs. Then you've got the yearly, got to do tax returns and accounts. There's another two and a half thousand bucks. In one year. In one year. In the first year each year. So in the first year, you're gonna cop three and a half plus two and a half.

SPEAKER_00 11:08

Yeah.

SPEAKER_01 11:09

Okay. And every year after it's gonna cost you two and a half thousand dollars plus uh an ASIC filing fee. So having these structures is great and they can provide great tax advan advantages, but when you're dealing with properties that, you know, the small at l the small level or whatever, keep life simple. If you're gonna talk to me about buying commercial property that's through worth three or four or five million dollars, well, you know, it'll be a different discussion.

SPEAKER_00 11:33

Yeah.

SPEAKER_01 11:34

It'll be a different discussion. I I always agree. I and one thing I one thing, sorry, going back to trust, a lot of people talk about trust. Oh, let's buy these trusts. Um, you've got to be mindful in trusts, certainly in New South Wales and a lot of the rest of Australia, there is no land tax threshold. So you pay land tax on the first dollar of the value of the property. So, you know, the the the land tax threshold sits over about a million dollars at the moment. So at 1%, that's a 10 grand saving. Yeah.

SPEAKER_00 12:02

If you're if you're, you know, your property is worth a million bucks. These I'm glad you mentioned that because there's so many different things that the mum and I keep coming back to the mum and dad investor that want to get into property and they think you've got to buy and trust. Yep. If I'm gonna build this thing big, it's got to be in a trust, and it's like that's how the wealthy do it. But I've always thought that you've you've got to graduate through the levels to get to that later on. Yeah. Buy one or two in your personal name and just figure out do I want to do this? Is this the thing that can happen? For goodness sakes, mum and dad could dust up, bang now, they're separated, and now But they may not have the stomach for it.

SPEAKER_01 12:40

Like you know, the the constant ringing up of the tenant saying my hot water system's busted or I got mold or you know, whatever the carpet's torn up or whatever it is. I mean, do you have an appetite to deal with this sort of stuff on a regular basis? Do you have the appetite and the ability to fund it if there's no tenant in there for a month or two? You know, it's not a simple process. And I suppose that's why going back to your shares and your property, um, that's why a lot of Australians like shares because you just sit and forget.

SPEAKER_00 13:10

Yeah. Do you make five, seven percent? And that and they're fine.

SPEAKER_01 13:15

And they're fine. And that's fine. Um, so with property comes a bit of pain.

SPEAKER_00 13:20

What about the company structures? Personal name, trust. I hear company trusts, company structures, you know, you're buying a company.

SPEAKER_01 13:29

You've got to be careful about that too, because yeah, you can buy property in a company. Um it really comes down to, yeah, the the benefit of that is that you got land tax thresholds in available in the company, yeah, which you don't do in the um trust. But say you make a profit of $500,000 and on a on a property, and you want to use that as a deposit for a house. So you personally live in that, you've got to pull the money out of the company. And that'll attract, that'll be called a dividend that comes out of it. And yeah, the company will pay tax at 30% if it's an investment company. Um, and then you'll pay the gap tax up to 17 and a half, not 17%. You personally. You personally, because it'll be paid out as a dividend with a franking credit of 30%.

SPEAKER_00 14:16

Man.

SPEAKER_01 14:17

Okay. So you've got to be mindful that that's going to be the case. Had you had that in your own name, you would have been up for capital gains tax, and the maximum tax you would have paid on that would have been about 23.5%, subject to whatever changes may be coming through of the next budget and whatever they're talking about at the moment. Um, so um, at the moment, I can say you're gonna be paying 23.5% on the profit if you s if you hung onto that property, yeah, versus potentially up to 40 to 47% if you put it through a company. So be careful.

SPEAKER_00 14:50

This is the hard thing, Tass, because you've got all these benefits, right? You're talking the personal name, simplicity. You're talking that, like you hear, oh my gosh, I'm gonna get, I'm gonna save that much on tax. Some people are just like straight in, yeah, put me in the company. And then, oh, but I want to scale it further and I want to keep building my portfolio so the trust will allow me to keep borrowing.

SPEAKER_01 15:09

Different discussion that if you if you've got if you've made the decision you're all in and you're gonna go and buy five or six or ten properties, well then yeah, we've got to look at the structure. Okay. We've got to look at what you're gonna do. Um, if your intent is to maybe look at buying properties that will invariably become development sites or duplex sites or whatever else, well, then I'd be talking to you about something else around those and structuring those.

SPEAKER_00 15:35

It's it's never a one-size-fits-all. It's never a one-size-fits-all.

SPEAKER_01 15:38

And you've really got to get advice.

SPEAKER_00 15:39

Yes. Um, sometimes people come to me and say, I'm gonna, we're gonna buy this place, we're gonna buy it in Darwin. How long are we gonna hold on to it for? It's like right now it's a growth area. Right now I know that there's massive amounts of infrastructure spend. I know there's population growth, I know average incomes are going up in the area, I know building approvals are at all-time low. I know that's a great recipe for growth. How long is that situation gonna last for? Maybe three, maybe five years, maybe seven years. Take advantage of that. Yeah, let's take advantage of it while it's there. Yeah, but I can't say five years, six years, five. Like it's it's gotta be based on performance, gotta be based on the market, it's gotta be based on so many different and it might be different to you, it might be different to me. You know, how long we hold each property for. But um, I feel like that's uh such an important reason why you need the right team in your corner if you're going to be the mum and dad. Absolutely.

SPEAKER_01 16:26

Uh look, you know what? A lot of people balk at picking up the phone and talking to their accountant because they're worried that they're going to cop a bill for 300 bucks for spending half an hour on the phone with them or whatever. I mean, seriously, it's a 10-minute conversation. Um, you know, people can afford 10 minutes out of their day. And if you don't have that relationship with your accountant.

SPEAKER_00 16:48

Man, that's what I've always valued about working with you. I shoot you a text, hey, thinking about doing this. What do you think? It'll either be a bang, a phone call, and you advise, or it'll just be a quick text message like, let's book a meeting or do this. Yeah. It's it's never felt difficult with you to be like, hey, gonna do this, should I do it in this structure? What should I do? The advice is quick.

SPEAKER_01 17:08

But it shouldn't be difficult. It's not difficult.

SPEAKER_00 17:10

Yeah.

SPEAKER_01 17:11

People choose to make it difficult.

SPEAKER_00 17:13

I think it's because you you know our our appetite for risk and our situation deeply. I think some of these other accountants out there are like, I actually don't know what they're like. I think they're not maybe they don't I I'm trying to steer away from that. They probably don't know their clients as deeply. They're just one of many, and that they've got to get up to speed each time they talk to someone.

SPEAKER_01 17:34

Maybe, but I mean I don't run a small practice either. And I've got a lot of clients, but you know, um, I've got the ability to talk to everyone and I understand everyone's position.

SPEAKER_00 17:43

So, you know, I think that's the role that we've got to play. We've covered a few things, right? So we've we've we've covered the duplex.

SPEAKER_01 17:50

Oh, yeah.

SPEAKER_00 17:50

That's a that's a serious one.

SPEAKER_01 17:52

Be aware and talk to and run the numbers and talk to your advisor. Talk to your advisor. Absolutely.

SPEAKER_00 17:58

Deploy the the mum and dad deploying 100, 200 grand capital. I feel like that's that's our like customer, uh, our typical customer. Sweet spot. That's our sweet spot. And then is that I've still I'm not super clear we've got to that in this. Are they buying in the personal name or are they buying in the trust?

SPEAKER_01 18:15

I would look start off in the personal name.

SPEAKER_00 18:17

Start off in the personal name to see.

SPEAKER_01 18:18

Let's not complicate your life.

SPEAKER_00 18:20

Regardless if they want to go full tongue.

SPEAKER_01 18:23

Let's or if they're gonna go full tongue, at some point in time we're gonna have to change structures because there might be serviceability issues, there might be uh the broker might turn around and say, Well, you can't get your finance from A and Z or NAB or Westpac or whoever you bank with, and we need to go to a second-tier lender. Okay. And to be able to go to a second-tier lender, we might need a different structure. So then you're sort of becoming, if you're at that level, you're a more sophisticated investor.

SPEAKER_00 18:49

Yeah.

SPEAKER_01 18:50

Okay. So you grow, you grow into these sorts of structures. If I had a client that was, you know, had two or three properties and was looking at um scaling it up to five or ten, well, I'd sit down and talk to them and work out what sort of properties they're buying. Because if they're resi properties, the the girls aren't going to be fantastic. If they're commercial properties, totally different ballgame. And and where they're they're going to be structured and where they're going to be sitting are going to be different to if they're Resi properties. You know, we've got to be mindful of it all. But I mean, yeah, we've also got to be mindful of the fact that at some point down the track, if you have held onto these properties for 20 or 30 years, there's going to be some good income being generated from them because the the debt hopefully would have been paid down.

SPEAKER_00 19:32

Yeah.

SPEAKER_01 19:32

So we got to be, we just got to talk and we've got to continue to talk to our clients.

SPEAKER_00 19:38

You you've you've got to have your uh your advisor, your tax advisor, your accountant involved in the conversation. Absolutely. Start in the personal name, it sounds like, but you will graduate to the trust. And I feel like the the assets that you're purchasing, be it a growth asset or be it a cash flow asset commercial space, that needs to be discussed before you go ahead and start making the moves.

SPEAKER_01 20:00

Well, yeah, absolutely. Understand what it's going to cost you, all that sort of stuff. Understand where it's going to be structured and how it's going to be structured, but understand what your intention is as well. Um, what do you want to do with those assets? Is it a buy and hold or is it a a potential buy, hold, develop site?

SPEAKER_00 20:20

You know, I mean, what are we doing with it? So many times, like I'm you were talking about this, and I'm I'm remembering a conversation that I had with a client just last week, and he's literally he bought everything in the in the company uh structure to evade the tax, easier just to um take the money out of the business. His business is doing really well, but because he'd done all of these assets just in that structure, now he's trying to continue to grow the property portfolio, and he's stuck. And it's like a decision that he made back then for really one purpose of ease with tax and taking the money out now stopped him from aggressively building his property portfolio and probably missed out on two years' worth of opportunity costs of deploying that capital into other markets because of one decision. But I in his defense, great guy, I think he just didn't think that it was possible to build a property portfolio as significant what he did in a short amount of time. But I it just comes back to like having the right advice, talking to someone beforehand, and just saying, like, this is what we're thinking about. What should I be aware of?

SPEAKER_01 21:25

I was this morning before I came to you, I was with a potentially new client and I sat there and talked about and looked at their structure, and they've got a trading entity that they do some high-risk work through, another building client, building a construction. They turn over a significant sum of money. Um and I looked at their balance sheet, and in that balance sheet is probably four properties that are worth a better part of 20 million sitting in there. One of them's a development site. In your trading entity. I said, can you pick up the phone and have a conversation with your accountant? No. And my accountant doesn't get involved in this stuff. Doesn't get involved with this stuff, hasn't got the headspace for it.

SPEAKER_00 22:05

Honestly, man, that's what I think is so so important of what to do.

SPEAKER_01 22:10

To understand this stuff. And he's sitting there telling me he's got three sons and he wants to build a you know he's he's managed to secure a property in Queensland on the water on the beach, probably on the Gold Coast somewhere. Didn't give me the exact address, but he says, I want to build four units, one for me and one for each of my sons. Beachfront. And I said, Well, how are we going to get that out of that? It's going to cost you to get that out of the company.

SPEAKER_00 22:35

Yeah.

SPEAKER_01 22:35

To do that, if that's what you want them to have a holiday home for.

SPEAKER_00 22:38

Shibits, man.

SPEAKER_01 22:40

So five-minute conversation. Yeah. We could have discussed the options with him.

SPEAKER_00 22:44

Yeah.

SPEAKER_01 22:44

I maybe 10 minutes in that case. That's okay. That's okay.

SPEAKER_00 22:49

I think it's honestly because people, it it just happens and they maybe they got the funds, maybe you had the money there, and it was just like, yeah, you can do it. And it's it's just the foresight of a plan, having a plan of where you want to get to. I think probably the most powerful thing that Jamie Lee and I ever did was we sat down and was like, what's the life that we want? Right. We want to live in this type of area, right? This is the amount of money that that would cost us, either to buy it or rent it. This is the type of car we want to drive, this is how much it will cost. And it's just like you write it down. This is what it's going to cost for us to live our life, X amount of money per year. And then you go about like creating that. But when we did that, we found that the path was so clear of where we're headed. I find a lot of times people don't do that.

SPEAKER_01 23:29

But is it a long-term play?

SPEAKER_00 23:31

Yeah, it's pretty long-term play. Exactly. 10-15 years.

SPEAKER_01 23:33

And unfortunately, a lot of people want a short-term quick fix and they want the returns to be there. Like, you know, you tell them that you're going to buy a property in Darwin or wherever it is that you're buying clients' properties for. They expect a return within a year. Does it happen? No, no. And uh, you know what? At the moment, we've got the US and Israel invading Iran. That's gonna that's gonna throw an issue there with there's gonna be an issue with oil, which is gonna be mean there's gonna be an issue with inflation, which means guess what, interest rates. What's that gonna do the property market? Yeah, you can't go into the property market and think I can make a quick hundred grand in a year. It's a long-term play. Long-term.

SPEAKER_00 24:12

You've got to be thinking long term.

SPEAKER_01 24:13

Okay. And world events do impact. Look at think about what happened in COVID. All the property prices, everyone was scared, property prices tanked, and then all of a sudden, and then boom, it just out the gates. Regional areas that hadn't experienced growth for a long period of time are now on the map.

SPEAKER_00 24:31

Yeah, absolutely. You know? So what uh Townsville after COVID, 140% growth. There's even like uh Rockhampton, same thing, 130 something percent growth.

SPEAKER_01 24:42

And they had probably flatlined for a long period of time. Nothing. Yeah, nothing. They had peaked, they had platlined, uh flatlined, and now they're running, they're going, like leading, leading the country.

SPEAKER_00 24:55

Um, another thing that me and you work on a fair bit is SMSF. Absolutely. I think that SMSF purchases are like more than ever. I've been doing this for six years now, and like every second, third property is SMSF. What what changed like from a few years ago to now?

SPEAKER_01 25:13

What changed? I think people have understood that, okay, with SMSFs or superannuation in general, the maximum contribution that you can put into superannuation per individual is $30,000 a year and claim a tax deduction for it. Okay. And then you can put in another um, what is it, $120,000 non-concessional, what they call a non-concessional contribution, which means you're not claiming a tax deduction for it. So you've had a windfall of $120,000, you can put it into super. Yeah. So you're sort of restricted in terms of your ability to put money into super and how much you can put into super because of these caps. Now, what people have understood is to really, if I want to fund my own lifestyle in retirement and not have to worry about depending on the government, I need to build up some serious wealth. And now, if I want to have, say, $100,000 payment coming to me out of the super fund, well, how much do I need to have in the super fund when I'm 65? And I always work on 5% return.

SPEAKER_00 26:13

Yep.

SPEAKER_01 26:14

Okay. So the super fund's going to give you 5% return. So I've got to get to, in that, if I'm an $100,000 lifestyle, that's $2,000 a week, and I don't have to worry about the government, uh, then I'm going to need $2 million in my super fund by the time I retire. Yeah. Now, $30,000 over a 30-year lifespan or 40-year lifespan is not going to get me there. No way.

SPEAKER_00 26:39

Yeah.

SPEAKER_01 26:39

Okay. So we've got to leverage. And I think people have cottoned onto that idea that, you know what, I've got $300,000, I've got $400,000 in my superannuation fund. Let me go buy a property and pay that down using the rent that's being collected from the property, but also my superannuation contributions or my spouse's superannuation contributions. So, you know, um, in certain circumstances, I've seen clients that have contributed the maximum amount of contributions into the super fund, um, pay off properties within about 10 years. Incredible, A. You can't use that property then to go and uh fund another property like you would normally do in rip equity out and go. Yeah, you can't do that. So you've either got to sell that cash out and then move on and buy two or whatever it is that you want to do. But um I think people have just cottoned onto the fact that leveraging is gonna get me to my end goal.

SPEAKER_00 27:35

Yeah. And when you step it out like that, like what's my end goal? I think super in this country, no one thinks about it. It's like this thing that's just there, and then it's like, oh yeah, that'll sort itself out when I retire.

SPEAKER_01 27:48

But super is what you got to understand is super is a it's a it's a structure with limitations on it. It's a you know, you're paying 15% tax on contributions that go into it, 15% tax on investment earnings. Okay. Uh a capital gains tax rate at the moment, let's just see what happens in the budget of 10%. Where are you gonna get that?

SPEAKER_00 28:12

Oh and what structure can you get that?

SPEAKER_01 28:15

When you're starting to compound and when you're starting to to look at the your ability to pay off debt quicker because your tax rates are low, because tax is a cost. So the less you pay, the more you have left over to pay down a debt.

SPEAKER_00 28:32

That's that's what Jamie Lee and I want to do, right? We're we're we're trying to think, well, we have. We bought that place in Townsworth for 500 grand. It's now worth 700. We bought it two years ago. Um, we had about 180 in our super bang, rolled into the SMSF, get the loan, buy this place for 500, and we still would have had a pretty sizable buffer. Yeah. Um after that. And we bought that, now it's worth 700. So we've turned out 180 into pretty much 400 in two years.

SPEAKER_01 28:59

Correct.

SPEAKER_00 29:00

I think that market, that market's still strong, but it's done in the last, that's in town's for that place. It's done, I think it was 17 or 18% in the last 12 months, and the month before the bit before that was like 20 something percent growth. So it's like, okay, we it's it's almost time in my eyes to sell that, and I've turned that 180 into 400. Let's say I turned that I got 500, now I've got like two deposits.

SPEAKER_01 29:25

Let's take it one step further. Five, I mean, you're a business owner.

SPEAKER_00 29:31

Yep.

SPEAKER_01 29:32

You currently rent space. Wouldn't it be ideal to buy the space that you operate your business from in your super fund and have your business pay you rent, and then you also contribute your contributions into the super fund?

SPEAKER_00 29:45

You've supercharged it because I was gonna I was gonna layer in one more purchase, then sell down, then then buy this place. Yeah. But it's it's an amazing vehicle to do that. And then later on in life, like what a you're you're owning this thing debt-free, and it's a massive commercial premise worth millions.

SPEAKER_01 30:04

But one thing I will say, like, I mean, as as as sexy as this all sounds, there's a cost to set up.

SPEAKER_00 30:11

Yep.

SPEAKER_01 30:11

Okay, let's be mindful of that. Because we talked about their costs, the cost of a uh trust being about three to three and a half thousand dollars. Similar sort of things to setting up a superannuation fund. If you're gonna borrow to buy into a superannuation fund, you've also got to worry about a custodian deed and maybe a custodian company. Okay, so there's there's an additional two and a half, three grand there in sort of structure costs there. Now, some lenders roll that in, and yet when you're paying your establishment fee, they set that up. Others don't. Okay. Um, that's the first point. The second point, obviously, is the ongoing accounting fees, they're gonna be higher because we have to audit these things. Well, every quarter, isn't it? Every year we have to order a superannuation fund. Um, so you know, there's there's an additional audit fee there and audit costs there. Um, so we've got to be mindful of that. Um and that's basically it. Like, I mean, if I had $50,000 in a superannuation fund, I wouldn't be doing it. But if I had three or four hundred thousand dollars, yeah, it's certainly something to look at. I know you just said that you started off with 180.

SPEAKER_00 31:17

Yeah. And that's fine. Yeah.

SPEAKER_01 31:18

Well, I was a bit uh balls to the wall.

SPEAKER_00 31:21

Yeah, I was a bit balls to the wall. And I where I'm at now, I I'm glad I've done it. Yeah. But I'd like if a client says to me I've only got 180, I I'm not that gun-ho on it. I would rather them have more. And especially in the super, I think sometimes with your super diversifying or going to some other leverage plays in equities and stuff like that is very interesting.

SPEAKER_01 31:48

It has to be. You have to be liquid in super as well. So having having a portfolio of purely property and superannuation is not going to serve you well.

SPEAKER_00 31:57

Yeah.

SPEAKER_01 31:57

You've got to balance it out with some equity. Absolutely. Um, that's a further discussion.

SPEAKER_00 32:04

I'm a bit too gunho. And I'm I'm trying to now that I've built out the property portfolio and the personal name in the in the trust and stuff, and also I've got that one asset in the super. I'm now trying to think of how do I add diversity in my personal wealth. The business is doing well. So, like, where where do I keep pumping more properties? There's a part of me just because that's what I know I should do, but I feel like as you go through the levels, I feel like such a wanker saying this, go through the levels of building wealth. You there is you can't have the same mindset. Like I was an absolute scrapper five years ago. For every single dollar for a thousand bucks, I'd absolutely scrap and fight to make it, and then you learn how to that provides you some type of skill set to then apply that skill to something else. And then that skill set's able to generate not thousand, maybe ten thousand. And that's like then at some stage with investing, I kind of know how to buy a property and turn that a hundred grand into two, three hundred grand, but that only serves me for that level. At the next level, I feel like there's a lot of structuring, advice, and planning for long term, and different types of property assets.

SPEAKER_01 33:18

Like I said, I mean we've talked about commercial property, it's not something that you um specialize in yet. I'd like you to.

SPEAKER_00 33:27

I want to I want to know about it deeply, but I've never done one before. So but yeah, I I think the commercial asset to me is like the most common thing that most of the clients come to us is basically saying, I want to build up a bunch of capital to buy a nice owner, occupy a house. Let's say I buy a couple of capital growth assets, sell them down, boss, take that couple hundred grand, buy a nice house. Or buy the commercial asset and have some cash flow.

SPEAKER_01 33:52

Correct.

SPEAKER_00 33:52

We just had in the studio recently, Christian Gilmore, 29 years old. The guy's got a passive income of 80 grand a year. He holds a granny flat in Brisbane that he's got minimal debt on, and he's got a $2 million commercial asset in Ipswich. The guy's got $80,000 a year passive, and he's 29 years old of holding two properties. But he did go through a heavy acquisition stage of buying nine capital growth assets, Brisbane, Perth, and there was another area that he bought in. Bang, bang, bang, all went up in mass sell down and then transitioned.

SPEAKER_01 34:22

I want to take you back to something you said where you've got clients that turn around and um buy property with a view to acquiring their dream home. Yes. That's great. And that's fantastic. Uh but what they need to be, and then they get involved in raising a family, having kids, going off to school sports, school fees, etc., etc. Um and they've missed that investment opportunity from that time to the time the kids are probably out of school.

SPEAKER_00 34:54

Yes.

SPEAKER_01 34:55

Okay. So it's important if this is a long game, um, and it's important to stay on there because you will reap the rewards. And yeah, it's going to be a struggle and whatever else if you're going to maintain a property portfolio whilst your kids are at school and doing all the activities and you're growing your family, but don't lose sight of your end game too. We talked about superannuation and I talked about having $100,000 in income, passive income being generated from the super fund. But you also want to have assets outside in your own personal name.

unknown 35:34

Yeah.

SPEAKER_01 35:34

Okay. Because they keep tinkering with the superannuation rules. And whilst I say this, this is what's happening right here and right now, I've got no idea what's going to happen in 10 or 20 or 30 years' time.

SPEAKER_00 35:48

Yeah.

SPEAKER_01 35:48

Okay. So you need to have some money in super because it's a tax-effective structure, but also have some money in your own personal name.

SPEAKER_00 35:59

It's on on the owner-occupy house, right? I'm big on the rent vesting.

SPEAKER_01 36:04

Yep.

SPEAKER_00 36:05

Rent by where we buy where is going to make some growth. What what do you what's your view on that? Like you you've always got to be.

SPEAKER_01 36:15

I think it's that look, you know, um, you're gonna be talking to my daughter very soon.

SPEAKER_00 36:20

Yeah.

SPEAKER_01 36:21

Um, and her view is, yeah, that's what I've got to do, because to live in Sydney these days, it's not cheap. That's the thing everyone's saying.

SPEAKER_00 36:28

It's too expensive to live here. It's too expensive to to buy here. But you say it's not. What do you mean by that?

SPEAKER_01 36:36

What do you mean?

SPEAKER_00 36:36

You said it's not.

SPEAKER_01 36:38

Well, it is. It is too much. It is expensive, sorry.

SPEAKER_00 36:40

No, yeah, it's it's it's too expensive, but I think there's a way.

SPEAKER_01 36:44

There has to be, yeah, absolutely. And and sometimes I think people don't want to swallow the hard pill, which is, you know, what I maybe I can't buy what I want right now because I've got to do this to get to a better place uh later on. And they don't want to, they don't want to they the the problem with a m um society at the moment, I think, is they want the instant hit, the instant gratification. Um property's a long-term play, and you'll see some good results. Um, it's not going to give you the instant hit that you want. Um, and you've got to stay on the path.

SPEAKER_00 37:27

Yeah. I agree. Like I honestly, Christian Gilmore, who was in here before he was in here doing a podcast, he's 29 years old, he's been investing in property. He's he's bought his first deal at 23 and he's now got 80 grand a year passive income from his property portfolio. I think that's incredible. Right. Wife, him and his wife are now thinking about having kids, he's done it so smart, but he's also talking about the sacrifices that he made to keep his income low, to keep renting, to do all these things that was against the grain, where his friendship group was going out and buying houses and doing these things. They stayed the course, they stayed the course, they stayed the course. Now they're talking about having a baby. Beck's gonna come off work, booth's 80 grand a year passive coming in. Not a problem, no worries. Yeah, and that's it's so interesting. Last piece I want to talk about uh is there is this crazy expectation. I don't know if it's a Sydney thing, but you might experience it from your side that for men in Sydney is to produce to have the house, to have the Ford Ranger, to have all of this stuff by the age of 30, 35, you know, like I it is such a crazy thing that like you're told go to uni, get the job, buy the house, marry the girl, get the car. That's becoming so difficult, Tas.

SPEAKER_01 38:48

Oh, absolutely it is. Absolutely, and unfortunately, this is what I'm talking about. They they need to fit into this mold, they need they need to live in the trendy areas of Sydney or or Melbourne or whatever it is. They need to live there, they need to be turning up in flashy cars, they need to have the the great designer handbags or whatever. Yeah. Guess what? That diminishes your ability to buy property at a time when you should be, because the investment, if you look at compounding calculators and you look at people that have started at an early age, they're much securely, they're more securely financial as they get on than those that even have started five or ten years later.

SPEAKER_00 39:33

Yeah.

SPEAKER_01 39:34

And put more money in and make more money.

SPEAKER_00 39:36

Correct. It's the earlier the side the better. Like it cut it comes down to correct.

SPEAKER_01 39:41

That's exactly what it comes down to. So that's why it's important to sacrifice now for your ability to go off and buy whatever whatever you want later on.

SPEAKER_00 39:49

Yeah. I mean, I uh property investing has been that for me. And I started at 29. I'm talking about Christian Gilmore, a guy who started at 23 and has got a passive income at 29. Yeah. I started doing it at 29, and I feel like it it gave me a vehicle to channel efforts and long-term strategy into that has helped me start to create a lifestyle that I want for my family. Like it's we're still not living the lifestyle we want, want. My wife still drives a Hyundai Tu song, like we're still sacrificing, but our portfolio each year is growing. It's easier and easier to build wealth as we're starting to get the momentum behind us. But Tass, thank you so much. You're very welcome, mate. If people want to reach out to you, talk to you, what's the best way for them to reach out?

SPEAKER_01 40:33

Oh, my website, bdhl.com.au, and you can just look me up and send me an email. Give me a call. Website, call email.

SPEAKER_00 40:43

Easy. Unreal. Thanks so much, Taz. Thank you, mate. Pleasure to chant to you. Thanks so much for listening to the Moves to Momentum podcast. If you got any value out of this episode, please give us a like or subscribe. Or if you think this is relevant to anyone of your friends or family, please flick it to them so they can have a listen.