Is The Australian Property Dream Costing You More Than It Builds?

Welcome back to the My Accounting Advantage podcast.

In this episode, Mai tackles one of the biggest and most common questions Australians ask when it comes to building wealth: is buying an investment property really for everyone?

Property is often seen as the ultimate milestone — something you’re “meant” to do. But as Mai explains, it’s not always that simple. Whether you’re a PAYG employee, a couple with an existing mortgage, or a business owner, the right answer depends on your income, cash flow, risk appetite, and long‑term goals.

Mai breaks down why Australians are so drawn to property, the realities of negative gearing, and the often‑overlooked costs that can catch investors off guard. She also explains why modelling and professional advice should always come before buying — not after.

The conversation also explores alternative strategies, including investing through a self‑managed super fund, and when that approach may (or may not) make sense.

This episode is a practical, honest discussion designed to help you slow down, ask better questions, and make informed decisions, rather than following the crowd.

In this episode, Mai talks about:

• Why property investing is so ingrained in Australian culture
• Whether stable PAYG income versus business income changes the strategy
• How negative gearing works — and what it doesn’t solve
• The importance of cash flow, not just tax deductions
• Common costs that surprise property investors
• When an investment property may not be the right move
• Why financial modelling is essential before buying
• How self‑managed super funds can be used to invest in property
• Why expert advice and clear goals matter more than market hype

Stay tuned for more weekly episodes where Mai shares practical insights, real conversations, and clear guidance to help you build long‑term wealth with confidence — not just get through tax time.

Learn more about My Accounting Advantage

Transcript

Welcome And The Big Question

Speaker 0:07

Hello and welcome back to the podcast, My Accounting Advantage, featuring Mai Harris. My name's Lee Woodward, the co-host. Let's welcome her back to our podcast. Mai, welcome back. Thank you, Lee. Today we've got a topic that's quite confusing for a lot of people. And that topic is, is buying investment property for everybody? Mai, take us into this one.

Speaker 1 0:31

Well, it's a hot topic now these days about, you know, whether or not I should have an investment property. And it's an Australian dream. Everyone aspired to own an investment property. You need to really get the right advice for this one. It depends on your level of income. Are you a PAYG employee, have stable income? Or are you a business owner that relies on the trading condition? So it depends.

Why Australians Chase Property

Speaker 1:06

Mai, this is such an interesting one. And I think you're right. In Australia, unlike other parts of the world, in Australia, we our mum and dad buy a house that we live in our own family home. Whereas in most parts of the world, everyone rents. They think buying real estate isn't for them and whatever they believe is up to them. In Australia, we want to buy our first home. Then the ultimate goal, as you just mentioned, is to get an investment property. It's like we've made it. We've got an investment property. However, as you just articulated then, depending on how you're structured, so myself and my wife, we're small business owners, we trust property. And I must say to you, Mai, I invest in property because I don't understand anything else. I don't understand shares. For me, I've always gone with property, which is probably the typical way of thinking. What's the benefits and what's the other options?

Speaker 1 2:02

I think it's um the most popular investment strategy for Australians because they can really see that the properties in Australia goes up and never comes down. They can see that from the past generation that they have profited from uh investing in property in such a short period of time. And also they saw the wealth that it generated as well. From a family point of view as well, I believe that a lot of parents talk about property investments and you know, you've made it if you um have your own property, you bought your own property, congratulations. It's quite, you know, like a stereotyping thing and a cultural thing that it's been ingrained into um, well, your childhood, I believe. Now you growing up, you aspire to just be a property owner and also even better if you're a property investor. So, and it's such a almost stardom that you have and you if you get there, you achieve. But at the same time, a lot of people need to understand that property investment needs to suit them to actually help them to minimize their taxes and push them up rather than push them down with their level of income and cash flow. You've got to understand that there are different strategies that are different and suitable for different types of people and also different type of income source.

Speaker 3:44

I think what's really interesting here, Mai, I was just having visions there of all these family members and people I know who 10 years go so fast. And in life, there is risk and reward. And some people play it safe, we're just gonna pay our bills, and nothing wrong with that. That's an important part of life. And then there's the small business owner that's given it a crack, and that's not simple either. You've got everything on the line. Many people have lost their personal family home as a business goes under. There's a lot to this. How do we determine for our listener right now? And let's go for someone who's employed by a company, they're on a safe, set salary at all times. At what point do they consider should I buy an investment property or not? How would you, if I was asking you that question as a customer uh of yours, what advice would you give me, knowing I'm self-em, sorry, knowing that I'm in this example, I work for a company.

Speaker 1 4:43

Yeah, an employee.

Employee Checklist And Negative Gearing

Speaker 4:45

I'm an employee.

Speaker 1 4:46

Okay, for an employee, first up, is basically how much are you earning? Is your income sustaining you right now? So, for example, if you are earning $120,000 a year and you have disposable income, meaning that after tax, you're still saving money. You might be living with a family member at the moment and aspire to own your own um house, that's fine. So as long as you still have excess cash that you can spare, well, then that makes you a good candidate to invest. And whether or not um property investment is for you, so you need to also assess, well, ask someone to help you to assess whether you can claim tax deduction by using the rental, typically now it's losses, so we call it negative gearing, to lower your taxable income. And then you'll benefit from getting a larger refunds. The refunds, though, are not to be used to, you know, enjoy life. It should be put towards paying off that home and paying it off quicker. So that's the first point that I would like everyone who's an employee to assess before they jump into property investment.

Speaker 6:18

Now that's for a single person. Let's say it's a couple, uh, they're on a joint income of 150 or 100, let's go for 150. Yeah. They may be living at home, but if let's in this scenario, they're paying off their their first home. They've already got a mortgage, and now they're thinking about taking on a second mortgage with a shortfall that needs to be made up between the rent and the loan that they're taking. And going back to your first point, they did it because, you know, w we feel like we're making it if we buy an investment property. What's your assessment on that?

Repairs Cash Flow And Reality

Speaker 1 6:52

So, with the assessment on whether or not you have sufficient cash flow, meaning the after tax to invest in a rental property, I believe you need to assess again whether number one, you have the equity in your current home to borrow against. And then that means you have a deposit to put towards the rental property instead of you know having to find the cash. So, in that sense, you're actually not using your own cash to invest, you're just using the equity that you have. So that's not going to put any more strain on your saving or on the current home loan. One thing that I really want to express to a lot of people is that if you are struggling already in paying your mortgage, your first mortgage on your current home, it's not advisable because now these days, borrowing is expensive. And more than likely, your investment property will be negative gearing, meaning that you actually have to top up that loan. So you might be out of pocket from anywhere from $1,000 to $2,000 a month. And you need to be able to wear that cost. So you need to get that assessment done before you you're jumping into it.

Speaker 8:29

Mai, this is so important. And just for our listener who's in this thinking strategy of, you know, an investment property is all I need to do. What about when the real estate agent rings you up and says the the hot water heater's gone and it's going to be $3,000? The tenants complaining about mould. We've just had a quote, it's another $2,000. Yeah. And at the end of the month, I've spent $6,000 on repairs of a property, depending on the age of that property. I think that's what catches people off guard.

Speaker 1 8:58

That's right. And a lot of people go, oh yeah, but it's all tax deductible. At the same time, you need to realize that it it is tax deductible. You're not going to get the cash back until you lodge your tax return. So you need to have the cash flow to pay for those repairs and maintenance beforehand. And you need to be able to sustain the repayment on top of that. And if you don't have that spare cash, it can be very difficult for a family.

Modelling First Before You Buy

Speaker 9:31

When is it perfect time? We've just discussed the thinking around, is it for everyone? And I think a lot of our listeners would take a lot out of what you just said and think, I've never really given that consideration. When is it a great time to do it? Meaning, what's the best candidate to go out and buy investment property?

Speaker 1 9:52

Okay, a lot of people think, oh, it's a really good time to buy at the moment. Maybe should just I should just jump in and ride the wave. And um I would say to you that go and see a professional, get an assessment done before you jumping into this. Because you might find that the tax deduction um incentives that you think may not be as big as you think. So with the professional that you see, the accountant that you see should be able to model the assessment for you and then provide you with the projected refundable amount that you would get on a yearly basis. And whether or not that's enough, because if the tax refund from having a negative gearing property doesn't help you that much, this means you might need to have to earn more money to maintaining your second mortgage, which is your investment property.

SMSF Property Basics Explained

Speaker 11:00

Couldn't agree more, and this is where it becomes really, really important to do the modeling before going to the open house and buying the property. Now, if someone's got funds available, and let's discuss this. Most people don't even understand that you can buy property with a self-managed super fund. But having a self-managed super fund is another business in itself because it's it an entity. Explain why people buy it with a self-managed super fund.

Speaker 1 11:29

Okay. So self-managed super fund, if you don't know what that is, it's actually your own super fund that you have control over. At the moment, a lot of people who are, you know, employees, they have employers contributing super to their funds. The funds are public funds. So they don't really have control over that. If you wanting to purchase a property under the self-managed super fund, you need to set that up yourself. Once you actually set up your self-managed super fund, you really need to roll all your super benefits into your self-managed super fund and then you are allowed to purchase an investment property within that super. If you have even spare cash and you want to do that, you can as well. The beauty about having your self-managed super fund is you can utilize your super balance that you accumulated over the years and you put it away in the public super funds to purchase that property of, you know, I wouldn't say of your dream because you can't ever live in it. You can enjoy the capital growth that will be building within that property if you purchase it. You're not using your own cash, really.

Commercial Property Through Your SMSF

Speaker 12:59

I think this one sounds too good to be true. And I'm all for self-managed super fund. I have a self-managed super fund, and I always have. The reason I had a self-managed superfund is I bought the shop where we ran the company.

Speaker 1 13:14

Yeah.

Speaker 13:14

And in commercial real estate, although it's a a difficult, a little bit harder to borrow for commercial, you need quite a lot of funds for the deposit, but you can be your own tenant. So anyone listening to this show right now and you're a hairdresser, you're a barber, you're someone who needs premises or a commercial lock up, big roller door, that's a great thing if you're the tenant, you're the blue chip tenant of your own property.

Speaker 1 13:39

Yeah, absolutely. It's such a game changer for business owners because let's face it, a lot of the time you're at the mercy of your landlord and they can say, Oh, sorry, I need to put the rent up now or whatever. But if you actually have quite a good balance in your super, you can actually roll it out, set up a self-managed super fund, and then purchase a commercial property. And I recommend that if you have a business and your business is paying rent to someone else, and often it's quite a substantial amount, why not use the funds that you accumulated from, you know, years and years? Bring it in, put it in to your own self-managed super fund, purchase a commercial property and then rent it to yourself. That rent is coming back to you. And if you actually have to get a loan out to complete that that purchase, that's okay because you enjoy the tax benefits of making super contributions and lower your your tax rates even more. Inject that cash into the fund. The fund will then use that cash to pay down the loan, and that will be at speed. In the at the same time, you can reduce your overall tax payable for yourself.

SMSF Costs Rates And Risk Checks

Speaker 15:09

This is such an important point for our listener. I know many business owners who, over their time, their business paid the rent and did okay as a business. But really, their wealth was at the end at 20 years later when they'd been their own tenant, paid off their beautiful commercial property, and when that was sold, that became their wealth. So the strategy was stay open, pay our own rent to pay down this property instead of paying rent and the business is not doing that well. Let's bring this back to a residential scenario. Let's say we've got a single lady, she has $300,000 in superannuation and wants to buy an investment property so that she's got something of investment. What is the cost of running a self-managed super fund at the same time? Because you need it fully accountable. Yeah. And when you said you you set it up yourself, technically not, you set it up with you as like, well, your accountancy firm runs my self-managed super fund. And I just have to be told what to do. Yeah. I've got access to the funds and I can move them around. But at what point is it there's not enough super to make it worth having a self-managed super fund?

Speaker 1 16:18

Okay. So my recommendation really, you need to get advice from a financial planner. Okay, so the financial planner, and we have financial planner in-house for this, she would go through and um do a risk assessment with you, in in this case, with the lady who, you know, wanting to purchase a residential property and just wondering if she's got enough balance to actually open a self-managed and then um purchase a residential property. Why it's so important to have this assessment done with the financial planner is because there will go through your risk appetite, your income, whether or not the super contribution that you receive each year will sustain that that debt, that loan that you will get to purchase the property within your self-managed, because it's actually a different rate of interest. And the borrowing and the lending for the self-managed superfund is quite different to the lending that we we have to purchase residential properties as a normal mum and dad. So yeah, it's important to talk to the expert. And then they also will assess whether or not it's for you. You have enough income, etc. And what's your goals on buying this investment property in your self-managed superfund? That's really important to um because people think let's just go by, but is it in line with your financial goals? Will it produce that golden nest egg that you will ultimately have when you retired? So that's why it's important to see a financial planner. And then what I do is I actually assist in that process and explain the tax side of things to educate you to understand the benefits of the tax savings that you could enjoy for having your own self-managed super fund and also how much tax you could save overall. That's my role. I will be assisting, but I can't set up the fund for you.

Clarity Planning And Final Takeaways

Speaker 18:42

Now at your firm, My Accounting Advantage, it's a one-stop shop. You've got financial planners, the accountancy firm, home loans, everything's there to and those people communicate with each other beautifully, which is really important versus separate views and separate companies. Yeah. Today we've really gone deep into this, and I love that all roads lead to get an assessment. Don't go to that open for inspection, just buy one because it looks exciting, realize there's a shortfall, and everyone's passionate about property, but the numbers are different for different people.

Speaker 1 19:14

Definitely.

Speaker 19:15

And as people listen to someone else who's got a completely different situation, you can't model your decision off their scenario.

Speaker 1 19:24

No, the answer is no, you can't. And um, I can't stress enough that there's no one size fit or strategies for anyone. Everyone's different and have different goals and aspirations in life. So, it's important to communicate that um to your advisor and then obtain the right plan and journey to achieve that. So, it's a personal thing. For me, you should have complete clarity before you go into something like this. Because sometimes I wonder when people jumping into purchasing properties, which I'm a fan of, and I'm myself uh a very savvy property investor. At the same time, I observe a lot of people who jumping in, purchasing their first or second properties, and they rush into it without knowing, you know, the true consequences. And often it takes them less time to make a decision on that property than if they were to buy a car. They go into the um in house inspection for 15 minutes and they come out and I'm like, yep, that's it. I'm going to buy it. And then here's a cheque for 10% deposit, you know? And I'm thinking, well, hang on. Are you clear about this? You know, are you going to be stuck with something that you don't really want? So, clarity and planning before you jumping into one of your biggest investments in your life is super important.

Speaker 21:09

Mai Harris, great episode today, and we're in episode two of the program. In the show notes is the link back to My Accounting Advantage. And, Mai, that assessment is mandatory. I want to thank you for joining us, and we'll look forward to seeing you next week.

Speaker 1 21:24

Thanks, Lee.