The Blogs that appear on this page may be sourced from outdated material so please seek appropriate professional advice. The blog material is in no way intended to be personal financial planning advice.

Catherine's Chat

Wholistic Financial Solutions provides information and updates regarding the property investment industry. Learn more from Catherine's chat here.

Property Investment Articles

Monday, March 07, 2011
Once you have decided the Right strategy, organized the Right finance and sought the Right tax advice you then need to source the Right Property.

This can be an extraordinarily time-consuming, complex and confusing process. You can do it yourself if you have ample, and I mean ample spare time to spend hours upon hours every night and weekend researching and ensuring that you are completing your due diligence. You will need to research:

·       the best states to invest in all across Australia
·       the best suburbs within those states
·       the best streets in those areas
·       the demographics (in relation to those in the area – their age, sex, marital status, average income, family size and whether they are renters or owners – both now and predicted)
·       the capital growth of the area – both now and predicted
·       the average rent of the area – both now and predicted
·       the infrastructure of the area – both now and predicted
·       the government zonings of the area (now and planned changes)
·       the government’s plans for development of roads, hospitals, schools, shopping centers, etc
·       the government’s planned changes or improvements to surrounding roads, highways and suburbs
·       plus many, many more factors

Once you have researched all of the above and you are sure that you have located the right area of Australia to invest in, you will then need to contact all the local real estate agents, set aside a few weeks of your time, try to arrange all of these agents to show you the stock they have on hand at that time and hope you can find a property that meets your criteria during this time, otherwise you will need to re-book the trip and go again when new stock reaches the market…

…or you can simply use a property buyer’s agent service or a property aggregator…

What is a buyer’s agent or property aggregate? 

You need impartial, independent and reliable advice in order to be successful at property investment and that’s precisely what buyers’ agents and property aggregators are in the business of providing.

Buyer’s agents work for the buyer NOT the seller’.

Imagine that instead of having to contact heaps of different real estate agents and developers and then having to sift through all of the competing and contradictory information they give you, imagine if you could contact just one agent and they would do all the running around for you.  They would contact many different vendors, real estate agents, developers, etc and, after determining what your needs and wants are, they will then present a summary of the best options available on the market at the moment that suit YOUR NEEDS. 

That’s what Buyer’s agents or Property Aggregators’ do. They work for you.

They provide market analysis and identification of growth areas in the capital city markets. They identify, source and negotiate specific investment properties in keeping with market conditions and the client’s requirements. Clients are provided with recommendations in a written report covering:

·       indicative investment cash flows
·       detailed market demographics and commentary
·       specific property recommendations
·       property plans, ,photos, specifications etc
·       full financial spreadsheets
·       assisting clients with the inspection and purchase of appropriate investment properties
·       negotiation of purchase price
·       coordination of the purchase process and ongoing client support

What to look for in a buyers agent

Independence is the number one factor. Ask them if they:

·       Sell more than one product from more than one developer
·       Have access to all of the fast-growing states of Australia.
·       Are knowledgeable about investment strategies.
·       Are experienced in property investment. Do they walk their talk? Ask them, “How many properties do you own?” Don’t be afraid to interrogate them. It’s your money they will be spending so you need to ensure you are 100% comfortable with their knowledge and experience.
·       Have access to every other specialty field necessary to help you complete the transaction, that is:                                          
1.     property strategists
2.     a finance team
3.     tax advisors
4.     property managers
5.     life coaches

“A really good buyer’s agent is knowledgeable about most mainstream investment strategies. They have an understanding of what the client’s needs are on a more personal level with regard to their goals, strategies and fears. They have the ability to ‘hear’ the client’s views and to take them and turn them into fully-realized achievements.”

Why use a buyer’s agent?

In a nutshell, because they save you the time you would otherwise spend researching. They save you the cost of the trips (all of which are non-tax deductible as you haven’t selected a property yet). AND THEY ALLOW YOU TO SLEEP AT NIGHT because you have done your due diligence by focusing on selecting the right buyer’s agent, trusting them to select the right property.

Buyer’s agents are experienced professionals who buy properties on behalf of clients on a daily basis. They have extensive contacts and have many buying strategies at their disposal. In other words;

They take a client’s request and apply their experienced strategies to deliver the best result for that client. You wouldn’t ask a boxer to do brain surgery…why not use an expert property sleuth to find the right investment for you?’

Property v Super (SMSF's & Property)

Monday, March 07, 2011

Is the Age Old Battle between Property & Superannuation finally over?

Why is there a war?

Since time immemorial it has been argued by numerous opponents as to whether the benefits of investing in property outweigh the tax concessional environment of superannuation. 

From a cynic’s point of view, one could say that the opponents opinion’s debate varied considerably depending on their own bias.  And this bias seems to be greatly influenced by the advisor’s commission structure. 

Funnily enough, analysis provided financial advisors proved, without a doubt, that superannuation and shares is the way to go whereas just as convincing arguments, raised by property spruikers, real estate agents and mortgage brokers, suggested that property was by far the superior investment.

Who should you believe? 

A new battalion – property and superannuation join forces?

The battlefield has changed and changed dramatically. 

Why would you choose;

Property instead of Super


Super instead of Property

When you can have the best of both worlds instead.

Why has the front line shifted?

New laws introduced in September 2007 allow Self Managed Superannuation Funds (SMSF’s) to, for the first time, buy geared property in a simple and uncomplicated manner. 

SMSF’s can now select a property of their choice, be it;
·         residential
·         commercial,
·         or rural
and borrow up to 75% of the value of the property. 

Previously an investor had to choose between;

·         using his spare funds to invest in a negative geared property,

·         OR contribute the funds to superannuation.  Let’s have a look at an example comparing the two alternatives.

For advice, assistance and to get started with Property and or SMSF go to

Comparing the two – Option 1:

Take Johnny who is 35 and purchases an investment property.

Presuming average capital growth of 7% and rental yield of 5% (both very achievable) the following scenario occurs at age 60.

Value of Property:  $1,775,328
Mortgage owing: $350,000
Net Value: $1,425,328

Plus, the property has been cash flow positive since year 7 netting a cash flow of $584,480 which Johnny could use for further property investing.

Taking tax out of this amount will bring the returns down to:
Net Capital Gain: $1,211,529
Net Cash flow: $409,136
Overall Outcome: $1,620,665

(*Presuming a 30% tax rate,8.5% IO Mortgage rate,rent yield grows at 6% in line with property growth, excess cash flow taxed)

Comparing the two – Option 2:

Compare this to Sally who invests the same amount as Johnny into superannuation. Presuming the same growth and yield (if his superannuation was invested in a well diversified growth portfolio) he would achieve a superannuation balance of $432,658 by age 60.  This is well short of the gains made by Johnny.

(*Presuming a 15% tax rate, contributions include the initial deposit and the cash flow shortfall and cease in year 7 when property cash flow positive, no CGT as investment held until after age 60)

Comparing the two - An un-biased opinion

As any professional advisor and serious investor should know there is more to consider than the pure numerical outcome.  Whether considering property or superannuation other important factors need to be considered. 

One of the most important factors is the stage of the investor’s lifecycle. 

In the working years of an investor’s life a strong cash flow allows the possibility of using gearing strategies to maximize returns thus making property a preferential option. 

Once the investor reaches the pre-retirement phase, it may be unwise to take on the risk of gearing.  Therefore, this may be the preferential time to consider locking away as much as possible into super.

The most common investment strategy seen in the baby boomer era was to invest all surplus funds into accessible investments including property and shares and then cashing these in and contributing the funds into super just prior to retirement.  The only disadvantage of this strategy was a potentially very large Capital Gains Tax bill.

Who shot this strategy down?

However, this strategy has been dramatically hampered by the Governments new contribution rules which only allow $25,000 a year (and $50,000 a year if over 55) of concessional contributions per year.  

The effect of the new contributions rule is to significantly disadvantage generation X and Y.  It is fair to say that most young singles and young families have better things to do with their money and more pressing needs than to make the most of their $25,000 per year contribution limit.  Then when they are getting closer to retirement and have more surplus funds they will be prevented from, like their pre-decessors, making large contributions just prior to retirement.

So taking the above example a little further let’s suppose Johnny sold his property at age 60 with the intention of rolling the funds into superannuation. He made a gain of $1,425,328.  Capital Gains Tax will be incurred on the sale bringing his net gain down to $1,211,529.  Can he contribute this to his super fund?

Under the current rules he will only be able to contribute $50,000 as a concessional amount (that is; tax deductible) and $100,000 as non-concessional.  Anything over this will be taxed at 48.5%.  If the current rules still apply when Johnny is 60 he may be able to bring forward three years worth of contributions and contribute $450,000 in one year.  This will still leave $761,529 outside the super fund that he is prohibited from contributing. 

So what does this mean?

What the above analysis means is that the age old argument of super Vs property is superfluous.  It is redundant and advisors and investors alike need to re-consider their strategies.

The contributions restrictions require investors to consider super much sooner than later.  And the new borrowing rules within SMSF’s open up a whole gamete of possibilities. 

Following on from the above example:

Johnny already has $50,000 in his retail super fund selected for him by his employer.  He chooses to roll this over to his own SMSF and use that to pay a deposit and purchase the investment property in the SMSF.  Instead of paying the negative gearing shortfall personally he instead salary sacrifices this amount to his super fund to enable the super fund to meet the mortgage commitments.

At age 60 Johnny has accumulated the same gain on the property as above, that is; $1,425,328 but he can now sell the property Capital Gains Tax Free (assuming he is on a pension).  The positive cash flow from the rental income has also been taxed at 15% instead of 30% netting him an additional $64,150

The total gains from simply
holding the property in his
SMSF instead of personally
are over $277,949.

And of course he could have used the positive cash flow to fund another 4 or 5 properties increasing the gain to well over a million.

For advice, assistance and to get started with Property and or SMSF go to

Why would you buy property in a SMSF instead of personally?

For many reasons including;

  • you get the benefit of ‘leverage’,
  • a maximum of 15% tax on any rental income in excess of costs,
  • you receive a tax deduction for the loan repayments of principal (which is normally impossible) via salary sacrificing the amount required to cover the shortfall,
  • asset protection – the asset is protected from creditors in the event of a lawsuit or bankruptcy (some conditions apply),
  • the property can still be sold and the loan repaid at any stage,
  • any capital gains on the property when sold will be taxed at a maximum rate of 10% (if asset held for more than 12 months)

But the biggest incentive of all – if you keep the properties until age 60 and commence a pension from the fund;
·       any capital gain on the property will be TAX FREE,
·       any rent on the property will be TAX FREE,
·       any income paid out to you will also be TAX FREE.

The laws are only new and law complying products are now being introduced and marketed.  It is envisaged that these products will hit the market like a storm once investors realize the potential.  There are already over 350,000 SMSF’s operating in Australia and it is likely that this figure will increase exponentially once knowledge of the loan products becomes widespread. 

In fact, as at May 2010, SMSF’s are growing at a rate of 2500 per month.

It is also interesting to note that this may be the first time in history that all advisors (financial planners, accountants, auditors, property advisors and mortgage brokers) have a common ground for advising clients.  All advisors have something to gain by assisting clients into these products. It’s not only a busy time ahead for advisors but a time to join forces and put a cease fire on the battle.

How to End the War and Live in Peace:

1.          Establish a SMSF – your advisor can do this in 24 hours

2.          Open a bank account with a bank of your choice

3.          Write to your existing funds and request them to rollover your funds to your SMSF bank account

4.          Find a property – recommend that you do this through a buyer’s agency. (See our Free Report as to why)

5.          Arrange a loan through a broker who specializes in SMSF loans.

6.          EASY AS THAT

For advice, assistance and to get started with Property and or SMSF go to

Most importantly GET Proper Advice

Ensure you consult an independent advisor who is licensed to provide Property Investment Advice, qualified and experienced in taxation and finance and regulated by ethical industry associations.

Your advisor should be willing and able to advise you, in writing;

·         How many properties you can afford to buy,

·         Where to buy and why,

·         What returns you should expect on your portfolio,

·         How much will it cost you to hold your properties per week (after tax),

·         How to minimize tax,

·         How to buy – individual name, company, trust or SMSF,

·         Your exit strategy,

·         How to insure your portfolio is safe in the event of any unforeseen circumstances,

·         What will be the ‘end result’ – your exit strategy,

·         And most importantly – will this enable you to achieve your long term income and lifestyle goals in years to come.

For advice, assistance and to get started with Property and or SMSF go to

Yours Sincerely, Catherine Smith
Wholistic Financial Solutions
02 6162 4546
Bachelor of Commerce / Masters Degree Taxation
Diploma of Financial Planning / Diploma of Mortgage Broking / Diploma of Real Estate / Justice of Peace(ACT)
Certified Practicing Accountant. Fellow of NTAA.
Recognised Taxation Specialist.
Public Accountant.  Tax Agent.
SMSF Specialist.
Training Consultant for Property In A Box

Buying property in an SMSF

Saturday, December 25, 2010

Is it worth setting up an SMSF?

Sunday, December 19, 2010
People have been asking whether it is worth setting up an SMSF. Any questions you have I would be glad to answer them.

Discover How to Build A Property Portfolio The Right Way Right From The Start

Recent Posts