Super is the often forgotten and ever-growing lump sum behind all working Australians – and it can now be leveraged as your entrance to the property market.
We’re pretty well versed on how tough it is to get a leg on the property ladder –especially in Australia’s capital cities, and particularly if you’re a young, aspiring first-homebuyer.
One organisation, Superestate, is aiming to level the playing field and revolutionise how Australians engage with their super.
“We have torn down the barriers and made property investment easy and possible for everyone, no matter how small your super balance,” says Grant Brits, a former investment banker and Superestate’s CEO.
“We believe that all Australians should be empowered to choose where their money is invested.”
In a nutshell, Superstate allows you to invest your super in residential property and understand where your super is actually going (the company displays its property investments on their website).
Superestate – founded by Brits, with input from property expert Dr Andrew Wilson and auctioneer Damien Cooley – is currently the only super fund focused on investing in residential property.
“We saw many friends and family struggling to get onto the property ladder, so we wanted to help find a new way for them to do it. Whether you’re looking for a home or to invest – it’s extremely challenging, especially for younger Australians,” says Brits.
“We figured out how we could make it possible for all Australians to gain access to property investment, so we knew we just had to do it.”
Breaking boundariesOne of the biggest obstacles in property investment is not having enough money or savings to start off with, Brits says.
“We wanted to make sure that we built a product that would allow everyone to have access, no matter their current financial position. This is what lead us to super,’ he says.
“It’s easy to overlook your super, but at the end of the day it’s your money. This is why we wanted to enable people to use this sometimes forgotten means to invest in something they’re really interested in.”
Also, something tangible.
“One of our best experiences to date was taking our members through the fund’s first property. Actually walking around a property where their super is invested was a very unique experience for them. Some of our members had all but given up on ever investing in property.”
Where does your super go?Traditionally, superannuation funds are invested in a broad range of assets including: cash, fixed interest, Australian or international shares and infrastructure.
Superstate also spreads its investment, but their asset mix uniquely includes residential property too.
When other super funds say they invest in property, this typically means through property trusts investing in office and commercial property, which financially, performs differently to residential property.
“Most people don’t even realise and are normally pretty shocked when they learn how much of their super is being invested in the stock market,” says Brits.
“If we look at the long-term historical performance of residential property, all of our super might have performed even better had the traditional super funds invested in residential property.
“Superestate never uses debt to purchase properties for the super fund. This means our members benefit from both any long-term capital gains, plus the steady rental income.”
The company looks to invest in high-quality properties in high-demand areas with limited supply (i.e. houses with land near the CBD), as they will likely do very well over the long term.
“When we consider specific suburbs we take into account location, demographics, resilience and growth drivers. This typically means we’re focusing on properties in our inner-city markets close to our major CBDs,” said Brits.
“We prefer our investments to come with land, meaning we’re mostly focused on houses. However, we’re always on the look out for good investment opportunities.”