Forums / Property Investing / Overseas Deals / Why I invested in US property using my Australian Super

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  • Profile photo of MistrysMistrys
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    @mistrys
    Join Date: 2019
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    Hi Everyone! 🙂

    I’m a newbie to the forum and wanted to share my story for others to be inspired. My wife and I are originally from the UK and migrated over to Australia about 5 years ago and something tells me I won’t be going back to the cold anytime soon lol. We both work in the IT sector and fortunately got jobs fairly quickly which was a relief and wanted to explore Australia and all it has to offer. Anyways, property caught my attention here as so many people spoke about it and the fact that it’s plastered across the news, so It’s difficult not to miss; which kicked started my interest into real estate investing.

    One day it occurred to me that I have funds sitting in my Super that are currently invested into a Super Fund, achieving around 8% return. After some research, I came to realise that I had the option of investing it into other types of Super funds such as Industry, Retail, Corporate, Public etc but the returns were hovering around the 10% mark, which although sounds good, I thought to myself that there must be a way to generate better returns. I even considered Shares but it felt much risker to me as it can be quite volatile unless you know what you’re doing.

    After delving further, I came across stories and people who had invested in Australian property using their SMSF, which sparked my interest. However, the loan interest rates were too high and lending seemed to be quite tight if considering to use your SMSF. There seemed to be a lot of complexity involved if taking out a loan via your SMSF, and even if I did pursue it, the overall yields were quite low with Australian property, ranging between 4% to 6%. On top of all that the property market has been declining/correcting in Sydney/Melbourne since the boom, and other markets seem to be stagnant as of lately.

    Personally this didn’t seem worthwhile so I researched a little more and came across people who had successfully invested in the US market, showing crazy returns in Detroit of around 20%+ with the added bonus of capital growth in the short term, due to the market being so HOT right now! I read up about how much money was being pumped into Detroit by businesses and even the government to revive the city and improve its economy, of which has been evident for the past year. So it was a no brainer! I made the decision to jump on that bandwagon and get my foot onto the US property ladder and am so grateful that I did! 🙂

    After setting up my SMSF, I managed to buy two properties (which is still crazy to believe that I’ve bought in the US):

    * Property 1 (Detached 3 bedroom, 1 Bath, 1 Garage) = Purchase Price of $38k AUD, Rental Income = $1200 AUD per month, giving a whopping 37% gross yield – I got lucky with this one as it was bought earlier this year so this type of yield is rare to come by, as its usually around the 25% mark, as with my second property below. After deducting the renovation costs, and all other expenses including maintenance, this equates to a very high NET YIELD of 20% which I’d never find in Australia.

    * Property 2 (Detached 3 Bedroom, 1 Bath, 2 Garage) = Purchase Price of $48k AUD, Rental Income = $1000 AUD per month, yielding at 25% gross. The rent is currently below market value, so at the end of the lease this will increase to equate to a gross yield of 28% bringing the NET YIELD to 19%

    Not only am I receiving Net Yields of around 20%, I have the added bonus of capital growth which will enable me to sell down and use the funds to potentially purchase another 2 high yielding properties, all within my SMSF!

    I am forever grateful to those who have provided the guidance I needed to take me on this path, based on their own success stories in the US and I’m really excited to see the future outcomes of this journey 🙂

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