Q&A – SMSF, Perth Yields, Depreciation, Timing & More

A Quick Red-Flag Refresher

Jeremy shares that their accountant forwarded an email signature containing roughly 75 self-awarded "awards," prompting a laugh given their Episode 34 discussion on marketing red flags. Jeremy recalls his own experience judging a "property investor of the year" award years earlier, and found the underlying information full of gaps, with many applicants' apparent success reflecting marketing ability rather than genuine investment skill. Both note that many industry "awards" can effectively be bought through advertising spend with the awarding publication or platform.

Question 1: What does it mean to want depreciation to "wash out"?

Jeremy clarifies that depreciation is fundamentally a loss, not a benefit, so wanting it to "wash out" means allowing a property to age so that its depreciation naturally declines over time, rather than seeking out a newer property specifically to maximise depreciation claims. He explains a claimed depreciation loss (for example, $20,000 in year one on a new house-and-land package) only returns a portion as an actual tax saving (say, $8,000 at a 40% tax rate), leaving the investor $12,000 worse off overall, not $20,000 better off, a common point of confusion, since depreciation is often marketed as though it were a genuine gain. He also notes new properties typically come with a smaller land-to-asset ratio, compounding the underperformance, and that two otherwise identical properties side by side, one new and one old, will generally see the older one outperform, since the buyer of the new one pays a premium for "newness" that fades over time.

Question 2: If cash on hand is limited, doesn't chasing higher yield make more sense than relying on unrealised capital gain?

Jeremy pushes back on the framing that a capital gain is "just a number" until realised, noting it still improves an investor's net wealth (their asset and liability position), even if it isn't accessible as spendable cash until sold or refinanced. He acknowledges cash flow does matter and that serviceability limits are real, but stresses that chasing an extra 1% yield rarely provides a meaningful edge, whereas even a few percentage points of additional capital growth can be worth far more in dollar terms, and capital growth isn't taxed until realised, unlike rental income. His broader advice is to look first at personal financial structure (whether investment debt is interest-only, whether a broker has explored second-tier lenders, whether extra repayments are misallocated toward already-cheaper investment debt rather than non-deductible home debt) before assuming a higher-yielding property is the answer. He also notes that trading property, selling once growth plateaus and reallocating elsewhere, can free up cash flow more effectively than simply holding out for a higher-yielding purchase from the outset.

Question 3: Is there a minimum property price that still delivers strong capital growth?

Jeremy is clear that price itself has no bearing on capital growth potential, cheap markets can boom, and expensive ones can stagnate. He pushes back on the old-school belief that "blue chip," high-priced suburbs deliver superior growth, arguing the data doesn't support it. That said, he cautions against extremely low-priced, remote markets with very thin transaction volume and low statistical reliability, rather than avoiding low price points on principle. His rough personal comfort range starts somewhere around $350,000+ for houses, below that, reliable, well-supported markets become harder to find, though regional markets at lower price points can still work well for a shorter-term, more active strategy, given the algorithm's forecasting strength is really only solid for the first three to four years. He also flags that many investors don't even know their real budget ceiling because they haven't had a proper broader conversation with a broker about maximising serviceability.

Question 4: Why can't high rental yield and strong capital growth coexist, and what's the risk of focusing purely on yield?

Jeremy explains yield and growth don't trade off in a fixed, predictable ratio, some markets do combine strong yield and strong growth for a period, but filtering the whole national market down to only the highest-yielding suburbs mechanically shrinks the pool of markets that could also deliver the best growth. He cites mining towns as an extreme example of high yield paired with high risk (single-industry dependency, small population, isolation). He notes markets like Perth and Townsville have shown strong yield and growth together recently, while Darwin's rapid recent growth (around 20% over six months at the time of recording) comes with its own risks (smaller population, potentially higher insurance and council costs). His overall guidance: don't over-index on a single extra percentage point of yield, and instead assess overall strategy (short-term active trading versus a longer, steadier hold).

Question 5: Should investors consider buying an apartment or unit, given the depreciation and land ownership trade-offs?

Jeremy confirms apartments do underperform houses on average, but primarily due to a lower land-to-asset ratio and greater ongoing oversupply risk (since units can be added to a builtup area far more easily than new houses), not because units inherently depreciate faster than houses of a similar age. He shares real 10-year unit growth data across capital cities at the time of recording (ranging from around 13% in Darwin to 81% in Brisbane, with Sydney around 47%, Melbourne around 40%), underscoring how much this varies by market. Looking at a shorter, more recent three-year window, some cities (Perth, Brisbane, Adelaide, all around 50%) showed strong unit growth, while others (Sydney, Melbourne, Hobart, Canberra) were flat or negative over the same period, reinforcing that the specific market chosen matters far more than the property type alone. His conclusion: if budget genuinely restricts a buyer to a unit, buying an established, smaller-complex unit in a genuinely hot market (with a clear short-to-medium-term exit strategy, and a check with council for any pending development applications that could add future supply) is reasonable, though he'd still choose a house first if budget allowed.

Question 6: Is 40 too late to get started with an investment property?

Both are firm that 40 is not too late. Jeremy notes even a single well-selected investment property, combined with normal superannuation growth, can support a comfortable retirement. Damien cautions that some publicised "retirement income" figures quietly rely on drawing down superannuation as part of a debt-payoff strategy without disclosing that clearly, and stresses the importance of understanding this distinction before assuming a marketed outcome is achievable through property alone.

Question 7: Is it still a risk to invest in Perth given talk of it nearing its peak, even with interest rates dropping?

Jeremy's view is that Perth still has meaningful room to run: its historical growth remains behind the rest of the country, and current demand-to-supply data still shows a hot market overall, with some individual pockets yet to catch up to the rest of Perth's recent growth. He does note Perth has slowed somewhat compared to markets like Melbourne or Darwin over the prior six months. His practical guidance: for an active, shorter-term investor, Perth still offers viable opportunities, provided a clear exit strategy is in place; for a longer-term, "buy and forget" investor, a market earlier in its own cycle (he points to Melbourne, as the country's largest city, heading into its next growth phase rather than nearing a peak) may be the more suitable choice. Existing Perth holders, in his view, shouldn't be looking to sell yet.

Question 8: Is it a smart move to invest in property through a self-managed super fund (SMSF), especially starting around age 29?

Jeremy and Damien are careful not to give personal financial advice here, but discuss the general trade-offs: SMSF property investment allows more direct control and potentially stronger returns than leaving funds with a default fund manager, but comes with higher setup and running costs, generally higher interest rates, and reduced borrowing flexibility, offset somewhat by more favourable tax treatment within the fund. Jeremy notes that starting seriously at 29 with disciplined, mistake-free investing could realistically support retirement well before 50 without touching super at all, though he flags genuine uncertainty around future superannuation policy settings, since governments periodically revisit the rules.

Damien's first instinct is to question the context behind a broker's cautious advice (which may reflect a genuinely low starting super balance rather than a blanket rule), and recommends a starting SMSF balance of roughly $200,000–$250,000 as a rough rule of thumb some planners use, given leverage is harder to access within a smaller fund. Both stress that this decision depends heavily on personal circumstances (existing super balance, risk appetite, diversification across the whole portfolio, not just property within super) and isn't something they can responsibly answer in general terms, recommending a conversation with a financial planner and flagging it as a topic to put to their own accountant in an upcoming episode.

On the related question of townhouse versus regional house, Jeremy frames this as a trade-off between land-to-asset ratio (favouring an established regional house) and overall demand-to-supply strength in a larger city market (where a townhouse might still be viable), concluding the right choice depends on intended hold period: a shorter "get in, get out" approach can suit a city townhouse, while a longer buy-and-hold strategy favours maximising land content, potentially by buying an older house on a larger block, further from the city centre, rather than a new, smaller-land-content property in the middle. Both agree that in either case, buying into a market where demand exceeds supply likely means outperforming the national average regardless of the specific property type chosen.

Question 9: Has Suburb Data's approach shifted from human-derived formulas to AI, or has this always been the case?

Jeremy clarifies the underlying formulas for individual metrics (vacancy rate, stock on market percentage, auction clearance rate, and so on) remain human-derived, that hasn't changed. What AI contributes is combining all of those human-derived inputs into a single overall predictive score, essentially applying mathematics to identify patterns and weightings a person couldn't feasibly calculate manually across so many variables and so much historical data. He stresses that "AI" in this context isn't mysterious or opaque, it's grounded in maths applied to human-defined inputs wherever possible, rather than guesswork.

Jeremy also connects this back to why more active property trading is now more viable than it used to be: previously, "buy and hold forever" was sound advice because nobody could reliably compare the likely future growth of a currently-held property against an alternative market, whereas improved forecasting now makes it possible to make a more informed sell-and-reallocate decision. Damien illustrates this with a historical example: an investor who successfully rotated through Sydney, then Hobart, then Brisbane, then Adelaide, then Perth, in roughly that sequence, would have captured substantially more growth than someone who stayed in a single market throughout, using Hobart's more recent slowdown (following its earlier strong run) as a concrete, checkable example via the platform's historical charts.

Closing Thoughts

Damien and Jeremy close by encouraging listeners to keep submitting questions for future Q&A episodes, and reiterate their consistent message: rely on genuine data rather than opinion, keep personal money management simple, and don't get swept up in noise or marketing claims that aren't backed by evidence.