Grant Brits

Olympic Swimmer Opens Australian Super Fund For Great Returns In Property

As the CEO of Superestate, Grant Brits delves a little more into the super fund that gives Australians the opportunity to invest in the residential property market. With such an avid interest in the property and the talent to make smart property investment decisions, it is no surprise that Brits managed to merge these two qualities together in order to found Superestate. 

Join us in this episode of Property Investory where we talk about Brits property investing journey as he explains how his interest in property grew when he realised he had the skills to make well-informed property investment decisions, and how he used these to begin his own startup company.

“The trade-off for me is that I am looking on the benefit and working for the benefit of our members and not just for myself.” u003cbru003eu003cbru003e-Grant Brits

Giving us more insight into what Superestate is, Brits introduces us to his super fund’s key differentiating point… 

 Superestate we are a super fund. We’re the only super fund that is specifically focused on investing everyday Australian superannuation into residential property it’s very clear for us to make the distinction where for everyone we’re not a.m.s where we’re a regular super fund and our focus is residential.

As the CEO and Founder of Superestate, Brits showcases that it is the people-oriented focus of his superfund that sets it apart from others.

As a super fund, a lot of our business is acting as a super fund – so that’s making sure our members, admin and backhand investing is happening and all being taken care of, and all the reporting is being done. But the really exciting thing for our business is because we are focused on residential property as an investment class. This is actually a part of our business as well and that’s the exciting thing for the podcast right? We’re all interested in property and strategies and how people are investing there. And the exciting thing for us is that we actually spend the vast majority of our time researching the markets, looking at properties, figuring out what we think the right strategy is on individual properties and then as you know, more broadly our overall portfolio position. 

Moving to Australia at the young age of seven, Brits interest in properties grew from spending many of his childhood weekends with his family at Home World.  

I grew up out in Castle Hill, in Sydney. We immigrated here from South Africa when I was pretty young, I think I was about seven. So really, Sydney raised I think I’d say. No, I don’t live in Castle Hill [anymore], I moved out of home when I was quite young and I actually live now on the northern beaches in Sydney. 

Castle Hill is a great place to grow up and actually it’s funny I’ve only sort of reminisced and realised this quite recently, but I’ve sort of jumped into my childhood here and property because growing up I don’t know there’s this would be the same for some kids and not for others. But I think there was a period of about five years from probably about the ages of eight through probably thirteen where I think my family spent every single weekend at homeworld. 

It’s just very popular place. 

I actually spent nearly all my time there. I mean I had my sport but then on Sundays or whatever it might have been, we spent a lot of time going and looking at properties because my parents were looking to actually build a house. And I think that’s actually when my interest in properties sort of really spiked up, because every weekend you’re going out and looking at these beautiful properties, imagining what they might be. Then sort of as time went on and evolved I really found – and I guess it’s pretty weird for a 12-year-old kid to be interested in looking at open homes – but essentially growing up I couldn’t walk past an open home without going to have a look and going to have that stickybeak and see how the property was laid out, and you know have my view and if I thought it was going to be a good property or what the price should be and so on. 

However, with his parents buying an established home instead of building one, Brit became exposed to the various property types available for purchase. 

They literally spent years looking, I think they put down deposits and blocks of land, that they then for whatever reason it didn’t go through with. There was a whole bunch of stories and they ended up actually just buying an existing house in Castle Hill that they lived in for a very long time. So yeah, it was a very interesting I guess learning phase for me to see what they went through, but they’re very good basically observe that from a young age. Just looking at different types of properties and new properties vs. old properties and so on. 

Growing up in Sydney, Brits interest in the property was put on the back burner, and sports became his priority. 

I went to the local primary school which was Oakhill Drive and then I went to school at Oakhill College. Yeah. So yeah I was very, very much yeah raised in the hills. 

What about after schooling. Did you go out and study in a degree or did you go straight into the workforce? 

Looking back on I guess my development and career, I’ve seen a few very distinct phases. So all through school I was actually I was very heavily focused on sport. 

I was actually a swimmer. All through my high school, basically I’d finish school and then I’d go off to the pool for training. This continued into university where essentially I was studying and competing. And then up until the age of 21, I’d say sport was actually my focus and I was very fortunate and very lucky with my sporting career. I managed to go to the Olympics and represent Australia and get a bronze medal which for me and that point of my life, it was obviously a very huge achievement. It was something that I look back very fondly on but, I think the challenge as a 21-year-old and living in Sydney I basically realised that swimming whilst that was a great fun sport. Already back then I was looking around and I was going if I’m ever going to be able to support myself, I need to actually be able to earn an income and I need to be able to buy a house and all these financial factors that come into life. Swimming, unfortunately, wasn’t a sport that could really support that long term. So at that point, I basically made the decision to focus on my studies and my career. I almost look at that as the end of my childhood development and from then it’s been very much professionally focused. 

It was after substantial thought that Brits decided to leave his fulfilling swimming achievements behind.

I’ll be honest I actually like I work very, very hard. I felt I got very lucky and things really worked out for me in 2008 and I was very young. I think it was that balance this decision of going, “Okay I can continue down this path for another 4-8 years and maybe I can achieve more”… But then there was just too much of a nagging question going “Okay well what else can I do, what other opportunities are there?” and it was a big step because when you leave anything you’re familiar with whether it’s a job or a certain career path. It is always hard and I guess I was very interested to see what else was out there because again I felt I was very lucky in what I had achieved and I had lots of friends who worked just as hard as me and maybe didn’t quite get as lucky. So I thought I’d cash in my chips and move on and see what else I could find. 

After completing university, Brits journey into the world of large scale investments began, his career path offering him a chance to work overseas. 

I finished off my degrees, I basically did a double degree in finance and commerce. Straight out of university I got a job at one of the investment banks doing capital market transactions and stuff like that which is very exciting. 

Straight out of uni and the deals you work on you know are hundreds of millions of dollars, if not billions of dollars, which is exciting because you’ve learnt a lot and you learn very quickly. Essentially the stuff you’re working on is in the newspapers which helps motivate a young professional to work hard, and the learning curve is extremely steep. So I did that in Sydney for a few years and I actually I ended up taking that to New York and I lived there for a year and spent a year working on US transactions and basically learning more about the industry. From a personal development standpoint working essentially on Wall Street in investment banking in New York was amazing for my learning. It just wasn’t very good for my long term health.

Long hours I assume.

Exactly, like I’ve always worked long hours, but when you’re working till 2 am every single night it does eventually add up and it is great for learning because you essentially pack a few years into one. But I was very focused on just finance and will sort of come back to the property story in a second but that was one of the nagging I guess items that I was looking for that I wasn’t getting fulfilled in that career. 

Brits explain, however, that it was by working in the Finance industry, that he would gain the analytical skills needed to become the founder of Superestate. 

Mergers and acquisitions. So essentially what my job was, I was one of the analysts helping companies to either buy or sell other companies. 

I mean you could even think of yourselves almost as like a real estate agent but not for property and sort of doing it for a two million dollar house and more a two-billion-dollar company or maybe a five hundred million dollar mine. 

One of the key skills that you do learn in that industry is learning how to value any type of assets or business which is very very valuable. I guess one of my benefits of going down that career path very early, was that I was sitting at board tables and in meetings where there were very important rich and powerful people, negotiating these deals worth hundreds of millions of dollars. You do get to see these high-level corporates interactions and negotiations play out, which I mean negotiations, whether you are negotiating an apartment purchase or a few hundred million dollar company sales, there’s certain tactics that people do use and they use in all these circumstances. So to be able to see people at the top of their game in the top of these industries doing that was very, very beneficial at an early stage in my career. 

With work demands taxing his health, Brits moved back to Sydney, this time working for a fund that would give him time to reignite his former interest in the property market. 

Because I was in New York, I did want to come back to Sydney. So actually when I came back I worked for a fund, but essentially it’s an algorithmic high-frequency trading fund that focuses on trading options and derivatives in Asia. So Hong Kong, Japan and Korea – which again is very, very technical and different but they again are something where you’re dealing with transactions that are worth a lot of money. But again slightly different to property but I think for me that was it was beneficial but it did allow me a bit more time personally to start looking at the property market. 

So how long were you with that company for?

Grant Brits australian super fund returns

I was with that company for – I think it was three and a half, nearly four years in the end – and it was actually whilst I was working at that company when I really got I guess my interest turned back to the property. It was something that from an early age that I’d always had a high interest in, and I think probably when I look back on my career, one of my, I don’t want to call it a regret but one of the items that I’d maybe revisit was that all through my early financial career I had this very strong interest in personal investment and property. But it was very hard following 2008, 9 and 10, where basically Post GFC, everyone, whenever you said “I might buy a property” essentially the theme was “Oh don’t buy a property now…”

“…You know, things are going to go down, just wait, just wait, just wait”. And I think because I was very focused on my career it was easy to just ignore. 

Absolutely. 

Yeah. And then essentially that was very bad advice. 

So how did Brits realise he could potentially turn his passion for property into a business?

What happened was I then started looking at the property market personally again and you know I basically realized, I was like I love this. I like spending half my day on the domain and real estate dotcoms rather than focusing on what I actually meant to be doing. So I was looking at all these properties. What I decided I said, “Okay well I’ve actually had a lot of training and had a lot of experience in valuing companies and different types of assets”. I said, “Can we actually, or can I, build a financial model that will allow me to look at properties and essentially assess what I think the fair value is?” And I spend quite a lot of time based on my on a personal investment standpoint actually running these numbers on properties right. And on suburbs and going “Okay well based on our analysis do we think this is a good purchase?…” 

“…Do we think this is a good house”? And it started off with a few properties I’d be looking at and that was basically – and this was purely out of interest – we’d run the numbers on it and go okay well it’s going to auction this weekend we think it’s worth this. Do we see value in that? And then we’d go long and we’d basically see how things would play out, and we developed this I guess our personal model in terms of looking at property and ended up actually doing a few transactions personally which worked out quite well. And we said, oh well and these transactions we were doing we’re in sort of late 2016, which if you look at the property cycle you go well for Sydney, that was a very high point. But what it really helps convey for us, is that through all property cycles there are always going to be great deals and not so great deals. It’s not property because it is an unlisted asset class valuation it is a science and an art and we basically we think that you know when the market is doing very, very well there might still be some great like there might be some great sales and there might be some great purchases. Just like right now in the market when we’re seeing in Sydney, times are a lot tougher for sellers. We’re still seeing some things that we think are great deals for purchasers, but then we’re still seeing some sales processes where the seller is still achieving great results. So this is one of the aspects that really draws us to property. 

We think that if you’re doing an intense amount of analysis in the background and you have a very strong understanding of the fundamental drivers of the value of the property that you can come to a very informed decision on what you think that property is actually worth. 

Brits explain more about his analytical model, which along with Australia’s transparent property market, is what allows companies such as his own to provide beneficial information to property investors. 

It’s a financial model in the background that we sort of drive-through Excel and some things we keep close to our chest but the information we’re happy to share. So our property market is actually I think it’s the most transparent property market in the world right. If you have access to certain research tools and even free information you can basically find up, what you can look up any property that’s on the market. You can see the previous sales history let’s say for example you say you’re looking at a house in a certain suburb you can look up the sales history for that house but not only that you can actually look up the recent sales for all the houses in the area and you can see what’s been happening and you can very comfortably form your view on what you think that property should go on, based on these previous sales. And you can do that comparing suburb to suburb and so on. 

But then the other thing that you can do as well as you can actually look up on the other side of the market the rentals you can see for you can work out essentially what you think the fair yields for the suburb is and how you think that should play out in terms of valuation. And when you factor this in with other I guess some other factors in the market like how many properties are on the market right now. What are the comparable properties are there? What are the clearance rates what is the demand and the supply situation you can form numbers around these qualitative factors? 

He continues that it is this transparent market in comparison to the property market overseas that makes property investments very advantageous.

In Australia, no one would ever ask you your salary or how much you earn that’s a very rude question. Like no one would ever come up to you and say “Hey, you know, how much did you get paid last year?”. No one would do it but I think the comfort of any Australian to go up to anyone say “I really like your house, what did you pay for it?” People have no problem doing that and that’s really fed into the data that is available out there on our market right. So it’s very, very interesting. 

With a company-oriented focus rather than a personal one, Brits began to utilise his understanding of the property market to analyse the situations of close friends and relatives. 

My personal journey…  I’d done a few smaller deals but the big one that was the real validation of our model was the transaction I did in 2016. I think one of the big reasons and one of the big catalysts for us to move into this business was that we bought a property and we were very happy with the result. But what I realized as well was that it was extremely hard for us, like dealing with the banks and making sure we had enough to actually you know just get the financing across the line on the deal essentially. I looked at it and said wow I’ve had all the sort of background in doing the data doing the research and actually going through the whole financing process and I was like that was not easy. I then looked at sort of a few of my friends and family who have similar aspirations and love the asset class and really want to invest in property. 

But I basically looked at that and said, well for them to achieve what they would like in the Sydney market right now, it’s not feasible. And it’s probably not going to be feasible for them to get exposure to a certain type of asset anytime soon. When we’re talking about that – specifically looking at my friends who live here in Sydney – they want to own nice houses in nice areas that they think will do well over the long term. And because that’s one of the things we look at, we go well everyone in Sydney understands that inner-city nice properties where people want to live are in really high demand. But being able to get access to those as an individual is extremely hard. And so that was one of the big catalysts going okay well we’ve got all this data and analysis and we think we can make educated investments. But then when we looked at our personal situations and our friends going, okay well people don’t necessarily have the hundreds of thousands or millions of dollars required to do this and like a lot of my friends growing up here in Sydney like a lot of them, they’ve had very good lives and they go to Europe every year and it’s great and there’s nothing wrong with that. But they also do want to get exposure to property. But at this point, it’s one of those hurdles that some people look at and go, well the amount you’d need is pretty astronomical. 

With the Australian dream of owning a property becoming more unlikely every day, how did Brits envision the super fund as a means to secure practical investments?

What we did, as we said well, hey every one of our friends they all work, they all have jobs and they do all have this thing called superannuation. It’s sitting out there and they have anywhere from five thousand dollars to sort of one hundred thousand dollars depending on what they earn and how long they’ve been working. And it’s essentially it’s sitting out there it is being invested but it’s not being invested in things they necessarily care about or maybe even understand. So we basically thought of that as one of the catalysts for our business, going… 

Okay, can we pair up what is a very, very important asset class and what is essentially money that is being invested, for your future? And that’s essentially the important thing about superannuation – it’s money that is meant to help service your retirement. And we basically said, well when we look at our retirements, what is going to matter, right? Will the stock price of you know, Facebook matter when I retire? No, but will the cost of housing in Sydney matter when I retire? And if you want to live in Sydney or if you want to live in Melbourne or wherever might be, of course! Because when you do retire, you either hopefully you own your property and hopefully you’ve done well personally and you might have some other investments. But the reality is that maybe when you retire, maybe you won’t own your home outright and you will have to pay off the rest of your mortgage or perhaps you will be a lifetime renter. There are going to be these situations and we think it’s really important no matter what your final situation is when you get to retirement that you’ve had the benefit of being financially exposed to the asset class. 

With the priority of helping his clients find financially secure investments, Brits managed to build his business while enjoying the process of property browsing rather than buying.

I jumped straight into the business, so actually I spoke to the bank and said: “Hey, can I get some more finance to do some more deals?” They basically said thanks but no thanks. 

OK. 

And look especially like the last year for the banks has been very challenging and to be honest, like I don’t think I’ve had the time or the capacity we’ve been so focused on the business in terms of setting everything up and looking at properties for the business. It’s just the focus because we’ve got a lot riding on this for our members in terms of like we’ve got a lot of responsibility. It’s the retirement funds that they’ve trusted with us and that needs to be our number one focus which for me it’s like it’s kind of nice because I still get to spend a lot of time looking at property which I love. But yeah the trade-off for me is that I am looking on the benefit and working for the benefit of our members and not just for myself. 

Sharing his own experiences with unsuccessful investments, Brits explains what happened with his worst investment. 

I think it would have been 2008, I was playing around in the stock market – because everyone was at that point – and it was just before the GFC happened and I remember I literally bought Fortescue Metals the day before Lehman Brothers collapsed. So up until that point, the stock market had been doing quite well and I thought this stock trading thing is interesting, and essentially that was one of those short term lessons where I basically didn’t do enough research, didn’t look at the broader market and see what was going on, and jumped in. But I think what I learned from that was that I very quickly crystallized that position and took the loss. But the funny thing was that Fortescue after that – obviously they had a very rough short term period – but again over the long term, I think if I came over and looked at it now for quite a while but had I hung on to that position for a few more years it actually would have turned itself around and done quite well. And I think the thing that is taught me is that with any investment you’re going to make, you need to know it backwards. 

You need to know every single piece of that investment thesis and why you’re making it. And that’s the big thing with property shares, it’s very easy if to buy stock and when you realise you’ve made a bad trade you can just sell it very quickly. Whereas with property, when you’re making that investment it’s a bigger decision because typically it’ll be a bigger amount of money and you can’t just flip in and flop out of positions you need to have a lot of conviction with what you’re doing. 

Brits demonstrates however that despite his success, he too has had some a-ha moments in his property investing journey. 

I think my biggest a-ha moment with the property was I guess my last property investment which you’ve spoken about which was a personal one, where we actually ran our models. I think that was one where we had all of our numbers, we had all of the data and we went in on our strategy very firmly. But essentially what happened was we did the deal and then very shortly after we closed the deal, there was another property sale of a practically identical property just down the road that sold well above what we’d just paid. 

I think that was one of those crystallizations of going ah okay, if we have this data and analysis on our side we can make very well-informed views that will hopefully over the long term, yield some great results. 

Superestate: The Australian Property Super fund With Grant Brits

australian super fund returns

Brits explain that one major benefit of consolidating your super with Superestate is that the stress and intricacies of property investing is handled for you. 

I’ll explain this in two ways – for a member or for a user of our super fund, the experience is actually extremely easy and light touch. Normally with property investment of any type, there’s a lot of work that needs to be done by the individual. So what we’ve done we’ve said okay “can we make this as quick and as easy and as simple for our members as possible?” And we spend a lot of time, money and effort setting that up with our tech team. So from a members perspective to be involved in superstate and have you’re super invested in residential property, all they need to do is become a member of our fund and put some of their superannuation with our fund. And essentially, all that means is that if you know your TFN –  your tax file number – you can log onto our website and use your tax file number to find all of your superannuation that might be out there in the system from all your jobs, and then there and then on the spot you can consolidate your super into our fund. Essentially that’s it from the member perspective. It’s actually very, very easy and then from then, it’s like your regular superannuation fund. You can obviously monitor it and see how it’s doing, or you can not worry about it and know that that’s being invested in and taken care of for you. 

Brits continue that with Superestate, the process of obtaining your super is virtually the same as any other super fund, leaving you with a peace of mind and a great investment!

For our members we’re exactly the same as whoever their current super fund is, it’s just rather than the super being invested in what most super funds invest in – which is largely financial markets and products – with us, you know at least some of your superannuation has been invested in our residential property market. There’s actually nothing more for the members to do like there’s nothing more onerous for them. 

It’s very, very simple on the member side. On our business side, there’s obviously a lot more complication and a lot more work that goes into every single step we just spoke about. But that’s our business and that’s what we have to take care of, and that’s what we have to do as a Superfund program. 

Sharing with us the nitty-gritty details of the business, Brits explains Superestates mindset and goals for their customers.

The exciting thing for us right now is because we are still a new concept, the big thing for us is actually explaining to people that a super fund now does invest in residential property. So what happens now is we’re actually in the process of negotiating and hopefully going to be transacting on a few properties very, very soon for the fund. Essentially with property investment, it’s not something that you can just rush and buy the first thing you see, it does take time. So for us, the very exciting thing [is that] we’re hoping over the next few weeks, going to have a few properties that we’ll be able to show to our members. 

As soon as we do execute on those properties, there’ll be full transparency for our members. They’ll know exactly where the money is being invested and why. That’s the really exciting thing, and a lot of our members are very excited about that. For them knowing, “okay or well cool, I know my superannuation has been invested in say, this Terrace in Paddington” for example, hypothetically. They will have that transparency. And for us to actually get to that point, there’s obviously a whole lot of work that it takes for us to get there, and like for any property investor, we have our process, which for us is very, very systematic and I guess sort of regulated as well. 

With these aspirations in mind, Brits expand on the companies future announcements regarding current asset ownership. 

There’s several million dollars in the fund. But right now the money that will be invested in property is sitting in a high yield cash account as we’re deploying it. 

Brits explain that unlike previous government plans to allow for one’s super to be partially used as an investment for first home buyers, Superestate aims to invest solely into the asset class. 

The regime that was put up by the government, I think there were some suggestions that they should maybe let homeowners use super to buy their first property and so on. 

That actually hasn’t gone forward. What has gone forward is that an individual can make voluntary contributions into their superannuation, so above and beyond what your employer puts into a Superfund. And then what can happen then – if you are a first home buyer – [is that] you can then draw down on those funds for your first property. So essentially it’s creating a tax benefit of putting some more money in your super that you can maybe use for that first property. 

But how exactly does Superestate predict positive potential returns on investment and present this to new members… 

One of the steps in our purchasing processes, is we get every property independently valued by one of the property valuers. So what they do, they actually set the cap or the limits. We actually can never pay more than what an independent valuer says the property is worth. And then what happens is every six months after we purchase the property, it will be revalued and that property valuation will be updated. That’s how hopefully over the long term members will be able to see, “Okay well they invested in this property in 2018 and I can see six months after that, this is the valuation; at 12 months it was this, and now it’s gone up by X per cent”. So that’s one aspect and then the other aspect that will be interesting to our members is that it’s not only about capital growth and capital returns it’s also about rental income because we actually – which is very unique in any property strategy  – we actually don’t have any debt. 

Ah Okay

Yeah exactly. It’s an interesting one because everyone who’s involved around the property space typically they leverage, and dealing with the banks and finance that goes without saying. But because we’re a super fund,  we’ve taken a very conservative approach to this and we’ve actually said, “Okay, well we think over the long term we reduce a lot of the volatility by not having leverage in there”. And it does also mean that we have exposure to the rental income. 

That’s good. 

Yeah exactly, normally your rent is just going to service your mortgage costs whether it’s a home loan or investment loan or whatever it might be. And that’s essentially what people have become very used to rent doing. So for us it’s actually very different because you’ve got the capital side, where hopefully the properties are growing in value. But then in addition to this, you have that very safe stable and secure income stream which is the rental income, which comes into the fund every single month every single week. And the nice thing for our members is that they benefit fully from both. 

With all of these complex grounds to cover, Brits expand upon how Superestate is able to manage all these properties…

We’re actually talking to a few of the actual bigger real estate agencies so like Ray White, LJ Hooker, The Agency and so on. And we’ll actually use them for the management of property. 

So, we have enough on our plates right now with the investing side. When it comes to the day to day management, I think it’s one of those things we’re quite comfortable and I think our members are quite comfortable with, [which] is us just using a professional in this space. 

Sometimes rental properties can be extremely smooth and there’ll be no problems but just as likely, I think for us we want to make sure we’re focused on the investing side, rather than being distracted by day to day issues with rental properties – whether it’s a broken lock or something with the plumbing or whatever it might be. So we will use professional managers.

Brits also illustrate that with Superestate, there is no particular target market and that property investing can be achieved by anyone with a super fund.

Our initial reception has actually been great. We’ve been a little overwhelmed with the response, which has been very nice. So our members at the moment, it’s a very broad group, right? Like, our youngest members are sort of in their late teens and maybe on their first job, and our oldest members are actually, you know, fairly close to retirement. 

I think the one common theme that we see through all of our members is that they do all have an interest in residential property. That is the underlying central theme between every single member. They all acknowledge that they really like the asset class and they think it’s very important. They also acknowledge that this is a really nice easy way for them to get exposure to the asset class without having to really do too much. And so it really is a lot about that ease as well. 

With the beneficial return, something on customer’s minds is administration fees. Brits assure that at its core Superestate is a competitive and customer-focused company.

Every Super Fund has fees and we’re no different. The one good thing for us is because were in superannuation, which is a very cost-conscious environment. 

We actually have to make sure that our product is comparable to others. And it is a challenge for us because essentially it’s very hard to compare our product to anything else in the market because we’re very, very different. But we still have to compete on fees. 

Setting Superestate apart from other super funds then, Brits delves into the residential rather than commercial asset focus, that drives the company’s investment strategies. 

The thing is, there aren’t actually any other super funds doing anything like us with residential property. All the other super funds who do invest in the sort of we’ll call it, the property asset class, their investments are going into office towers and retail and basically the industrial property type, which you can get exposure to through unit trusts and listed investment products. None of them in a really meaningful way are focused on residential property. 

The big thing is, it’s very easy to go by you know, shares in a listed reit, right? Which is a listed property trust and you can do that straight away. Or if you are a big super fund and you’re looking to deploy a lot of your member’s money, it’s a lot easier to go invest 200 million dollars in an office tower than it is to go buy 100 properties worth 2 million dollars each. 

Basically, the nice thing for us is that we’re essentially starting from a clean slate, which means we get to grow in scale with our property fund and with our members. And essentially by the time we get to that scale, we would have already grown through the whole process and we’ll already have that large and diversified portfolio of properties which is really nice. 

With this in mind, Brits also explores the financial requirements of investing in residential property in the Australian market… 

As a super fund, there are no technical minimums for us. Like obviously in Sydney you need to have a certain amount of money to buy any property. 

We have that amount. We’re already in the market looking like we’ve said before which is really exciting for us. And then from a member perspective as well, there really is no minimum or maximum. Our youngest members literally have hundreds of dollars in superannuation and I guess some of our more mature members have several hundred thousand. So for us, the limitation is obviously you need enough money to buy a property in Sydney and Melbourne or wherever you might be looking and we’ve got that which is really nice for us. 

And whether certain markets – both state and nation-wide  – are more appealing…

When we look at the market and where we’re focused, we obviously have to pay very close attention to all the short term drivers and what’s going on in the individual markets. But the big one for us as well is because we’re a super fund, we need to be very, very focused on where we think the world is going to be in the long term. So 10, 20, 30 even 40 years plus, right? 

Yes. 

So we do look Australia-wide, but I’ll happily say that our focus is essentially on our biggest, most stable markets. Because we think when we look forward in the future and go “Okay well what is the world going to look like in 2030, 2040 and so on?”, we still have the view that we think Sydney and Melbourne followed by Brisbane will be the most important cities and the largest and have the most demand for property. 

I think one of the tools we used to look at that we look at population distribution and we go okay well we can see how many people are living in Sydney, and how many people are living in Melbourne, and what the concentration is and so on. And that really helps us to assess and go, “Okay, well when we’re building this portfolio where should we be allocating those funds?”. It wouldn’t make sense for us allocate a lot of money into a small emerging market just because it is seen as speculative. I think for us as a Superfund we’re looking for those very safe, stable and predictable results. 

However, with quantitative and analytical predictions aside, Brits illustrates that networking in itself is also a key component of successful investing. 

When we were setting up the business, we set out to build a very, very robust and sort of strong advisory team. The function of our property advisory committee is to help the business in terms of our property investment directions. So what we did, basically we’ve brought on two gentlemen as advisors. The first one as you mentioned is Dr Andrew Wilson. So he was chief economist at the domain for many years and he is extremely valuable when it comes to looking at the bigger picture, the macro – what does the whole market look like, so when we’re looking at, you know, Sydney versus Melbourne versus Brisbane and so on. But then even the next level down, when we’re looking at Sydney, he really helps us go, “Okay well what areas in Sydney? And what suburbs are doing what?”  And he’s very helpful when we might say be comparing an inner west suburb or something in the north and so on. 

Good. 

u0022Listening to not only the successes but also challenges and failures is something that’s very valuable.u0022u003cbru003e-Grant Brits

And then on the other side of the spectrum, we have Damien Cooley. Damien is one of the leading auctioneers I think in the country, but he’s based in Sydney. And his business does, I think it’s several thousand auctions a year in the residential space. So he’s very, very knowledgeable about what’s going on day to day in the market right? So he’s he’s the guy that’s out there, that when the market’s running hot, his job is very, very easy as an auctioneer. 

Yes

He’s feeling that. And just as well on the flip side, when the market is not doing so well, he basically sees that firsthand and feels that. He brings a really valuable insight as to what’s going on, on different property types and different areas and so on. Right? Because he’s at that coalface every single day. So between these two gentlemen, we have a very nice coverage on Dr Wilson on the very high-level economic drivers – so what’s going on. And then with Damian, the micro, what is happening day to day at property auctions. 

Brits explain just how beneficial the advisors he networked with are in providing a clearer perspective of the property market…

That’s the job of our team to go well we’ve got these two great advisors. We then need to use their information and bring that all together and basically apply what is financial markets analysis and rigour and then applying that to our property market. For us it’s really fun and exciting because we view the residential property as it is – they are all homes at the end of the day – but they’re also financial assets. And we look at the sort of under both voyances. 

Brits also speak of how they managed to get Dr Wilson and Damien on board, and how long it took to establish Superestate following this. 

We had to go out and find them. Basically we met them, had the discussion and told them what we were trying to do and trying to achieve. They saw I guess, the challenges for many Australians in terms of getting exposure to the property market. I think they realised that given their knowledge and expertise, that they might be able to add a lot of value to a business like this and help out. 

We’ve actually we’ve been around as a business for a few years because getting all of our licensing and approvals to run and establish a super fund took a long time. And that’s something that should happen, it’s very, very important. And there were lots of regulatory boxes we needed to tick and licensing we needed to obtain and so on and that did take quite a long time. Then in March this year, we actually opened to the public. So we’ve been operational for now, two and a bit months – which in superannuation is still the blink of an eye, but yeah. So essentially the business has been around for a few years but operational for only a few months. So the exciting thing for us is because we are still a very new concept, we’re going with our first property purchase purchases. We will be doing a lot more marketing and basically increasing that awareness as to what we are, what we’re investing in and how everyday Australians can now invest their super in property very, very easily. 

With his company clearly on its way to success, Brits explains what allowed him to build Superestate from the ground up… 

On a personal level, I’m very fortunate that my partner works very hard and has been able to cover a lot of the bills so she has to get a lot of credit. She works extremely long hours and she allows me to focus on this business, which is very nice. 

And how exactly the brand of Superestate came to be…

Branding and naming is always a challenge for any business because you want it to convey who you are and what you do. I think for us, literally, we’d had the idea and said, “Okay well let’s pair property and superannuation together” and then what it was, I think and I’ll be honest, we were actually playing around looking at domain names seeing what was available and sort of whittled it down to a few and Superestate was the one that was available, it stood out to us and it really resonated with what we were trying to do. So it was because it was available. 

It was one of those nice marriages, so when we actually stumbled across it was a very clear winner. 

However, despite the positive success Brits has had so far, he acknowledges that it could not have happened had he listened to his doubt and setbacks 

On a personal investment level, I think getting involved in property for your first purchases is always a big step because it’s a lot of money. It’s something a lot of people spend a lot of time looking at and they should. It’s one of those things that if you know you’ve done a lot of work and research in it and you can make a very firm decision, I think that’s the right time to do it. But look, it is hard and it is a big step and I have a lot of respect for anyone who can do it and can do it well because it’s not easy. 

Yeah. Yeah. I agree. 

For a long time, I saw a lot of people who basically avoided the market just because there was a bit of fear and uncertainty around it. But again it all comes down to personal conviction on any investment. 

He also confirms once more the importance of mentors and positive relations both personally and in the industry.

I guess the one nice thing about our positioning, [is that] we’re completely independent to sort of everyone in the real estate industry at this point. So what that means [is that] I can actually have very, very nice relationships with a lot of individuals in the space. I won’t name any at this point, but there are several individuals that we are very close with. Whether they be more on that advisory side, or on the sales side or leasing. There are some individuals that have given a lot of value to this business and have afforded us a lot of their time. Some of these individuals, they might become involved in a more official capacity in the future or they might not. But it is something and I think those relationships have been personal ones that we’ve just fostered over the last year and a half to two years;  looking at properties and going through this whole experience of setting the business up. So it is something that I think having great positive networks in relationships is always going to be beneficial. 

On a more individual level, Brits also shares how his listening and reading interests have assisted him on his journey to success. 

I spend a lot of my time just like basically in transit listening to podcasts and whatever. I try, I actually try to listen to more business podcasts. 

On the listening side the one I guess, or well the two podcasts I listen to very, very regularly, one is called Masters of Scale with Reid Hoffman. So he’s one of the founders of LinkedIn and what he does, is he essentially interviews a lot of high-level business leaders from the tech industry. So people like Mark Zuckerberg and so on. I really like hearing his dissection of how these people built their businesses and what were the challenges and focus for them. And I think the other one I spend a lot of time listening to, I think it’s called How I Built This. Again, it’s an American podcast but essentially what it is, is it’s very, very high-level business leaders discussing their personal journeys. I think the very nice thing you know hearing anyone, whether it be an investor, whether it be a startup founder or basically a business leader, hearing the stories of the challenges that they’ve overcome because in the media I guess you do see or you know the bright lights and the glitter and everything that looks great but I think realizing that every one of these individuals no matter what their position now, they’ve been through a lot to get there. I think the one book that – and this is only just a recent one but it actually ties into this theme as well – is Shoe Dog, the sort of memoir on Phil Knight, the founder of Nike. 

Oh that’s sounds interesting. Cool. 

Yeah. Again, what all of these things come back to I think, is it’s explaining that all of these amazing individuals and these people that are put up by society as you know, beyond incredible… a lot of the time they are very normal humans who’ve just managed to achieve amazing things through their tenacity and resilience and so on. I think that’s something whether you’re looking at personal investment, or business, or whatever it might be, that I think really resonates. And listening to not only the successes but also challenges and failures is something that’s very valuable. 

Remaining positive about his own journey, Brits states that given the chance to change his own journey and give advice to himself 10 years ago, he would refrain from doing so. 

I don’t think I’d say anything. Just because I’m very happy with how everything has turned out and I’m very excited about sort of the position I’m in now and the future of this business and what we’re going to be doing. I think look, there’s obviously some things in my past that I wish didn’t happen, but I think everything has led to this position and everything, kind of have to take the good with the bad. So I think if I saw myself I’d just be very happy knowing what was in-store today. 

I’ll be honest, there are lots of things that I wish I could wipe out. But you know you never know how the world might have worked out differently had you taken one slightly different decision. And it is funny how little decisions can ultimately have very big impacts. So who knows? Maybe things could have been much better or much worse, I don’t know? And that’s why I’m very happy where things are. 

With so much positivity and excitement in regards to Superestate and an undoubtedly successful road ahead of him, Brits reflect on what he would change in the past once more, leaving us with advice that we must all remember when starting on our own road to success… 

Actually the only thing I would change now that I’ve sort of been thinking about it. The only thing that I would change is basically not listening to any of those negative outside forces when I was first thinking about getting involved in investing in property, like eight-nine years ago. 

Yes the GFC time. 

Exactly, I think in uncertain times, it’s very easy to listen to doubters and naysayers and I think looking back, essentially my advice would be bought as much high-quality property as you can because it’s in for a great ride.

This episode was produced by Andrew Faleafaga with narrations and interviews conducted by Tyrone Shum.

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