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Commercial property is being actively promoted as a compelling alternative to residential investment, particularly as higher interest rates reduce borrowing capacity and tighter tenancy laws make residential property less attractive. On the surface, the pitch is appealing: higher rental yields, tenants paying most outgoings, and the potential for capital growth. But in Stuart's assessment, current valuations make the risk hard to justify.

This episode examines commercial property through a valuation lens, explaining how cap rates work, why current pricing looks stretched relative to historical norms, and how the spread between commercial yields and the 10-year government bond rate has compressed to levels last seen before the GFC. At recent auction prices, some properties are selling on cap rates below the risk-free rate, meaning investors are accepting less income than a government bond while taking on substantially more risk.

The analysis models what happens to investor equity if cap rates revert toward their long-term average of 3.5% to 4.5% above the bond rate. The results are stark: at 70% leverage, a reversion to historical norms could wipe out most or all of an investor's equity.

Stuart also explores why cap rates have stayed compressed despite rising bond yields, and why the structural forces holding valuations up may not last. Commercial property can be an excellent investment, but only at the right price.

My new book is available for pre-order now: Pre-ordering the book will help me get it into bookstores. So please do me a favour - please consider pre-ordering now - links and pre-order bonus are available here: https://prosolution.com.au/book-preorder-bonus

Do you have a question for the podcast? Email us at questions@investopoly.com.au.

If you're interested in working with our team and me, discover how we can work together here: https://prosolution.com.au/family-office-services

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IMPORTANT: This podcast provides general information about finance, taxes, and credit. This means that the content does not consider your specific objectives, financial situation, or needs. It is crucial for you to assess whether the information is suitable for your circumstances before taking any actions based on it. If you find yourself uncertain about the relevance or your specific needs, it is advisable to seek advice from a licensed and trustworthy professional.

Pre-Order Wealth by Design Here

This episode brings together three listener scenarios that each involve genuinely complex financial positions, multiple moving parts, significant income, and decisions where getting the sequencing right matters enormously.

The first comes from a 34-year-old specialist trainee doctor in Sydney, engaged, planning a family, and facing a highly unusual income trajectory, moving from $250k now to as low as $130k during a London fellowship, before returning to Perth as a consultant earning potentially $600k or more. The central question is whether to buy a stepping-stone property in Perth's middle-ring suburbs before income rises, renovate it during an 18-month stay, then rent it out while overseas, or wait, save, and buy a better asset closer to his forever suburbs once borrowing capacity is fully established.

The second involves a 49-year-old earning $475k with seven Melbourne investment properties worth $6.77 million, net debt of just $330k, and $920k in super, but almost no share exposure. She is three years from being able to retire on rental income, but is questioning whether her heavily concentrated, all-property strategy leaves too much on the table in terms of tax efficiency, liquidity, and long-term portfolio resilience.

The third comes from a couple in their early fifties with a nearly paid-off home, a modest investment property in a good school zone, $1.2 million in combined super, and $100k in underperforming shares, asking for honest clarity on whether early retirement is realistic and what the best path forward looks like across property, shares, and super contributions.

My new book is available for pre-order now: Pre-ordering the book will help me get it into bookstores. So please do me a favour - please consider pre-ordering now - links and pre-order bonus are available here: https://prosolution.com.au/book-preorder-bonus

Do you have a question for the podcast? Email us at questions@investopoly.com.au.

If you're interested in working with our team and me, discover how we can work together here: https://prosolution.com.au/family-office-services

If this episode resonated with you, please leave a rating on your favourite podcast platform.

Subscribe to my weekly blog: https://prosolution.com.au/stay-connected

IMPORTANT: This podcast provides general information about finance, taxes, and credit. This means that the content does not consider your specific objectives, financial situation, or needs. It is crucial for you to assess whether the information is suitable for your circumstances before taking any actions based on it. If you find yourself uncertain about the relevance or your specific needs, it is advisable to seek advice from a licensed and trustworthy professional.

Pre-order Wealth by Design Here

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Superannuation's enforced long investment horizon is one of the most underused structural advantages available to Australian investors. This blog examines whether internally geared ETFs have a role to play within super, and backs the analysis with detailed financial modelling rather than theory alone.

The numbers are compelling. A 30-year-old with $200,000 in super, contributing $20,000 per year and investing in a geared diversified ETF via an SMSF, is projected to retire with a balance of approximately $4.3 million, more than 26% higher than an equivalent ungeared strategy in a low-cost industry fund. The benefit is most pronounced for younger investors with larger balances, longer timeframes, and higher contribution rates. As retirement approaches, the case for gearing weakens materially.

But the strategy carries real risks that deserve equal attention. Volatility is amplified; a 50% market fall in a 35% geared ETF produces a balance decline of around 77%. Sequence-of-returns risk can turn a strong strategy into a poor one, depending on when a major correction occurs. And the cost and compliance obligations of running an SMSF add a layer of responsibility that should not be taken lightly.

The blog also surveys the available geared ETF options in Australia, covering diversified and single-market products across a range of gearing levels. The conclusion is clear: gearing inside super can be genuinely attractive, but is best treated as a complement to ungeared strategies rather than an all-or-nothing decision.

My new book is available for pre-order now: Pre-ordering the book will help me get it into bookstores. So please do me a favour - please consider pre-ordering now - links and pre-order bonus are available here: https://prosolution.com.au/book-preorder-bonus

Do you have a question for the podcast? Email us at questions@investopoly.com.au.

If you're interested in working with our team and me, discover how we can work together here: https://prosolution.com.au/family-office-services

If this episode resonated with you, please leave a rating on your favourite podcast platform.

Subscribe to my weekly blog: https://prosolution.com.au/stay-connected

IMPORTANT: This podcast provides general information about finance, taxes, and credit. This means that the content does not consider your specific objectives, financial situation, or needs. It is crucial for you to assess whether the information is suitable for your circumstances before taking any actions based on it. If you find yourself uncertain about the relevance or your specific needs, it is advisable to seek advice from a licensed and trustworthy professional.