Forums / Property Investing / Creative Investing / Setting up SMSF to purchase NRAS property

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  • Profile photo of JannazoJannazo
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    @jannazo
    Join Date: 2012
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    Hi, we are thinking to set up a SMSF to purchase an NRAS property. We have been quoted $5,500 as it is more complex than a regular SMSF set up. Is this a fair cost? We have $80k between the two of us and expect to purchase off the plan upto $350k . Are there any pitfalls we should be aware of? Any advice would be welcome.

    Profile photo of Richard TaylorRichard Taylor
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    @qlds007
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    Hi Troy

    SMSF Ebook just sent.

    Cheers

    Yours in Finance

    Richard Taylor | Mortgage Broker helping investors build their wealth thru property
    http://www.mortgagecapitalaustralia.com.au
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    0-40 Properties in a decade with a unencumbered portfolio value in excess of $40M. Ask me for a copy of my API Interview.

    Profile photo of Richard TaylorRichard Taylor
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    Jannazo

    Wow sounds very expensive to me and cant see why it would that more complicated than the average SMSF.

    Then of course you have to find a lender that will lend to a SMSF for a NRAS property.

    They are around but they are not thick on the ground.

    Cheers

    Yours in Finance

    Richard Taylor | Mortgage Broker helping investors build their wealth thru property
    http://www.mortgagecapitalaustralia.com.au
    Email Me | Phone Me

    0-40 Properties in a decade with a unencumbered portfolio value in excess of $40M. Ask me for a copy of my API Interview.

    Profile photo of Melanie ThewlisMelanie Thewlis
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    Hi Jannazo,

    It's possible to get up to an 80% LVR when using an SMSF to purchase an NRAS property off the plan, so you shouldn't have too much trouble acquiring a property for $350,000.  <moderator: delete advertising>

    Regards,

    Melanie Thewlis

    Profile photo of Jacqui MiddletonJacqui Middleton
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    @jacm
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    That is more than triple what I paid to set up my SMSF.  I cannot see how it would be more complex to set up.  NRAS property or NRAS property… it's still a property.

    Jacqui Middleton | Middleton Buyers Advocates
    http://www.middletonbuyersadvocates.com.au
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    VIC Buyers' Agents for investors, home buyers & SMSFs.

    Profile photo of Brady5Brady5
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    Excuse my ignorance but what is an NRAS property?;

    Profile photo of Melanie ThewlisMelanie Thewlis
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    @melanie-thewlis
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    Hi Brady,

    An NRAS property is one that has been approved for participation in the National Rental Affordability Scheme. This is an Australian government program to increase the stock of affordable rental dwellings across Australia by encouraging private investment in new affordable housing.

    Basically, the owner of the property agrees to let his/her property at 20% below the market rent to approved tenants. In return, the investor receives a mixture of incentives from the federal and state governments in either the for of a tax offset or payment. This incentive is received for ten years and is currently valued at $9,981. In normal cases this more than makes up for the shortfall in rental income, and it means that in some cases the NRAS incentives could finance up to around 1/3 of the purchase price of the property.

    NRAS properties have been popular with some investors over the past couple of years, although you of course need to do all your normal due diligence as with buying any normal property.

    There's plenty of NRAS info available on the net. A good place to start is the federal government's site: http://www.fahcsia.gov.au/our-responsibilities/housing-support/programs-services/national-rental-affordability-scheme

    Cheers,

    Melanie

    Profile photo of Richard TaylorRichard Taylor
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    NRAS – National Rental Affordability Scheme

    Cheers

    Yours in Finance

    Richard Taylor | Mortgage Broker helping investors build their wealth thru property
    http://www.mortgagecapitalaustralia.com.au
    Email Me | Phone Me

    0-40 Properties in a decade with a unencumbered portfolio value in excess of $40M. Ask me for a copy of my API Interview.

    Profile photo of Brady5Brady5
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    Thanks Melanie. Much appreciated.!!!

    Profile photo of JannazoJannazo
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    @jannazo
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    Hi All, thanks for your comments. the initial cost is $1700 to set up a Self Managed Super Fund. in order to borrow I need a corporate fund and a bare trust in order to get a loan through my SMSF to buy a National Rental Affordabiltiy Scheme property. That is where the extra expense comes in, up to about $5500 including the initial set up cost. It sounds a lot, but I was wondering if anyone out there has done this and knows if this is a fair cost?

    Profile photo of Richard TaylorRichard Taylor
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    Hi Jan

    Wow that's exhorbant.

    Did 2 SMSF loans this week and you are looking at $1200 to do the Company and Security Trustee Deed.

    Unless you are adding the lenders application, valuation, legals etc but still that is way over the top.

    Cheers

    Yours in Finance

    Richard Taylor | Mortgage Broker helping investors build their wealth thru property
    http://www.mortgagecapitalaustralia.com.au
    Email Me | Phone Me

    0-40 Properties in a decade with a unencumbered portfolio value in excess of $40M. Ask me for a copy of my API Interview.

    Profile photo of JannazoJannazo
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    Thanks for that Richard, I better get some more quotes.:)

    Profile photo of Jacqui MiddletonJacqui Middleton
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    I got my SMSF set up AND a corporate trustee setup for $1600 total.  The bare trust, needed for the St George bank loan, cost $1000 extra.  St George bank had a requirement I speak to a financial advisor who had to sign a document saying I understood I had to make mortgage repayments bla bla bla…. the financial advisor provided this service for $450.

    Jacqui Middleton | Middleton Buyers Advocates
    http://www.middletonbuyersadvocates.com.au
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    VIC Buyers' Agents for investors, home buyers & SMSFs.

    Profile photo of Richard TaylorRichard Taylor
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    Exactly Jac

    And you got service with a smile for that price.

    Cheers

    Yours in Finance

    Richard Taylor | Mortgage Broker helping investors build their wealth thru property
    http://www.mortgagecapitalaustralia.com.au
    Email Me | Phone Me

    0-40 Properties in a decade with a unencumbered portfolio value in excess of $40M. Ask me for a copy of my API Interview.

    Profile photo of Jacqui MiddletonJacqui Middleton
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    Indeed.  Poor financial advisor had to sit there and hold a straight face while he asked me if I understood that I would have to make repayments on the loan.  Apparently some people think it to be optional ehheheheheh

    Jacqui Middleton | Middleton Buyers Advocates
    http://www.middletonbuyersadvocates.com.au
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    VIC Buyers' Agents for investors, home buyers & SMSFs.

    Profile photo of insanoinsano
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    @insano
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    Interesting, thanks for all the info….

    I've been thinking about going into an NRAS property using my super too, $5000 setup does sound a little on the high side, not that I've looked into it but did attend a seminar a while back and they mentioned this setup and I don't remember it being that high of a cost or I would have remembered using some cuss words…and I wasn't really interested at the time.

    Since then I've heard the talk shows such as skybusiness taking about the government looking into super and possible changes, as always the good ol government looking at moving the goal posts for all of us to keep chasing it for hard and longer… nothing happening just yet but I've got 35-40yrs of a waiting game to see…

    Other thing that put me off was having a property in super puts all your eggs in one basket, no diversification so that's a risk in itself…

    On the other hand I love property and WANT another one!!

    Leverage to buy a property (which my super doesn't do atm, leverage that is)

    Up to $115,000 in government incentive over 10 yrs, my super fund prob won't perform that wall over 10 yrs

    Guess it's time to go back and do the numbers and see….

    Would love to hear more about your SFSM and setup fees Jannazo once you've completed the process

    Wayno

    Profile photo of Richard TaylorRichard Taylor
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    Wayno

    I wrote an Ebook on the subject last year so shoot me an email if you would like a copy.

    Cheers

    Yours in Finance

    Richard Taylor | Mortgage Broker helping investors build their wealth thru property
    http://www.mortgagecapitalaustralia.com.au
    Email Me | Phone Me

    0-40 Properties in a decade with a unencumbered portfolio value in excess of $40M. Ask me for a copy of my API Interview.

    Profile photo of CootaCoota
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    @coota
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    Richard,

    Have about 150k in my super and looking at investing in property through super also,if you can flick me a copy of the Ebook 

    that would be great.

    Regards

    Michael

    Profile photo of Richard TaylorRichard Taylor
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    @qlds007
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    Sure Michael

    Can you drop me an email so i can reply or give me your email address.

    Cheers

    Yours in Finance

    Richard Taylor | Mortgage Broker helping investors build their wealth thru property
    http://www.mortgagecapitalaustralia.com.au
    Email Me | Phone Me

    0-40 Properties in a decade with a unencumbered portfolio value in excess of $40M. Ask me for a copy of my API Interview.

    Profile photo of insanoinsano
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    @insano
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