Hi guys, just after some options from some of you commercial property investors in regards to who/which SMSF you use to invest? Any popular or preferred SMSF?
Cheers
DavidI’m assuming by ‘which SMSF do you use’ you’re talking about some of the cheapy no frills SMSF setup/admin companies which make their money getting commissions/bonuses from the limited range of products they recommend.
Generally for ease of use and greatest flexibility for investing having a specific setup of a SMSF if the best pathway – an accountant/lawyer can organise this. You’ll generally need to get financial advice on the specifics regarding this – especially if you want to invest in property/commercial property as lenders will put it in their requirements for settlement.
Just remember the important saying – pay peanuts, get monkeys.
Corey Batt | Precision Funding
http://www.precisionfunding.com.au
Email Me | Phone MeInvestment Focused Finance Strategist - servicing Australia-wide
Hi David,
I’m not sure about your current situation and how involved you want to be with your SMSF, but back when I had limited funds available in 2013 I found that eSuperfund was amongst the most competitive in price and offered exactly what I wanted.
https://www.esuperfund.com.au/home
Although it can be time consuming to go through their entire checklist, and upload all the documentation required, I found that the effort and time was worth the sacrifice. Thanks to the SMSF I was able to invest in Steve McKnight’s Passive Income Fund, which has performed spectacularly since it’s inception.
http://www.passiveincomefund.com/
P.S. You might want to consider talking to an accountant about the best way to set this up i.e. you might need a Corporate Trustee in order to invest in properties using your SMSF
A SMSF is a trust. The proposed members must set up a trustee and the settle the trust and appoint themselves members of hte trust. Who do you use? The trustee does the work. There are various companies that help in administration of the fund, there are also financial advisors that can advise on the financial aspects, but it is the trustee that must make the decisions for hte fund.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Hi David,
I just used the accountant I use for my business to set up the SMSF company/trust etc. You will need to get a financial planner’s approval and it is a fairly expensive process. Approx 20K by the time all the professionals and red tape invoices were paid.
Terry summation is correct about the process and it can be a daunting but rewarding one to learn all the in and outs.
I guess one of the main things to remember is that you need to think of an SMSF fund in a similar way to the super you have now, except (I assume because you are here) your SMSF will be investing in commercial property on your behalf instead of where super funds invest your current super. You still can’t access the money until you retire etc same as standard super.
I would advise that your first step is to go to your accountant and financial planner with your plan and get their professional advice. This may or may not be the best option for you given your current circumstances and I believe it is best to get independent professional advice early on when it comes to SMSF.
Hi David,
One thing to consider, prior to establishing your SMSF is the cost of your money, depending on what it is that you plan to do your interest rate will be higher 1-1.5% as will your deposit. Talk to your broker about what to expect before you establish.
Self-managed superannuation funds with less than $1 million in assets perform ‘significantly worse’ than institutional funds because investment returns are heavily eroded by the costs of running the fund. This raises the question of whether creating an SMSF is worth it for most investors.
Jason D | CSI Prop
https://csiprop.com
Email Me | Phone MeWe looked into a SMSF about a year ago and banks would only offer 70% LVR and rates were approx 6.25% from memory.
Likely to have dropped with recent rate cuts. We decided to hold off for a few years.
80% or even 85% with 1 lender available however interest rates certainly have not come down too much.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
We looked into a SMSF about a year ago and banks would only offer 70% LVR and rates were approx 6.25% from memory.
Likely to have dropped with recent rate cuts. We decided to hold off for a few years.
True but “only” 70% lvr means you are still getting leverage that you wouldn’t otherwise get in a super fund investment. IE if you have 200k in any fund and buy shares you get 200k of shares. Even at 60% lvr with 40% deposit (which sounds like a lousy lvr in real estate) you get a $500k property with $200k deposit and $300k loan. This means you have $500k of asset that can grow instead of $200k of asset. (PLEASE NOTE I am ignoring other costs like stamp duty and buffer funds to keep the example simple) Assuming similar positive capital growth rates over the long term you will win having more exposure. The idea is that even with low lvr you get SOME leverage and your money gets into a bigger asset which could mean magnification of gains (or losses). I am not saying this is right for everyone but (in general) for younger people with time on their side and money to invest in the fund it might outperform normal fund investments because of the leverage. Not financial advice.
BuyersAgent | Precium
http://www.precium.com.au
Email Me | Phone MeSouth Coast NSW Independent Buyers Agent - Wollongong to Batemans Bay and Regional NSW. DOWNLOAD OUR FREE 14 POINT PROPERTY BUYER'S CHEATSHEET to avoid painful mistakes at precium.com.au
Try not to do obvious mistakes and you’ll be fine.
https://propertyupdate.com.au/6-common-mistakes-made-when-buying-an-investment-property-in-an-smsf/
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