Forums / Property Investing / Help Needed! / SMSF Purchase Property Outright

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  • Profile photo of ECSMOMECSMOM
    Participant
    @ecsmom
    Join Date: 2018
    Post Count: 1

    Looking for some information on SMSF – can I buy a residential investment property outright with my super? If so, do I need to leave a % of money in the fund? I don’t own any property and am currently renting – if that matters. TIA.

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,010

    Evening Ecsom

    Yes assuming your SMSF Trust Deed allows you to invest in property there is nothing to stop you doing so but the question is why would you do it.

    There is no legal requirement forcing you to keep a % of money in the Fund but again as a Trustee or Director of the Trustee Company and acting responsibily you want to ensure you have cash flow coming in to cover the ongoing costs of the property and SMSF management.

    Diversification of Assets is always wise do why not look to take a SMSF loan with an offset account.

    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 TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,173

    Probably poor wording but ‘you’ cant purchase property with your super, the trustee of your SMSF can though.

    But I agree with Richard – why would you want to cause the trustee to do that? Unleveraged property has a low return, could the money be used elsewhere more effectively?

    Terryw | Structuring Lawyers / Loan Structuring Pty Ltd
    http://propertytaxbook.com.au/
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    Lawyer, Mortgage Broker and Tax Advisor (Aust wide) http://propertytaxbook.com.au/

    Profile photo of Dale SmithDale Smith
    Participant
    @propertyinvetsor888
    Join Date: 2019
    Post Count: 4

    Interesting to note that Macquarie, the last bank willing to lend to SMSFs, announced that it will stop for any applications after June 30

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,010

    Unless you are existing accreditated introducer Macquarie isn’t taking on any new SMSF’s now let alone June.

    Still several other SMSF lenders and some interesting post LBRS products in the pipeline.

    Cheers

    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 BuyersAgentBuyersAgent
    Participant
    @knightm
    Join Date: 2005
    Post Count: 317

    I see people buying smsf property outright (or on very low LVRs) when they are nearing retirement quite commonly. For folk who like owning property as a pure assett class to generate rental returns for retirement income it works, as long as you target higher yielding properties. For example currently I am searching for a small block of units for an smsf and they are not intending to sell for capital gain but keep long term and use rental income to buy milk and bread during retirement.

    The main difference in their mind is that the assett is tangible, the rent is reliable, the problems are quantifiable. We can all make arguments for/against shares and dividends and other income streams but each person needs to live with the risks they take on. Some people are sceptical about stock market crashes or dividends disappearing in future. For them it makes sense I guess.

    As mentioned above you still need to keep SOME buffer funds because you need to cover costs, emergencies, rates/insurance when properties are vacant etc so I would proceed with caution and set aside a good amount of cash still. Also as mentioned the wisdom of using 80-90% of a fund to buy 1 property is pretty questionable, very little diversification there. So… if you have enough cash to buy several properties outright AND some shares AND some cash then I would think go for it if you are nearing retirement and just thinking about income. Choose your locations carefully as you don’t want vacant properties if you live on the rent!

    If you are young and have limited funds, then this could be a bad idea and the leverage is much more attractive longer term. Not financial advice of course, get expert help before doing anything.

    BuyersAgent | Precium
    http://www.precium.com.au
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    South Coast NSW Independent Buyers Agent - Wollongong to Batemans Bay and Regional NSW

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,010

    Due to popular demand we are launching our in house SMSF loan product with no liquidity and no minimum fund balance.

    It is a lodoc loan so even if you are self employed and the lvr and property asset is right you will be considered.

    Even if a new Labour Govt carry out their threats and withdrawn LBRA’s the product will still strive.

    Just waiting on legal opinion post an ATO PR to release it to the market but certainly if initial inquiry is anything to go by there will be no shortage of takers.

    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.

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