Purchasing property with your SMSF

At the wHere ? group we have established ourselves as specialists in Self Managed Super Funds so our clients may set these funds up for the sole purpose of purchasing property within the fund.

Using our same criteria mentioned of researching and purchasing property to generate capital growth, we can buy investment properties for clients within their SMSF with a minimum balances of$100,000.

When putting together a property game plan for clients we can incorporate this into the equation as well, even if it is a long term component to their game plan.

Purchasing property within a SMSF can be as simple or hard as you make it, but the key to always remember, is the strategy is a long term strategy, so with this in mind, we look for properties which will suit this type of plan; i.e. long term capital growth, minimal work to be done over time, and a property that has a good rental return.

Properties we purchase in a SMSF may not always be the same type of properties we purchase for other customers, there are a few additional attributes we look for;

• High Yield Investments – 5.5% minimum as the rent in this case should service the debt with capacity to purchase further
properties into the future.
• Low Maintenance – as you will be keeping this property for a much longer time than a property purchased outside of super it's important that as the property ages, it doesn't cost you.
• Capital city or large regional town – As this strategy is a long term strategy, this is one of the most important factors, the growth will always be sustainable in major capital cities.

The above factors are the secondary attributes, and the property locations and type of properties will always depend on the stage of life and how aggressive our SMSF clients are.

Below gives you a brief idea of how borrowing with your SMSF to purchase property works;

Example –

A couple on $60k pa each @ 9% contributions

•    Starting balance = $50k ea in super = $100k

$104pw each as employer contributions into Superannuation

Less 15% input tax = $88 net each = $176pw as regular repayments

Ability to purchase a property for $300,000

Loan repayments     $240 p/w based on 5.79% pa

Net Rent receivable    $294 p/w

Net position        $54 pw Positive

Loan would also decrease by $176 p/w from personal super contributions

Like to know more?

Contact us to arrange an obligation free consultation.