Hi everyone,
We have just bought a property under a SMSF. Just to give you the facts and figures, it may help you greatly. Also, people have mentioned it's complicated, and it is, however we have found a very good accountant that is doing all the paperwork so it really is quite simple for us, sign here, fill this out, post that etc. so a great accountant is ESSENTIAL, as it is with normal investing. Our super (mine and hubby's combined from 2 diff funds) totalled approx $140k. The property we bought was at about our maximum at $339k and the lender usually lends up to 70%, ours was a 65% lend, the approx figures are that the loan will be for about $221 k and it's about $11k for costs, (this is all fees from every angle). Now the repayments on $221k are much less than the anticipated rent of about $350 per week, so it immediately becomes cash flow positive, but the cream on the cake is that your super payments (or in this case hubbys, as I am not working) will be going into the fund each week, which means if he gets say $300 per week super, this is another repayment on the property, so effectively we are paying $650 per week on the property and the repayment is say $300 per week (i dont have figures with me, but lets say this as an example) The fund is set up then set and forget, yearly audits need to be done and they are carried out by tax office, however, once again, acct does all that. The fees are about $1000-1500 per year, however we don't look at the fees, we see it as: there is no way super will give us the same return given that property is a 10 year cycle, therefore, if we were only ever to get one property out of this over time (so we can access at retirement) then we are ahead as the unit is currently valued at $380k, if it doubles in say 10 years, it may be worth $700k, the debt would be reduced from the current $221k (lets say $50k over 10 years) so the debt remaining would be $171k on a value of $700+ k. Then we would sell that and buy 2 etc etc. Even though these figures are hearsay, I think you would agree that $700k sounds better than what super would give you currently (perhaps $300-400k best case). Am happy to answer more i you need. We are so glad we did it and if something changes our mind (which i doubt very much) you can simply sell the asset and go back to 2 managed super funds. p.s some funds don't pay weekly into SMSF (like hubbys) so we transfer an annual buffer every year.
Ingrid