Fresh at this but looking at setting up a SMSF and purchasing a investment property with a IO loan, this would be my second property and not my principal residence at first but would like it to be. Pros and cons?
Hi street monkey – I have been toying with purchasing an investment property with SMSF and aim to set one up this year, a little worried I don’t have enough in super yet (only $100k but you can borrow 70% and even up to 80%.
Firstly you and your relatives are not permitted to live in a property purchased with SMSF (assuming you can once you have retired).
If you do a search on this forum you will be able to find some previous posts on this.Thanks marree- I dont have a lot in super ..only about 30k but was interested if that could be used as a deposit on a IO once a smsf has been set up with the loan being for a investment property? With the existing PI loan I have for my PPOR unsure which is the right way to go…..set up my existing property as the IO and move into the new place or vice versa……..both areas have potential for growth.
Hi Street Monkey
You probably do not have any money in super at the moment to warrant setting up a SMSF. You need to remember that there are a few compliance costs that come along with a SMSF.
Regards Maurice
Thanks MauriceS
Thats pretty much what I needed to know…..wasnt sure whether the set up and running costs would defeat the purpose at this stage of the game.Might be better of getting keeping the super where it is and just look at a io loan for the investment property for a start.I would suggest looking at a SMSF around the 300k mark
SM must admit I wouldn't go as far as Maurice and we recommend our clients consider a SMSF if they have $75K +.
They have to understand the set up, and annual complaince costs but if they are looking for flexibility and opportunity of increasing the returns over a standard industry fund then it is certainly an option.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Hi Richard,
Qlds007 wrote:SM must admit I wouldn't go as far as Maurice and we recommend our clients consider a SMSF if they have $75K +.They have to understand the set up, and annual complaince costs but if they are looking for flexibility and opportunity of increasing the returns over a standard industry fund then it is certainly an option.
Cheers
Yours in Finance
So would you recommend a SMSF over 'normal' super funds? (Understanding the effectiveness of the SM part can vary). I'm in the PSS (Public Sector Super) and I'm led to believe it's a decent fund. I'm contributing the maximum 10% a fortnight.
cheers,
—
MarkHi Mark
Assuming it is a Defined Benefit Fund i think you will find it will be difficult to beat.
Course doesnt mean that the performance is any good.
Difficult to comment further without other information.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
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