Hi, we are about to sign a contract to purchase our first investment property through our SMSF. It's a one bedroom 58 square metres off the plan in Carlton Melbourne, for completion in 18 months. We still need to set up a bare trust to borrow 80% ..a bit scared… hope we are doing the right thing?! Any advice welcomed.
Regards RonHi Julie & Ron
I must admit if it was the first purchase in your SMSF i certainly dont think i would be buying an off the plan property especially if you are looking at an 80%.
There are only 3 lenders that i am aware who are offering an 80% lvr and one of the certainly wont lend on off the plan.
I must admit you wouldnt want to take the risk that the property was downvalued and you ended putting in extra cash funds just to get an 80% lend on the valuation which could be a lot less than the purchase price.I can think of better areas to invest in rather than wait 18 months to invest in an OTP property.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Hi Richard
Thank you for the advice. Unfortunately we have already put a deposit down so I guess we will learn from our mistakes. Fortunately there is still enough in my super to purchase another investment property, so the next one we will seek advise and do much more research before we begin.
Regards Ron
Julie Ron wrote:Hi, we are about to sign a contract to purchase our first investment property through our SMSF. It's a one bedroom 58 square metres off the plan in Carlton Melbourne, for completion in 18 months. We still need to set up a bare trust to borrow 80% ..a bit scared… hope we are doing the right thing?! Any advice welcomed.
Regards RonHi
What name have you signed the contract in? The purchase needs to be in the name of the Bare Trustee which should have been established prior to the contract being signed.
Yep Mike is right. The buyer name on the contract of sale needs to be either:
– The bare trust name
or
– Yours or another name "AND/OR NOMINEE" (eg Bob Smith and/or nominee)If you didn't sign the contract under one of these two names then your smsf is not going to be the buyer. You might have to have a conversation with your solicitor about the implications of this
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
Hi Mike,
Thanks for that, our conveyencer did point this out and after discussing this with our accountant he explained that if we were buying in Queensland the Bare Trust would have to be set up before signing contracts. Here in Victoria it can be set up later.We stil have a lot to learn. Interesting reading all the tips and advice in this forum!
Cheers Ron,Hi Ron
Hate to say I disagree with your Accountant.The Security Custodian Trust has to be established prior to signing the Contract on ALL occasions.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
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