SMSF is it worthwile?

Hi Troy,

The beauty of acquiring property inside a Smsf is the ability to leverage ( ie borrow money ). You swap your deposit, stamp duty and a few buying costs for a whole house which tenants then pay off for you. You would need to look at properties yielding above 6% for it to work, and you need low vacancy rates and good capital growth. If you have already set up your smsf I suspect you already know these things and are maybe nervous taking the next Sep? Maybe you don’t know anyone who has trodden this ground before you. If you need a sounding board or kick in the pants shoot me a PM. I’ve trodden the ground and have a very clear vision of the path I will drive my smsf down.

SMSF is fantastic and extremely popular however be very careful about putting 'all your eggs in the one basket'. Some of the pros has been listed above – some of the cons include set up costs associated with lending and accounting. You will need to have approx 25% deposit which means higher than ordinary deposit funds required, you cannot borrow to renovate (however I hear through the grapevine that a lender is somehow about to change this and flip it on its head). 

Regards

Shahin

Hi Steve

Matter of watch this space but don't get too excited quite yet. 

Went to a SMSF seminar earlier in the week ran by my Financial Planning Licensee where there was an ATO representative discussing their overview on SMSF and the increased amount of borrowings they are seeing coming thru.

At the moment their are adopting a watch and see attitude however it wouldn't take much abuse by certain lenders for tighter controls to be implemented.

I own a fair number of properties inside my SMSF but purchased them prior to 2007 so the current legislation certainly gives investors an opportunity to expand their portfolio with the current 80% lvr's being offered.

Cheers

Yours in Finance

Hi Steve,

I can't say which lender it is as it was an off the record conversation but they are putting something out within the next 2-3 months. 

Regards

Shahin

It is becoming easier to manage your own SMSF and if your bank is being difficult in lending money to your SMSF then you can always use your personal savings to lend money to your SMSF and acquire property in your SMSF. You have abundant flexibility in maximising your personal benefits.

Y-Stress?

http://www.ystress.com.au

@Newcastle Knight

Here is a useful quick guide to SMSF property investing:

http://www.switzer.com.au/your-money/superannuation/the-rules-of-smsf-property-investing/

Maybe, but there'll be more rentals on the market which will eventually cause a tweak in the supply and demand of rentals and may result in the need to decrease rental prices or not hike them quite so much each year.  For people that get on the SMSF bandwagon early and have owned the properties for a few years already it won't matter so much.  For the latecomers, I think it will be slower to make awesome progress.

The beauty of buying property in super is leverage.  Borrowing to buy an asset worth more money than you actually have, and then letting tenants pay it off.

$65k is enough to open a smsf and buy its first house (paying deposit, stamp duty etc).  The next one you'd need a little less (about $58k) because you would not be "setting up the smsf".  just buying the second property.  I'm talking about properties with acquisition prices of around $230k.

Hi acurabot

The short answer is no you cannot get profits out of a SMSF before retirement. 

Also a SMSF cannot borrow money to make improvements to a property.  Even if the borrowings come from you yourself.  So if you gave your smsf money to renovate, it'd be just that.  A donation.  And the profits would belong to the SMSF when the property is sold.