Hi guys, I've just signed up to this forum, and it looks pretty interesting and informative.
My partner and I are in the process of combining my SMSF and his SGC super into one SMSF, and are looking at buying a block of units.
We would need to borrow to fund the purchase, and I am just wondering if it is possible to borrow 80% of the purchase price in a super fund on a block of units? Or will the LVR be less?
Also, as neither me not my partner have highly developed negotiation skills, I was wondering about engaging a buyers agent to do the negotiation. Can anyone recommend a buyers agent who might be willing to negotiate on our behalf on a property in regional Victoria?
Any feedback much appreciated.
Hi zorro
Firstly welcome to the forum and i hope you enjoy your time with us.
Yes an 80% lend on a residential property is available although a block of units (depending on the number in the block) maybe considered a commercial lend.
There are other issues you also to consider if you are buying a block and have any intentions of Strata Titling them.
I am currently in Melbourne doing a few SMSF presentations to Investors and there a couple of areas investors need to be aware of when buying inside the fund itself.
We work with a couple of Buyers Agents in Victoria however need to remember that a Buyers Agents fees are not Tax deductible in the fund and the costs are added to the cost base of the property when sold. Again a couple of ways around this to maximise your deductions.
The security could be an issue with certain lenders depending on the post code so would need information in order to confirm what could and could not be done.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Richard you seemed to indicate that a 80% loan through a fund is available. Could you tell us which lender goes this high with a SMSF. Thought they stuck to around 66%.
gmh454 wrote:Richard you seemed to indicate that a 80% loan through a fund is available. Could you tell us which lender goes this high with a SMSF. Thought they stuck to around 66%.That is how Richard makes his money, knowing what to put where. It is intellectual property built up over many years of hard work. Why not use Richard to do the loan for you.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Appreciate that Terry.
Yes there are 3 or 4 lenders that will go upto 80% but it is not just a one lender fits everyone rule given the complexities of SMSF lending and also the way in which lenders serviceability criteria works.
It is certainly not the same as a standard housing loan.
Other issue is of course location.
Metro or certain regional areas are fine and can be done at standard SMSF lending rates others are deemed slightly higher risk and lenders charge a premium.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Hi all, your feedback is much appreciated. please keep it coming as I'm just a newbie and like a big sponge with info!!!!
Cheers, Claire
Hi Claire
Good to hear the information is of interest.
If you are interested i wrote a SMSF Ebook last year and will happily send you a copy.
Just need a email address as it is in PDF.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Thanks Richard, I'd be very interested. My email address is [email protected]. I look forward to reading your book!
Cheers
Hi Claire
Ebook sent.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Hi Zorro
You don't really need to concern yourself too much with which lenders offer what to your SMSF. You simply need a great broker who does indeed know such things to act on your behalf in securing finance. Richard's your man
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
Thanks for the Ebook, Richard. I have already read it once, and think I have a few structural issues to deal with. – like the fact my SMSF is currently set up with individual trustees, and maybe a corporate trustee would be more appropriate??. Especially as I'd like to include my (employed) son in the fund????
ive also watched with interest the other post about questions to ask my accountant, as I have an appointment with mine in about a month. Love the sensible suggestion to ask what he invests in!!!
I have also seen the post about repairing/renovating a property within a super fund, and just wondering what the distinction is between a repair and a Reno. For example if the bathroom is tired and past it's use by date, and it gets all new fittings, tiles etc – what will that be classed as?
Cheers, Claire
Claire
Ok if you have the Trust set up with a Personal Trustee you won't get an 80% lvr with any lender so if you are looking to maximise your gearing going to need to change it to a Corporate Trustee.
In relation to your comment about renovation / repair a SMSF may use borrowed funds to maintain or repair an asset but cannot improve the asset in this case property. In this case an improvement could be building an extension etc.
Repairing an Asset would involve merely restoring the function of the Asset to its original state and does not change the character of the Asset.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
You can always make higher contributions into your SMSF to fund any improvement and the benefit in this is that it can reduce your personal tax bill.
You may also consider buying the property in a Unit Trust where your SMSF owns units in the Unit Trust so that you have flexibility in how you purchase the property and how you can add-value to the property.
Y-Stress?
Y your total deductible contributions being both employer and employee are limited to $25,000 per member per year so depending on your incomes going to be fairly limited.
Non deductible contributions are limited $150,000 per Tax year or $450,000 over a 3 year period so again fairly limited.
Regretfully you cannot buy the property in a Unit Trust and have the Super Fund as sole Unit holder.
The Fund cannot control the investment decisions within the Trust.
Such arrangements are being closely looked at by the ATO.
Nice in theory cannot be done in practice.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Hi Richard
Yes, the ATO is looking into these arrangements but the main issue is that the property in the Unit Trust is not allowed to have a charge over the property, this is why the loan must be structured properly to avoid these issues.
There are ways to structure this so that the client can benefit.
I'd love a copy of your e-book also. If you don't mind sending my email is: [email protected]
Cheers
HI,
Prior to entering any agreements I would suggest that you get a Pre-Approval from a lender for the SMSF, and make sure that they will accept your Trust Deeds and the Security. Many people do not understand the "Single Acquirable Asset" that a SMSF needs to invest in and what the lender will accept as well. Getting a pre-approval will let you know what you need to achieve to get the funding and save you a lot of time and money. There are companies out there who have pre-approved Trust Deeds.
Cheers Grant
HI Grant
Not quite accurate.
No lender will assess the SMSF Deed prior to an application being made and in fact there are only a small handful of SMSF lenders that offer a true meaningfull SMSF pre-approval.
You are referring to the Security trustee / Bare Trust and certain lenders offer a Draft acceptable Deed.
You still need to ensure that the Trustee Company is formed correctly and that the Bare Trust / contract is correct.
I hate to tell you how many SMSF deals we get in where the Contract is incorrect or the Deeds are wrong and unacceptable.
Even had one last week from a Solicitor which was in the wrong name so definitely a specialist area.
Lenders work serviceability totally differently to a loan made outside Super and therefore some clients cannot understand why they do not qualify.
All in all matter of working with a Broker / Planner who has done one or two of these since 2007.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Hi Sean
Just sent.
Let me know if you have any questions.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
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