Excellent News – Single Contract new builds suited to SMSF Investment now available Australia wide!
But the real question is “Do you really want another *$million in super when you retire?“
We know, never in the history of Australia, have we experienced what is going on in the residential property market, such as what is happening right now, where there are more buyers than property being driven by FOMO, low interest rates, low supply, government incentives for first home buyers etc. Some are calling it the ‘perfect storm’ for obvious reasons.
This is driving capital growth and strengthening rental yields, which is “your investment opportunity” and also an incredible opportunity for a Self Managed Super Fund wanting sound yields and capital growth potential … you’d have to agree!
The issue has been trying to access what the industry classifies as “Investment Grade Property”, which is also well suited to a SMSF!
What we mean by this is that, in general, only a small percentage of residential property is viably suited to being an astute investment. In Super, with less deductions and the requirement for higher yields, even fewer properties actually tick the boxes you would want … if you only knew what you didn’t know that you knew.
What we have found over the years, especially based on the budgets of $550k to $850k, is a new build home attracts and is better underpinned with improved numbers on your investment, when compared to an older secondhand property, for numerous reasons we can share with you when we catch up. Having access to a new property dramatically widens your choice to a lot more investment grade property, better suited to a SMSF.
Another advantage is your ability to put down a 20% deposit and use the power of Leverage (the banks money) to further fund and drive your investment. Meaning your SMSF has only invested 20%, yet the fund is achieving capital growth on 100% of the asset.
Add to that Rental Income paid to your SMSF, and the magic of Compounding Growth, plus some deductions which reduces the 15% tax rate on your contributions … all adding up to further drive and underpin your investment into Investment Grade residential property in your Self Managed Super Fund.
Currently, where there are borrowings, to leverage into your investment, law does not allow one to improve on the asset. Meaning a two-part contract (house and land) is not allowed and so some builders built under single contract, included holding costs, and thus charged you around 20k to 30k for the privilege.
What is available to you today, is a solution where a professional firm steps in between you and the developer, this firm arranges everything on your behalf with the developer and provides you with a Single Contract to suit SMSF requirements.
How good is that!
What this also means to you is now we have incredible choice, and not the limited choice we had prior to this new ‘one part contract’ service. Improved choice can equate to improved investment returns you would agree.
Further to this, the company will offer your SMSF, the ability to borrow the balance of the amount you need after your initial deposit and at a rate lower than the banks.
Banks incidentally have become less inclined to lend to super and make you jump through crazy hoops to get this funding. Banks traditionally have undervalued single contract homes in Super, meaning a larger deposit required out of your SMSF’s pocket at your own expense. Banks also insist on overpriced, expensive Statements of Advice you have to hire a Financial Planner to give you!
How is this group different : This group will treat your application primarily as a low doc loan, valuations will also stack up and the whole system makes it that much easier to be able to secure an Investment Grade residential property to suit your SMSF requirements and preferred investment strategy; and no pesky overpriced Statement of Advice needed.
Types of dwellings suited
Some Housing Solution Products which would traditionally be a two part contract they will accept include :
- Stand alone homes – yields around 4.5% to 5%
- Dual Key or Duplex – homes yields around 5.5% to 6%
- SDA Property otherwise called NDIS Property – yields around 12% to 18%
- Co-Living homes – yields around 8% to 9%
Not sure if you are aware of NDIS Property (purpose build houses to accommodate people with disability) which are able to generate yields of 12% to 18% or a co-living home with yields around 8%? Ask us if you are uncertain.
You now have improved choice
The purpose of our blog today is to expose you to the opportunity of giving your SMSF incredible choice, the ability to borrow and have your investment valued appropriately so your SMSF is not out of pocket, matching the location to your budget etc. All combined equates to you and your SMSF and beneficiaries all having a lot more $’s in your pocket at retirement.
Where to from here?
If securing Investment Grade property in your SMSF and having more $’s available to you at retirement and after retirement is a priority you want to solve, where do you feel we should go from here?
Now that you have been made aware and knowing you now have a vastly improved choice of investment grade properties and the ability to secure a SMSF loan and have your SMSF investment valuation stack up and not be unrealistically undervalued by a bank looking after their own interest rather than yours … what will you be doing differently to permanently alter the course of your super’s end value by taking deliberate control of it?
As you know, I am passionate about property, I love helping my clients make informed astute investment decisions and I value questions. Assuring you of my prompt, personal and professional attention now and into the future.
Want to make a difference, then click here to ask your questions or request more info on Single Contract properties and or SMSF loans or pick up your mobile now and phone me on 0412 108 125 to discuss.
And on Cash Flow Positive Properties to suit SMSF strategy read here