Single Contract SMSF Property

Can a SMSF secure a new build two part contract (house and land) when there is borrowings?

SMSF Compliant Single Contract New Build Investment Property

The answer today is “definitely yes”, if undertaken correctly using the one part contract solution we will introduce you to. Without which the answer unfortunately is a resounding No!

The ruling for two part contracts states “that a SMSF is unable to secure residential land and improve on the land whilst there is borrowings.” Meaning one cannot have a two part contract, one for the land and one for the build, if the SMSF is going to borrow money.

Question becomes : “So how do we overcome it?”

The solution is to have another entity step in between your SMSF and the two contracts. They settle the land on your SMSF’s behalf, and enter into and pay down the build contract on behalf of the SMSF.

At the same time they enter into an agreement with your SMSF to ‘sell it the end product’, which is now your new build. thus the process removes the investment barriers of a two-part contract for building and development.

Simply explained : properT network source a block of land for you, have a home designed to suit. This firm sign both land and build contract, after which you enter into a single contract with them, put down the required deposit and sit back and wait for completion.

Advantages

Today, to find a builder who is prepared to offer this service is just about impossible as builders as just so busy and they just don’t need another layer of complexity, when they can make full profits and get guaranteed their payments along the way through bank draw downs.

More Importantly : This now gives you the investor a far wider and increased choice of location, build, builder and options to suit your budget. Our strategy is to match the investment vehicle to your budget, purpose and objectives for the investment (and not to squeeze the wrong property into your budget). Now that you have choice, it is easy to match your investment strategy to a ‘best fit’ property. The result is a financially healthier SMSF.

Having choice also gives you improved control of the financial destiny of your SMSF as it has never been easier to purchase a brand new home and land through your SMSF, as it is right now. On behalf of your SMSF you have the opportunity to remove all limitations allowing you to decide the location, which block of land and which builder.

Another advantage is having choice makes it easier to diversify your retirement portfolio into property. Property in Australia (when held for 7 – 10 years) is viewed as a low risk investment vehicle. Be mindful – not all property is Investment Grade!

Another advantage is that this opportunity is totally unique. Giving you further opportunity to diversify your portfolio.

Under single contract, the process is deliberately set up to guide you through each step from start to finish, simplifying the entire process for you and your SMSF. Meaning the system ensures that the land settlement and the construction process is overseen on your behalf making it that easy for you, saving you time and unnecessary stress.

Why Property in a SMSF

Diversification of your portfolio

Ability to Leverage, meaning put down only 20% or 30% as a deposit and borrow the rest

By way of example : if the Investment Grade Property were worth say $650k and you invested only $130k, this $130k is working for you on a value of the asset which is $650k. Yes or yes?

The result is your 20% is working for you at 100% of the asset value. The compounding returns are thus in excess of say a managed fund or share portfolio where if you invest only 135k then ONLY this 135k is working for you.

Further to this, you will receive an ongoing Rental Income which could help pay down the loan for your SMSF and when you achieve increased equity, your income on retirement will be that much higher.

Another benefit is that one can deduct depreciation against SMSF contributions to further lower the 15% tax rate on contributions.

Capital Gains tax is also lower, especially when you hold the property for longer.

Industry Funds over 10 years tend to return around 5% to 6% on average and for the privilege you pay fees onto op this, further reducing your average returns. Sure of late, we have experience extraordinary returns that are predicted to flatten out again and head back into ‘normal’ territory and performance. This spate pushed up long term yields towards 8.2%. But property has also experiences highly unusual gains over this same period.

Under ‘normal’ conditions, an Investment Grade residential property with a 20% deposit could be returning you just over 10% pa consistently. And keep in mind you have only invested 20% so if you take the actual yield on this $130k which is the only $’s you have invested, then the yields are that much higher at around 23%.

Investing in a Property with your Super has never been easier.

divert your super’s portfolio, now having access to lucrative property opportunities suited to a smsf

Can a SMSF borrow money to invest in a Single Contract

In short the answer is yes, speak to us we will direct you according to your needs

On Retirement

Choice to sell the asset and take profits and reinvest the profits if that is your preference

Hold the asset and live off the Rental Income

Where to from here

Investing in property with a SMSF to secure an income-producing investment vehicle forming an essential part of your own retirement planning, is easier than you think, it is the prospect of building from the ground up that may seem overwhelming. Invite our system to partner with you and your SMSF to become your trusted partner, placing you and your Super first at all times. Ensuring our process helps you every step of the way to help you get the most our of your SMSF investment.

Now that you have CHOICE of how you may be able to maximise your Super and Leverage into an asset that is deemed risk mitigated over a 7-10 year period and you can secure a new build – reach out to us with your questions and or level of interest.

At properT network we have been helping our clients secure Investment Grade property where our guarantee to you is to save you time, help you come to an informed and educated investment decision so that you can make more money.

We have been in this space for 16 years now, prior to that 15 years financial planning (which we gave away as the products just did not suit our client base). Meaning we own a lot of knowledge, skills and understanding in this investment space.

SDA Property under the NDIS is a high yielding investment vehicle well suited to a SMSF investment strategy. Click here to learn more and why.

Note : all figures shared above are for demonstration purposes only and will change according to your circumstances, your SMSF circumstances and other industry factors. None of what has been shared above or anywhere on this website is Advice, merely sharing of information and logic. Please take this into account when giving your investment consideration.

NDIS Property in Super

What to be mindful of when investing in NDIS Property using your Super

SDA Property under the NDIS is an incredible investment vehicle and can be ideally suited to your SMSF for the purpose of attracting high yields to further grow the capital within your SMSF.

BUT not so fast …

There are significant issues that you would want to and need to be VERY aware of when considering what SDA Property your SMSF would want to acquire.

We raise very important issues and criteria to ensure your Investment is risk mitigated.

SDA Property can be very complex, especially “when one does not even know what you don’t know that you don’t know!”

Yes or Yes??

So check out our video below, after which we urge you to sit back and contemplate what we have shared.

We at properT network strive to ensure our clients make informed investment decisions and our door is always open for your questions, so that you can make that important informed decision.

Read more on NDIS Property update here

Do you want another Million $’s in your super when you retire?

Excellent NewsSingle Contract new builds suited to SMSF Investment now available Australia wide!

It is easy to retire with an extra $million dollars in your super when you understand how

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.

Solution

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.

Today

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.

SMSF Loan

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.

Read more here

High Yielding Investment Property

How to maximise your return on investment in your SMSF

Are you looking for a risk mitigated, high yielding investment property, yield linked to CPI and guaranteed for 20 years?

Where you Invest say $650k to earn an income of $100k* pa, linked to CPI

Whether looking for that extra income to pay down your own home loan or create another $100k in Super

Industry Funds continue to perform poorly, dramatically affecting any compound growth potential for you and thus a far lower end value at the time of you wanting to retire. Long term industry super funds perform at 5% – 7% over the life of your investment. Meaning it will take you around 15 years to double your capital

If you increased it to even 10% average, every 7.2 years your Investment Value would double!

What if you earned 15% pa on the same monies in a risk mitigated investment which is linked to CPI (meaning income increases) and guaranteed for 20 years

Read more here

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