NOT ALL investment properties are suitable to SMSF’s

In fact a very small percentage of properties are suitable to SMSF investment strategies.

As a Trustee of your Self-Managed Super Fund you are held accountable for the selection of the asset and ultimately the performance of your SMSF.

What this means to you is that selecting the ‘best fit’ property to suit your SMSF is imperative and also vital to the long term outcome of your retirement planning.

Selecting a property which does not suit SMSF investment requirements could result in you putting your Self Managed Super Fund into jeopardy and thus you the Trustee will be held accountable and liable for a highly punitive fine.

New or Off the Plan Property could be

  • Low Stamp duties (in most States)
  •  No need to spend money fixing up to rent
  • Higher upfront rent
  • Higher Capital Growth over period of ownership
    • Compound growth off a larger base
  • Low ongoing maintenance
  • Builder guarantees and warranties
  • Full depreciation benefits
  • Lower Cash Flow required to fund the investment in your SMSF

Existing Property could be

  • Full Stamp Duties
  • Expense to cosmetically fix up to be able to rent it out
  • Lower rent
  • Lower capital growth off a lower capital value
  • Higher ongoing maintenance costs
  • Low to no depreciation benefits
  • More cash required to fund the property every month

NB :  Results of New Property could be

  • 13.64% Return on Investment
  • -$37 per week cash flow negative in year 1
  • $3,862 Cash Flow Positive over 10 years
  • $409,530 Equity in year 10 at 5% capital growth
    • $67,827 higher

Existing and lower priced Property

Note : higher rent, lower stamp duty, lower maintenance, higher return on investment, less cash needed to fund investment on a monthly basis, higher compounded capital growth

 

Cash Flow Over 10 years could be $3,862 positive

NB :  Results of Existing Property could be

  • 10.52% Return on Investment
  • -$87 per week cash flow negative in year 1
  • -$30,881 Cash Flow Positive over 10 years
  • $341,703 Equity in year 10 at 5% capital growth
    • -$67,827 lower

Existing and lower priced Property

Note : lower rent, higher stamp duty, cosmetic upgrade costs, higher maintenance, lower return on investment, more cash needed to fund investment on a monthly basis, lower compounded capital growth

 

Cash flow over 10 years could be -$30,881

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