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.

How are you tracking with your Retirement Savings?

The purpose of bringing this to your attention is to make you aware of and cognoscente of the fact that something can be done!

There are always solutions; we only need to understand what that solution might look like which best fits your own situation and circumstances.

New analysis based on figures from the ATO on retirement savings demonstrate that men will have around $154,450 and women only $122,850 in their retirement balances between ages 60 – 64. Not much is it?

Sure you may have more, BUT the question is will it be sufficient to give you the life you want and deserve and for how many years will it last when you are unable to continue to save?

Wow, about 18% of 66 year olds are still working and this figure is likely to continue to grow. Meaning a lot of people have not catered sufficiently for their retirement. And 38% of 66 year olds are retired and living totally off their super and other savings. Difficult to estimate what percentage of these people will run out of money during retirement though.

You may qualify for the state pension, but can you really live the way you want to on this low amount?

You may also have a home which is paid for but costing you more than you are comfortable with in rates, upkeep, garden and home maintenance, electricity, water and more. This could be a drain on your retirement savings thus restricting you from doing what you always dreamed of doing in retirement.

There are solutions, you just have to reach out to us

We could go on and put more fear into you, this is not how we best serve our clients we rather focus on solutions. So if the above presents as a concern for you and you want more at retirement then reach out to us so that we may get a better understanding of where you are now, where you want to be and by when. Having this understanding is important to us and you as it will provide us with probable solutions and solutions that could ‘best fit’ your requirements which in turn will add new value to your retirement destiny.

Solutions are varied and may prove to be a mix of strategies from reviewing your family home, your super, savings plans, shares, properties and more.

Brisbane Tipped for Strong Capital Growth

Brisbane & Pockets of South East Qld Tipped to be the strongest Property Market in Australia

“Investing in an area with very high and growing demand improves your opportunity for strong rental yields and capital growth potential we all agree”

Identifying these areas and expanding your investment potential into new geographic locations improve the opportunity of creating and securing more wealth, with online inquiry for property in Brisbane and South East Queensland on the increase … meaning astute investors are investing in locations from where they live Brisbane is tipped to be the strongest property market in Australia in the next five or six years. Leading real estate industry figure John McGrath described the Brisbane market as undervalued and predicted it would soon start to catch up to southern powerhouses Sydney and Melbourne. Mr McGrath, the founder of McGrath Real Estate, was speaking in Brisbane at a function on Wednesday and “very, very confident” in where the property market was right now, particularly in Southeast Queensland. “We think Southeast Queensland, and Brisbane is a focal point, is going to be one of the strongest markets in Australia.”   Click here  for full article and watch Adam Di Marco share words of Wisdom here enabling you to come to your own informed decision on where to focus your own research on

SMSF Investment Property

Self Managed Super Funds and Investment Property

SMSF Property Investment

More people want to take control of their own Super destiny and wherever they turn, they are reading about “Leveraging and Investing in a Property within a SMSF.”

Compared to other asset classes which generally cannot be leveraged, it’s not hard to see why many investors are now ‘investigating and talking to a financial planner or you about buying property in their Super Fund.’  And we have not even mentioned the incredible Tax Advantages …

Over 2 years ago we predicted that Self Managed Superannuation Funds (SMSF’s) would become a big driver of the Australian property market.

Since then, other commentators and the finance industry as a whole have woken up to the trend, and have begun to realise the massive influence SMSF’s will have in the property market over the coming years.

Property investing under Self Managed Super Funds has entered the mainstream. In the last 12 months it seems like everywhere you look there are ads promoting property investment through SMSF’s – even on TV!

“Why invest in Property in a SMSF and what is so appealing to put a property into one’s Super?“

Leverage: the ability to BORROW money to get the bank and the tenant to help pay off a large slice of Retirement Savings + Tax Benefits !

 

SMSF lending is ‘limited recourse’… In other words, a borrower’s ability to qualify for a loan under an SMSF has very little to do with what they personally can (or can’t) borrow outside the SMSF. It means that even if an investor is personally maxed out on their borrowings outside their SMSF, they may still be able to borrow money for investing within their SMSF.

Most people still don’t realise just how big SMSF’s are becoming with more and more adverts and thus enquiry coming to the fore, values of property could rise according to demand!

Over the last 5 years, the rate of growth in SMSF’s has massively outpaced growth in managed funds. There are now close to half a million registered SMSF’s in Australia
SMSF owned Assets represent almost a third of all money in superannuation within Australia. Property is beginning to make up a large proportion of assets in a SMSF for obvious reasons! The property market is once again on the rise, population in Australia continues to grow, rental yields continue to increase … why wouldn’t you own a safe portfolio in bricks and mortar being mostly paid for by your tenant and the tax man with help from your bank!

Around $15.5 billion of SMSF assets are already invested in residential property, making up around only 3.5% of the estimated $439 billion in SMSF’s – the potential for the Property Market is Immense.

 

The opportunity to own a Positively Geared Investment Property in one’s SMSF is here, meaning after your initial deposit, whether you continue to contribute towards your SMSF or not, the income is higher than the outgoings. Another reason to invest in bricks and mortar.

 Are you aware that potentially it is not all coming up roses investing through other channels and you should be talking with property professionals who have your interest at heart. Not all property makes for a prudent investment!

 This is where we come in. By now you will have an understanding that we always put your clients first and that we have access to property Australia Wide; giving you choice and enough supporting information based on our own due diligence PLUS encourage you to undertake the same amount of their own due diligence prior to making an Informed Decision.

 Investment Property | SMSF | Leverage using the banks money and your tenants rent to contribute towards your retirement planning goals

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Self Managed Super Fund’s and Investment Property

SMSF and Investment Property

…what you would want to be aware of!

 

Investment Property in your SMSF

The STATE REVENUE OFFICE has clearly warned trustees of SMSF’s that he will be focusing on SMSF and investment property out of concern that trustees are making ill informed investment decisions on behalf of their SMSF’s!

 

The purpose of this blog is to remind you and enlighten you on the benefits of securing and investment property for your SMSF where the numbers actually stack up. This will mean you will be better off by thousands of dollars at retirement; by making an informed decision based on the underlying fundamentals and numbers underpinning the potential property.

The recent Financial Review article warns investors/trustees about two major issues in SMSF space with regards to investing in property; a most welcome article highlighting the fact that ‘trustees don’t seek advice upfront often leading to poor investment decision making which will attract the attention of the SRO’.

We urge you to take the view that if you are going to make an uninformed decision (which is unfortunately what most tend to do, putting emotion ahead of the financials) then perhaps you have an obligation as Trustee to your SMSF (and the Tax Office)  and thus take advantage of services such as ours prior to looking for your preferred investment property.

 

Does the property you are looking at have the correct Fundamentals in place?

The question is : “Are you giving yourself choice of an alternative solution to potentially make a better more informed and astute investment decision?”

An Investment decision that will benefit you by Thousands of Dollars. This is why more and more accountants, financial planners and mortgage brokers are now introducing their clients to services such as ours.

You will avoid the above pitfalls whilst we save you time, stress and probably money using our professional services, in working with you to help find what we call a ‘best fit’ investment property that matches your goals, investment strategy and overall SMSF and personal objectives.

 Did you know that securing a new property over an existing older one will result in your investment being thousands and thousands of dollars better off over the investment period?

See figures in example below :

SMSF Property

Increase the end value of your retirement by making an Informed Decision upfront

Your Investment  will be better off based on :

 demonstrating the above figures;   providing you with a selection of ‘best fit’ properties + due diligence and market reports on why these properties;   implementing our personal objectives of encouraging our clients to make an informed decision(using our industry knowledge, expertise and due diligence);  and inviting you to undertake your own due diligence on our recommendations.

  … the reality is that our system is deliberately designed to ensure that you will make more astute investment decisions!

  • than if you went to your local estate agent or a financial planner who is trying to flog you a property they have access to; both will tell you exactly what you want to hear so that you put down a 10% deposit and buy that property

 

Ask those in the know how you could maximise your Investment Returns

Our primary role is to explain how the numbers work, provide you with a selection of best fit properties that match your investment objectives, in your preferred locations (across Australia) and work with you so that you as the Trustee of your SMSF  make an informed decision whether that be a no or a yes, to options on the table.

There are other ways to perhaps achieve better results for your SMSF.

We look forward to your questions and feedback

Helping you grow your Retirement Value whilst exceeding your expectations of us. We assure you of our prompt and personal attention now and into the future.

 

Wanting to set up your SMSF?    Free consultationclick here

 

SMSF Property FundamentalsWhy a SMSF, tax advantages and Why an Investment Property…  more

 

Comments or questions are welcome.

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