Self managed superannuation funds (SMSF) have steadily gained in popularity as more and more people have taken control of their financial future and set up their own funds. This is not necessarily an easy thing to do, but with the help of an accountant who understands the rules around establishing an SMSF, and the tenacity to stick to a plan and see it through, it is a sound strategy, although not for everyone.

There are some specific restrictions on SMSFs and quite stringent reporting, administration and auditing requirements. For example, you must have an approved investment plan and if there are any other members of the fund, any investments undertaken must be signed off by them before making any purchases. However, an SMSF can now be used to buy property.

Follow Advice Given by Successful Investors

Taking this step is not as simple as attending an auction and signing a contract so a few tips to buying property in SMSF may help out budding investors who have already organised their funds for this purpose. The first tip is to follow the advice of those experienced in property investing. That may seem obvious but because the property is being purchased for an SMSF, it should be seen to be a prudent investment at the time.

At Fountain Property Group, we advise our clients to approach an investment property like a business and remember that it is not being purchased for personal occupation. This increases flexibility of choice about the style of property, its location and the features it contains. These will be different for rental purposes as opposed to an owner-occupied dwelling.

We also recommend that clients have a set criteria in mind based on research. For example, we know, based on reliable data, that renters typically need transport, shopping and essential facilities like schools and medical centres. If renting families dominate an area where apartments are prolific, then older, two to three bedroom apartments in that area will rent well, and are more likely to be priced within reach of an SMSF buyer.

Organise Financing before Making Offers

Be aware also that any financing needed should be organised before making offers on property. The unique nature of SMSFs means that the title to the property is owned by the trustee on behalf of the SMSF. Things get a lot more complicated past this point, so here at Fountain Property Group, we recommend advice from an accountant.

At settlement, the correct company names need to be on the documentation or extra stamp duty will be incurred to transfer the title later. This is solicitor territory and paying for expert advice up front will save a lot of grief and expense later. There are many more hints we could give, so contact us for further detailed information.

 

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Dorian Traill is the current Director of Grand Capital Finance Group and Fountain Property Group. He specialize in home loans for people as well as helping them build wealth through quality investment properties that ultimately lead to long term financial freedom.