Thinking of investing in property

Thinking of investing in property through a Self-Managed Super Fund
(SMSF)
For some years, self-managed super fund members have been able to invest in residential property, as long as they follow strict guidelines. The first step is to have a discussion with a Australian Financial Service Licence holder to determine whether investing through an SMSF is the most appropriate approach to property investment given your personal circumstances.Talk to a specialist / Financial Services Licence holder before you start looking at an investment property to buy. Also be aware that rolling over any existing superannuation savings from industry funds into a SMSF may take up to a month to process, so build in time for this to occur.
If you need a loan to buy the investment property, you will need to establish a bare trust to hold the property which the lender takes security over. The purpose of the bare trust is to allow a limited recourse borrowing arrangement (LRBA) to occur.
This means, should you hit unexpected difficulties and be unable to make repayments, your lender can only access the assets that the loan is against.

What can you buy?
There are two main, and fairly simple, rules of buying residential investment property through SMSFs. Firstly, you and your relatives cannot live in the property and, secondly, you can maintain the property but cannot improve it.
The residential investment property can be a house, an apartment or townhouse, or any other type of property a non-SMSF investor might consider. The maximum borrowing within an SMSF will vary depending on the locality of the security and the lender used. Also it is important to take into consideration that there is a cost to establishing and maintaining your SMSF, as well as subsequent  fees and charges involved in the purchase of the investment property.
Thinking of investing in property through an SMSF? Then talk to your Australian Financial Service Licence holder today.