Invest
5 questions to ask before you invest in property through your SMSF
There’s a question mark next to SMSF property investment, so Aussies considering the move should weigh up the pros and cons.
5 questions to ask before you invest in property through your SMSF
There’s a question mark next to SMSF property investment, so Aussies considering the move should weigh up the pros and cons.
Westpac made headlines recently after it announced that it would stop lending to SMSFs, leading property groups to warn the move indicates the riskiness of the investment.
Other groups suggested commercial property could fill the void, while others still highlighted the smaller lenders that remain in the market.
According to legal technology experts GlobalX, the message for borrowers is to exercise caution.
CEO Peter Maloney said the trend of buying property through an SMSF is understandable given Australians’ lack of trust in financial institutions.
“More buyers and older Australians are planning for their future and they have lost faith in their financial systems. They are turning to self-managed super funds (SMSF) to build their property portfolios,” Mr Maloney said.
“The appeal of this to the average Australian is that they get to decide when and where their super is invested and they can see a physical asset.”
However, buyers should still be careful about the move given the weight of fees in addition to borrowing conditions.
He said these are the five key points investors need to consider:
1. Who should you consult for advice?
“There are so many rules involved with the process so it’s important to seek independent financial advice on whether this is the right move for you,” Mr Maloney said.
This is in addition to seeking legal advice.
“You shouldn’t be afraid to ask your lawyer or conveyancer and your accountant to explain things to you in depth. It’s tough to wrap your head around so it’s always better to be comfortable and ask plenty of questions,” he said.
2. Do you understand your responsibilities?
“If your SMSF property loan documentation and contract isn’t set up correctly, unwinding the arrangement could be difficult so you want to ensure you are fully aware of what you are getting yourself into,” Mr Maloney said.
3. How much will it cost?
SMSFs need to maintain a “liquidity buffer” of 10 per cent of the proposed investment’s value, so investors can’t use all of their superannuation to buy an investment property.
4. How do the fees compare to other property loans?
“There are a lot of fees involved with SMSF property sales and these can add up and reduce your overall super balance. You should definitely try to find out all of the costs before signing up,” he said.
Fees include legal fees, stamp duty, advice fees, bank fees and the upfront fees.
5. What’s your investment strategy?
In line with the second question, investors need to be aware of the requirement to have a documented investment strategy. This is a detailed financial plan that factors in the current and future needs of the fund’s members.
RELATED ARTICLES
Property
New investment platform Arkus allows Australians to invest in property for just $1
In a groundbreaking move to democratise investment in property-backed mortgage funds, GPS Investment Fund Limited has launched Arkus™, a retail investment platform designed to make investing ...Read more
Property
Help to Buy goes live: What 40,000 new buyers mean for banks, builders and the bottom line
Australia’s Help to Buy has opened, lowering the deposit hurdle to 2 per cent and aiming to support up to 40,000 households over four years. That single policy lever will reverberate through mortgage ...Read more
Property
Australia’s mortgage knife‑fight: investors, first‑home buyers and the new rules of lender competition
The mortgage market is staying hot even as rate relief remains elusive, with investors and first‑home buyers chasing scarce stock and lenders fighting for share on price, speed and digital experienceRead more
Property
Breaking Australia’s three‑property ceiling: the finance‑first playbook for scalable portfolios
Most Australian investors don’t stall at three properties because they run out of ambition — they run out of borrowing capacity. The ceiling is a finance constraint disguised as an asset problem. The ...Read more
Property
Gen Z's secret weapon: Why their homebuying spree could flip Australia's housing market
A surprising share of younger Australians are preparing to buy despite affordability headwinds. One in three Gen Z Australians intend to purchase within a few years and 32 per cent say escaping rent ...Read more
Property
Tasmania’s pet-positive pivot: What landlords, BTR operators and insurers need to do now
Tasmania will soon require landlords to allow pets unless they can prove a valid reason to refuse. This is more than a tenancy tweak; it is a structural signal that the balance of power in rental ...Read more
Property
NSW underquoting crackdown: the compliance reset creating both cost and competitive edge
NSW is moving to sharply increase penalties for misleading price guides, including fines linked to agent commissions and maximum penalties up to $110,000. Behind the headlines sits a more ...Read more
Property
ANZ’s mortgage growth, profit slump: why volume without margin won’t pay the dividends
ANZ lifted home-lending volumes, yet profits fell under the weight of regulatory and restructuring costs—an object lesson in the futility of growth that doesn’t convert to margin and productivityRead more
Property
New investment platform Arkus allows Australians to invest in property for just $1
In a groundbreaking move to democratise investment in property-backed mortgage funds, GPS Investment Fund Limited has launched Arkus™, a retail investment platform designed to make investing ...Read more
Property
Help to Buy goes live: What 40,000 new buyers mean for banks, builders and the bottom line
Australia’s Help to Buy has opened, lowering the deposit hurdle to 2 per cent and aiming to support up to 40,000 households over four years. That single policy lever will reverberate through mortgage ...Read more
Property
Australia’s mortgage knife‑fight: investors, first‑home buyers and the new rules of lender competition
The mortgage market is staying hot even as rate relief remains elusive, with investors and first‑home buyers chasing scarce stock and lenders fighting for share on price, speed and digital experienceRead more
Property
Breaking Australia’s three‑property ceiling: the finance‑first playbook for scalable portfolios
Most Australian investors don’t stall at three properties because they run out of ambition — they run out of borrowing capacity. The ceiling is a finance constraint disguised as an asset problem. The ...Read more
Property
Gen Z's secret weapon: Why their homebuying spree could flip Australia's housing market
A surprising share of younger Australians are preparing to buy despite affordability headwinds. One in three Gen Z Australians intend to purchase within a few years and 32 per cent say escaping rent ...Read more
Property
Tasmania’s pet-positive pivot: What landlords, BTR operators and insurers need to do now
Tasmania will soon require landlords to allow pets unless they can prove a valid reason to refuse. This is more than a tenancy tweak; it is a structural signal that the balance of power in rental ...Read more
Property
NSW underquoting crackdown: the compliance reset creating both cost and competitive edge
NSW is moving to sharply increase penalties for misleading price guides, including fines linked to agent commissions and maximum penalties up to $110,000. Behind the headlines sits a more ...Read more
Property
ANZ’s mortgage growth, profit slump: why volume without margin won’t pay the dividends
ANZ lifted home-lending volumes, yet profits fell under the weight of regulatory and restructuring costs—an object lesson in the futility of growth that doesn’t convert to margin and productivityRead more
