Is it possible to put 10-20% deposit and borrow the rest if buying property under your SMSF name, not as an individual? Or are the borrowing requirements different for business loans (which is basically what a SMSF is) Dont have any property whatsoever at the moment so was thinking about getting ball rolling and rent one out so that i have a home fully paid off by the time im old.. cant be bothered working now, let alone when im 65+ Cheers
Someone correct me if I'm wrong, but I believe the loan type used for a SMSF purchase requires at least a 20% deposit and incurs a significantly higher interest rate that that offered for an individual.
Its best that you have 30% deposit because the loan is a limited recourse loan in a bare trust. Having said that the banks will insist on you giving personal Guarentees and the tax office has looked the other way with regards S.I.S. act with Trustees as individuals giving guarantees. For a real limited recourse loan you would probably need to put up 40-50% equity and wear higher interest charges as well Kind Regards non recourse
Thanks for getting back guys... still checking a few things out. Not sure if will go with property, just tyre kicking atm
Rather than buying a residential property where your up for the rates and building maintenance, look at purchasing a shop with a residence above the shop in your super fund. If I was starting again that is what I'd cut my teeth on. It would give you some experience in both residential and small commercial. The other advantage is it can give you two sources of income and if you stagger the leases you will have some income coming in while looking for another tenant. Kind Regards non recourse
Check your SMSF documentation. I believe that many do not allow the fund to hold a mortgage. If so, your accountant may have a creative work around.
You might want to do some research into the RE markets before you jump. Commercial has been frozen for over 6 months now, nothing selling, nothing leasing. Residential is bad too with prices steadily falling against low interest rates and rents are also falling. Might wait a year or 2 myself? Could go either way, but most likely south.
An "exspurt" is a big drip under pressure. Commercial has been frozen for six months ...eh? Gee I'm glad your "not advising me" I just raised one of my commercial tenants rent 12% with annual increase of 5% for five more years. In our super fund one of the tenants has moved on, over 17 years, his monthly rent paid the building out in just under nine years. For 10 years I kept telling him he should buy his own building and he has finally bit the bullet. Using his super fund with he and his wife salary sacrificing means that he will own the building in just under 6 years time. The new tenant that is replacing him is paying the trust 60% more. The problem with taking at face value what the press is saying about real estate is that you are thinking like 80% of the population and average is very average. Kind Regards non recourse
I get my data direct from those in the business of selling and leasing commercial non recourse and if you have done well with your property good for you, you are the exception to the rule these days. But your personal anecdotal evidence is of little value as far as others is concerned, always remember that.
I will give you the benifit of the doubt notanother. What your arguing about has all been said before on this thread. My anecdotal heresay is not from someone who heard it for someone else. I have been at the coalface for 30 years and there are a few of us on this site who have the runs on the board. The reality is if you own or operate a business stepping into a commercial property that you purchase and lease some of the space and sublet the rest is a no brainer. If you have no idea doesn't matter what you get into most likely first time around you may get cleaned out. As for those in the business of selling and leasing commercial real estate most of them are not worth a nob of goat $hit. That is why we manage and ocassionaly sell our own properties, mostly we hold forever but occassional someone comes along with a wad of cash and I'm always happy to sell something for more than its worth. You will never go broke making a profit but you do have to factor in the capital gains and the cost of acquirring something else. Kind Regards non recourse
I understand your points non recourse, I was not speaking so much to you as to others who may be reading here, to others who are just now thinking of buying into the market. You are clearly established and can weather a downturn but others may not be in that position. I would not like to tell someone NOT to buy, I just like to add the what if, to stimulate thought because very few people think critically about large purchases it seems. In the end no sane person is going to redirect hundreds of thousands of dollars based on a couple of posts they read on an anonymous forum. But they may be stimulated to do primary research for themselves, as you clearly do, rather than just trusting an agent who was probably laying bricks or selling used cars 6 weeks prior. I agree with you that agents are useless but I do have a personal friend who is one and he probably only lies to me half the time lol. I also have two other friends with commercial investments where long term lessees have moved out and the agents have told them it will take at least 6 months in the current market to replace them. With holding costs exceeding 10k per annum that is not good news for them. On a brighter note one of these friends owns part share of a serviced office complex here on the SS of Brisbane and business there is doing well, as people who can't afford real commercial space set up shop in his little poke holes. "Fortune passes everywhere"
All good points and your full explanation puts it in a different light. The holding costs for commercial property are huge and if you cannot carry the property for at least two years empty your in the wrong game. When all cylinders are firing commercial is brilliant but if you dont have a plan B and a plan C for when things go off your "investment" will eat you alive. Because this is a silver and gold bullion site, I assume the majority are fiscally literate but clearly with property most have the speculators mindset and it enrages me when I see all the negativity with regards to property. The saving grace of property unlike shares is you cannot get in and out quickly which therefore allows you to blow off steam and then come to your senses and back off. The good part about an SMSF although it isn't law the auditors really push you to write up a annual investment plan and as trustees looking at purchasing property this often will determine the fate of your fund. I ignored all the criticisms from accountants and auditors for 12 years with having 100% of our super in commercial buildings and because of that our funds growth was exponential. Then in late 2006/2007 I discovered the looming sub prime debacle that was coming and having bullion as hedge for our properties both in and outside super became a priority. The great thing about being an investor today as opposed to before the internet is if you put the time in you can develop the fiscal literacy to avoid the scam operators and investment churners. My bag is being in control of our good ship fortune. Most people on this site if they applied themselves can do the same. Kind Regards non recourse
lol - with those kinds of hurdles i'm sure there'll be heaps of people lining up to buy up property for their SMSF! In fact i see this pushing demand for property so high that this will surely cause the resumption of the property bull run ....
Yes, we came in at just the right time, with the internet disseminating all the truth as it does. I have always had the rule that if anyone wants money for investment information I ignore it because I figure that if their advice was so good they would be off making lots of money with it and not trying to milk me. But you do need time, lots of time. I must have spent 40 hours a week or more in the early days, repetition of available evidence. Certainly a learning/growing curve though with a lot of doubts and disturbed sleep in the early stages. Very unsettling to discover that practically the whole system is geared to milk you of your hard earned cash hey. I always remember the first trip into the city to buy some gold. It was only a grands worth, a bunch of sovs at $125 each and a one oz roo I think? I walked out and sat in the park next door, looking down at this tiny bundle of coins I had just given a big wad of cash for and wondered if I was really doing the right think. I did the right thing I only hope that when the optimum time comes to sell a lot I do the right thing there too. Wisdom to you.
Yippe there are no free lunches if your a fair dinkum investor. The problem with 90% of the population is they mix the terms speculating and investing as if they are one and the same. Out of the 10% who are fiscal literates only 2% of them have the emotional fortitude to evolve into potential billionaires. Kind Regards non recourse
I differ with you if you are relying on your gold to appreciate in value rather than just retain its true value. I view my investment properties as golden geese that continue to yield a cash flow that allows me to stack gold and silver. I am not reliant on either my bullion or properties for the capital gain; if with bullion that occurs it is just the icing on the cake. By selling a property I am killing the Golden Goose that lays my stack plus I am handing back some of my capital gain in tax. By never selling and the prudent use of other peoples money in the form of conservative negative gearing, I am deferring my tax liabilities so that the issue is passed onto my children at my demise. If they choose to kill my flock of geese; justice will prevail and our government of the day will squander it on people who don't deserve it because it is "fair." Kind Regards non recourse
