By Jon Colley
Director and Professional Lending Specialist, Loan Wize
Have you wondered how you can purchase investment property using your Self-Managed Super Fund (SMSF)? Property is a favourite for Aussie investors, and for great reason. The gearing that lenders provide for property investors allow for strong returns on original capital investment. While strong rental yield and capital growth have provided some excellent returns for longer term investors.
For investors that favour property as an investment class, the thought of having some greater sense of control over your superannuation assets is quite appealing. This is why property investing in your SMSF has always been a popular alternative or addition to Direct shares or Managed Funds.
Can I borrow through my SMSF?
Originally, investing in property through your Self-Managed Super Fund (SMSF) involved having enough cash in your fund to purchase the property outright, and was usually reserved for funds that had significant balances. Since the introduction of Limited Recourse Borrowing Arrangements (LRBA), however, the ability to finance a percentage of the property purchase has created an opportunity for many more Superannuation funds to consider property investment as an option.
Borrowing through your Self-Managed Superannuation Fund is a great way to leverage your Super assets and build your retirement savings quicker. All the while diversifying your risk into a different asset class altogether by introducing property into the mix.
How can I access Limited Recourse Borrowing Arrangements (LRBA)?
While the LRBA options have been available for some time, the number of lenders offering this type of funding has reduced significantly over the last three years, with many major lenders no longer offering SMSF lending.
Loan Wize has several lenders that continue to offer LRBA lending for Self-Manage Super Fund property acquisitions (and refinances), which provide you with the option of purchasing property in your SMSF.
We also work with professional partners like ABA. Advice Beyond Accounting that will assist with the establishment and compliance for your SMSF, to ensure that your Fund is always meeting the complex compliance requirements.
Do I have to purchase an established property with my SMSF?
Traditionally, established properties were the only option for SMSF purchases. This was due to construction lending being unavailable for SMSF lending, as they are typically a two-part contract (ie. land contract/construction contract). This often restricted your property options available for purchase to established properties only.
Loan Wize now have access to new built house and land properties on a single contract basis, allowing you to invest in a new build property rather than an established dwelling, giving you greater choice and control.
How can I find out more to purchase investment property using my SMSF?
If you would like to know more about using your SMSF to invest in property utilising an LRBA arrangement, contact me, Jon Colley at Loan Wize and we can discuss this further to see if this is an option for you.
Important note on SMSF Investment Advice
Loan Wize and ABA are not financial advisers and cannot offer financial advice on your SMSF investments.
Loan Wize provides lending solutions and can provide you with detailed credit advice to determine whether lending through a SMSF is an option you could consider.
ABA can help you administer and manage your SMSF, including maintaining accounting and member records, as well as preparing annual pension fund paperwork, preparing annual financial statements and maintain portfolio records.
Loan Wize and ABA always recommend seeking investment advice from a licensed Financial Adviser and would be happy to recommend a financial adviser you can discuss this with if you do not have one.