Best SMSF loan/ provider?

[Redwood]

The rates notice is the last thing I would accept as proof of a valuation. Some councils are ok some are way off and I am not going to work out which council I can trust. If the trustee wanted to use the rates notice as a bases I would preference them to go to say http://house.ksou.cn/ and pick 3 comparatives. It would give a better result.

PH, commercial judgement to be applied, for instance in Melbourne CIV is pretty accurate across most councils. If it smells bad, commercial judgement comes in......depends on your knowledge of the area. In the olden days with large scale audits we insisted on curbside annually with full independent valuation every 3 years, surprised that the ATO is quite relaxed given many SMSFs are including property at cost......



Cheers mate

 

[Property Hoarde]

PH, commercial judgement to be applied, for instance in Melbourne CIV is pretty accurate across most councils. If it smells bad, commercial judgement comes in......depends on your knowledge of the area. In the olden days with large scale audits we insisted on curbside annually with full independent valuation every 3 years, surprised that the ATO is quite relaxed given many SMSFs are including property at cost......



Cheers mate

But if you do not test the CIV for reasonableness how would you know.

In short you might think that the rates notice is appropriate audit evidence, I do not. I do not believe it to be reliable and therefore I do not accept them. Most of my clients know to get a real estate agent valuation but I still allow for every 3 years, no need to do every year unless it is clear that there has been a major adjustment to the market in the area.

 

[Paul@PFI]

The two-three year valuation is very normal. The exception of course is a valuation should be current immediately preceeding a new pension, a terminating member etc.

One issue that can encourage a regular valuation for a SMSF is when its paying pensions and also in receipt of contributions (to a seperate account of course). Related party commercial rents should be reviewed regularly (annually I reckon) so that rent increases can be immediately implemented. This can often pump up fund income and assist with growth in balances.

 

[Property Hoarde]

Related party commercial rents should be reviewed regularly (annually I reckon) so that rent increases can be immediately implemented. This can often pump up fund income and assist with growth in balances.

Is this what they would do if they were unrelated ie at arm's length?

 

[see_change]

We've bought four via SMSF .

First was with westpac around three years ago . Wouldn't use them again . They insisted we have a financial plan prepared by their adviser .... Expensive waste of ...... We couldn't find the property we wanted within the initial approval period but found one just after that period , given verbal nod and signed , but then they decreased the amount they were prepared to lend us so we had to chip in more . Unimpressed .

The next one we bought via St George , no problems .

Then , last year we bought three properties in Brisbane last year , two in super .

Initially we applied for loans with St George for all three , but two of the valuations came in low and we ended up changing lenders in two of them . So we ended up with a further SMSF loan with St George and one with AMP .

Outside the valuation issue , no problems with St George , and AMP were quick and efficient .

From what we heard there was a couple of valuers in the area who were being conservative .

Cliff

 

[Marty McDonald]

Can any one shed some light on commercial smsf experiences. Based on policies I'm looking at st george and Westpac (both don't have the minimum in fund requirement which rules out CBA, Thinktank and Bankwest). Any others active in this space?

 

[Shahin_Afarin]

We use St George for commercial as well. Excellent and robust proposition. They have excellent policy, turnaround times and quite pragmatic when assessing deals. You can get applications from start to finished in 5 weeks which is excellent. Westpac is very much like NAB - completely hit and miss.

We only really go to Macquarie for SMSF when we have NRAS - other than its very rare we go past st george.

 

[Marty McDonald]

Gr8 thanks shahin

 

[Aaron_C]

Can any one shed some light on commercial smsf experiences. Based on policies I'm looking at st george and Westpac (both don't have the minimum in fund requirement which rules out CBA, Thinktank and Bankwest). Any others active in this space?

I've had luck with St George so far which are more flexible than the others.

 

[Redwood]

Can any one shed some light on commercial smsf experiences. Based on policies I'm looking at st george and Westpac (both don't have the minimum in fund requirement which rules out CBA, Thinktank and Bankwest). Any others active in this space?

G'day marty, when it comes to commercial you may be looking at a member buying his/her own premises.

In this case, consider a related party loan rather than a 3rd party loan (much more effective for the member) including lower interest rate and no application and legals which is a significant saving over time.

Lenders in the commercial space, i've found Westpac very good as well as BOQ and La Trobe. For all SMSF investors please be aware of upfront costs before you proceed and also consider settlement terms to ensure you can process the loan and settle on time.

Cheers, Ivan

 

[Marty McDonald]

G'day marty, when it comes to commercial you may be looking at a member buying his/her own premises.

In this case, consider a related party loan rather than a 3rd party loan (much more effective for the member) including lower interest rate and no application and legals which is a significant saving over time.

Lenders in the commercial space, i've found Westpac very good as well as BOQ and La Trobe. For all SMSF investors please be aware of upfront costs before you proceed and also consider settlement terms to ensure you can process the loan and settle on time.

Cheers, Ivan

Thanks Ivan was looking more at the application process but thank you. Going with the dragon in the end.

BTW on your related party loan suggestion many lenders wouldn't do this at resi rates as end use is commercial in nature. Most majors wouldn't unless the cash out purpose is for "future investment purposes" but that can be a long bow to draw these days especially if the amounts are more than $200K.

 

[Redwood]

Thanks Ivan was looking more at the application process but thank you. Going with the dragon in the end.

BTW on your related party loan suggestion many lenders wouldn't do this at resi rates as end use is commercial in nature. Most majors wouldn't unless the cash out purpose is for "future investment purposes" but that can be a long bow to draw these days especially if the amounts are more than $200K.

Hi Marty, re related party loans, let me emphasise that you need to seek advice as there are a number of considerations involved to ensure you are compliant.

Personally I have done my own related party loans and the best thing is I don't need a bank to tell me what to do nor pay their ridiculous application or legal fees. There are none and can save up to $5000 up front plus the interest rate saving which I describe below - you pay a 'commercial terms' interest rate, which you need documentation to support i.e your personal equity rate.

Your SMSF is taking a loan from your personal equity. So you have $500k available and you take a loan of $300k. On that equity you are paying 4.9% for instance. You then create a loan agreement between the SMSF and the related party (yourself) and have a commercial rate that can be supported (4.9%....). There has been a lot of conjecture around zero interest rate loans - don't do it, refer recent ATO guidance. Remember there is a bare trust involved and we can help with the bare trust set up.

So based on the above, its not what the lender will accept its your equity and to quote Eric Cartman 'i'll do what I want' (subject to compliance with SIS compliance). Are we on the same page? happy to take it offline to discuss as related party loans are a great vehicle with the right advice. Of course, best interests of the client but the drawback is the opportunity cost of using the equity which is a no brainer for commercial property (i.e business premises).

Hope that helps

Cheers, Ivan

 

[Marty McDonald]

Hi Marty, re related party loans, let me emphasise that you need to seek advice as there are a number of considerations involved to ensure you are compliant.

Personally I have done my own related party loans and the best thing is I don't need a bank to tell me what to do nor pay their ridiculous application or legal fees. There are none and can save up to $5000 up front plus the interest rate saving which I describe below - you pay a 'commercial terms' interest rate, which you need documentation to support i.e your personal equity rate.

Your SMSF is taking a loan from your personal equity. So you have $500k available and you take a loan of $300k. On that equity you are paying 4.9% for instance. You then create a loan agreement between the SMSF and the related party (yourself) and have a commercial rate that can be supported (4.9%....). There has been a lot of conjecture around zero interest rate loans - don't do it, refer recent ATO guidance. Remember there is a bare trust involved and we can help with the bare trust set up.

So based on the above, its not what the lender will accept its your equity and to quote Eric Cartman 'i'll do what I want' (subject to compliance with SIS compliance). Are we on the same page? happy to take it offline to discuss as related party loans are a great vehicle with the right advice. Of course, best interests of the client but the drawback is the opportunity cost of using the equity which is a no brainer for commercial property (i.e business premises).

Hope that helps

Cheers, Ivan

Ivan I know super is your area but lending is mine. I am fully aware of what you mean by related party loan and am aware of the 0% / commercial terms implications. I find your tone a tad condescending but perhaps I misinterpreted you. Going back to my other post what I was saying is cash out if you have the equity against the home or resi IP's is not always available with all lenders (at resi rates) if the end use is commercial in nature. You just try and do a big cash out with nab to on lend to buy commercial property and see how you go.

 

[Redwood]

Ivan I know super is your area but lending is mine. I am fully aware of what you mean by related party loan and am aware of the 0% / commercial terms implications. I find your tone a tad condescending but perhaps I misinterpreted you. Going back to my other post what I was saying is cash out if you have the equity against the home or resi IP's is not always available with all lenders (at resi rates) if the end use is commercial in nature. You just try and do a big cash out with nab to on lend to buy commercial property and see how you go.

G'day Marty, my apologies, I must have misread the post....play on...tone never comes out right on a forum you know that. Cheers, Ivan