Property investing with SMSF (newbie)

[jos]

Hello all

I am new to this site and new to Investment options, reading through the site, i've got alot of information but done of which seem to answer what i wanted to know according to my circumstances.....

I am in my late 20s and looking what the super company is doing with my money lately i am considering taking control of the profit or loss and want to invest in a property using my Safe Managed Super Fund, my intentions is to purchased a property, rent it out for a long time then sell it when i get to my retirement age. I know most of the details about rolling over the money from my current account into a SMSF but what i don't know is.....

How do i go about getting finance for the loan?

I have close to 30k in my superannuation account so far. Would that be enough to purchased a property with a price of around 200k or less? What is the maximum that i can borrow from the lender?

Can i pay stamp duty, lawyer fees and other cost with the money in the super?

I know my super is not great but would the lender reconsidered since i already have a property with 2/3 declare as investment?

There might be some stupid questions there and i expect cristism but i am highly interested to finding out what my options are regarding with my current super situations

Any comment is a good comment......thanks

 

[AVD]

Hi!

From the banks that I have been dealing with for the warrants most residential LVRs offered are around the 70-72% mark and 65% for commercial. You would need more than the amount you have in super to be able to buy a house of that price.

The legals and extra's can be paid for by the super fund if it has the funds. The idea is to have enough in super to cover the 30% shortfall + all legals and fees and favourable to the bank is to have at least the first years interest amount already in super.

You also should be in a position where your employer sponsored (or voluntary contributions with evidence of regular repayments) are enough to cover any difference between the net rent (they usually use a figure of 80% of the gross) and the repayments and after taking the tax on the income into consideration you should aim for a surplus of funds for the bank to consider you serviceable.

It is great that you are considering such a great retirement tool so early in your working life! I could talk about the warrants all day so feel free to PM me with any further queries.

Alysha

www.gatherumgoss.com

 

[BV]

$30K by itself is too low but if you have own savings you can lend to your SMSF and charge interest

You'll find some of the answers here
http://www.somersoft.com/forums/showthread.php?p=569516#post569516

and here
http://www.somersoft.com/forums/showthread.php?t=54235

 

[jos]

hmmm.... that would mean i need about $60k to be able purchase a property value at 200k. i can't salary sacrifice too much because my income tax bracket is not too high and i also have look after my current house so maybe if i still want to buy another IP, my other options is not to use the money from super, refinance the current property and borrow as much as i can....

Thank you for you advice

 

[BV]

If you have equity in your existing property you could borrow against it and then lend the money to your SMSF.
Read through the first link I gave you.
There is a url there pointing to an article explaining the lending process.

 

[tubs]

But then again Jos might be better using that equity to buy a house in his name at 80%+ LVR rather than tie it up in super.

Once its in there its stuck until 65 (or by that age, probably 70).

 

[BV]

But then again Jos might be better using that equity to buy a house in his name at 80%+ LVR rather than tie it up in super.

Yes he can gear better outside super and he will also save on the SMSF operating costs.

Once its in there its stuck until 65 (or by that age, probably 70).

Why is it stuck?
You can sell it before retirement if he wants to

 

[tubs]

The house isn't stuck. The profits are.

Its really a choice only if he wants to contribute his own money to his SMSF.

 

[BV]

The house isn't stuck. The profits are.

Its really a choice only if he wants to contribute his own money to his SMSF.

ok so you meant to say the equity is locked.

True, at the moment it is but down the track I am sure the banks will develop this brand new equity mate product to address the SMSF equity issue and make money in the process.

Anyway, he's not interested, he's too young, it's not the right choice for him etc etc

 

[jos]

I've done some thinking and i worked out that it is probably not appropriate to use my super money to invest in a property at this stage maybe in my in my mid 30s, then i would have extra money in there to choose the property with the best profit, Reading through some of the threads and articles about retirement, my money is best invested rather leaving it my super company.

i am argreeing with tubs, my best option right now is to to look into using my equity and pruchased an cheap property that won't give me too much headache.

By the way.... newbie question....what does LVR stand for? i've been reading it and still can't work out what it ctand for?

 

[LynnH]

LVR = Loan to Valuation Ratio.

Example: Loan is $400K, property is valued at $500K - LVR is 400/500 or 80%.

Cheers
LynnH

 

[jos]

LVR = Loan to Valuation Ratio.

Example: Loan is $400K, property is valued at $500K - LVR is 400/500 or 80%.

Cheers
LynnH

ahh thanks