Who cares what you have in your smsf
Some people could make it work with far less than 100k. You just have to realise that you won't be buying blue chip and have an understanding of how the numbers work. Cash flow is king in smsf property.
After you take into account the leverage factor all you really should be aimung for in a smsf is to pay the thing off with minimal out of pocket costs
As for diversification .....
So if property goes up then its a result of? A good economy, people making money from their jobs and share gains
If property go's down its a result of? A crap economy , people losing money from job cuts and a bad share market
In my mind there is no point in diversifying into other asset classes other than property and I guess cash. Because show me an example of when housing has crashed when shares have been booming.
Property wins because it is safe leverage
This is all true, yes- but you aren't accounting for the role the planner will play in influencing most SMSF's investment strategies. It is the planner who will be pushing the diversification barrow. It is the planner who will likely be pushing the anti property barrow. It is the planner who will be looking to"sell" a product from their deal group's approved product list, rather than encouraging property. Believe me when I tell you this
I run an NRAS business, which is far and away the king of all "cashflow is king" property opportunities, I have more than 250 financial planners signed up as referral partners, and the majority just DO NOT EVER encourage, introduce or even discuss resi investment property with their clients. They are an incredibly conservative bunch, and the culture within the planning industry is very very simple ; very few of them will discuss or recommend anything outside their dealer groups approved product lists, unless they go and obtain their own PI insurance, and that all equates to a massive, massive roadblock for SMSF's and resi property. Dont believe me? Take a close look at the data - the ATO publishes it every quarter , so you can check SMSF asset allocations in 5 seconds online. You'll come to ask yourself a very simple question; why oh why, in spite of the MASSIVE ramp up in newly established SMSF's in recent years, and all the rhetoric around SMSF's gearing into property, has the number of them that actually invest in resi property grown from 2.82% to 3.43% since amendments to the SIS Act in 2007? If 134,000 new SMSF's have been established since 2007, why have only 7,000 new investment properties been purchased by those 134,000 SMSF's in the last 7 years?
June 2008. 375,657 SMSF's 10,631 invested in resi property - 2.83%
June 2013. 509,362 SMSF's 17,509 invested in resi property - 3.43%
http://www.ato.gov.au/About-ATO/Research-and-statistics/In-detail/Super-statistics/SMSF/Self-managed-super-fund-statistical-report---June-2013/?default=&page=2#Asset_allocation_tables_%28$m%29
Can someone with 100K invest in resi property? yes, technically and mathematically it's do-able. Will their planner encourage it? Nooooo. Will their planner actively discourage it? Very very likely.
If you were to push on, in spite of your planners objections, and put 100K into a resi property, what can you really afford to buy and what quality of asset is it likely to be.... hmmm. Hard to say.
Anyway, all I'm trying to demonstrate is... 100K is really really pushing it. Doable ? yes. Sensible? the property would have to be quite a find, and very inexpensive, to put every egg in one basket like that.
