Using Super to Upsize a Rental Property Portfolio

January 12th, 2022 | Comments Closed | Blog

Australians who want to live in safety and financial comfort in retirement can turbocharge their retirement nest egg by buying one or more investment properties using their super. DDP Property founder Zaki ameer Sydney says investors should consider using their income as a general-purpose for their property investment through a self-managed super fund (SMSF) to purchase an investment property.

“You can now get a loan with 20 percent of your rent as a deposit for your SMSF property and 80 percent of the lender’s loan,” says Ameer.
“For example, a $ 400,000 property would cost $ 80,000 plus stamp duty and other costs around $ 100,000 from your super; on the side”.

DDP Property is in its tenth year and has helped more than 2,000 customers buy property. The key is for Ameer to buy property in high-growth, high-demand areas that may not be in your yard.

“I prefer lower-priced properties in hot growth areas where growth will be 5 to 7 percent per year in the long run and high rental yields to cover all your expenses so you don’t have to dive into your excellent balance or contributions from future employers,” he says.

“We’ve helped many clients acquire properties with a $ 100,000 minimum balance or a super-combined balance. It’s a key time in the market, compared to the market time.”

And with property values ​​rising by almost 15 percent in the last 12 months in Australia’s top five cities, according to CoreLogic, property looks like a good long-term investment. Ameer says investors need to keep their investment goals in mind and minimize risk and maximize returns on rental property portfolios.

“Make sure your property is in an area where the property can be easily rented, make sure that the rental covers all the costs of owning the property and that you have all the insurance – be it life, income, homeownership or home insurance. financial advisors will be able to help you with these. ”

Other costs should also be considered, such as the initial set-up fees for an SMSF, plus compliance with annual tax reports and audits, but Ameer says long-term benefits based on historical capital gains should outweigh those costs. Ameer says that if investors have an SMSF and have not yet purchased the property in their SMSF, DDP Property can help create additional structures for buying an investment house with its partner financial planners and accountants.

“Residential ownership allows investors to be exposed to a class of assets that is understandable and reliable and allows them to avoid the volatility of other asset classes, such as stocks.

DDP Property reimburses the buyer some of these fees in cash. The buyer pays DDP Property a one-time fixed fee to guide the buyer through the process of purchasing the property.

“Cashback can help you buy your property after you return to your SMSF,” he says. “It can then be used for future investments in assets, shares or any other type of investment class that complies with the SMSF.”

Ameer reiterates that it is important to receive financial advice on whether or not to buy a property through an SMSF is the right decision for your situation. The nation’s highest self-governing super-body, the SMSF Association, says that before any investment decision is made by SMSF sponsors, it is essential – and a legal requirement – that trustees consider the actual investment strategy of their SMSF and investor status.

“The strategy should determine how much exposure the fund should have to the real estate market, the form of exposure, and how appropriate it is in the situation of SMSF members,” says the SMSF Association. “It is important for administrators to understand that this is not a problem and to forget. In fact, it is part of the annual duties of auditors of an SMSF that the SMSF has an investment strategy and must ensure that its investments are in line with that strategy throughout the year.”

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