Buying Australian Property Using a Self-Managed Super Fund

Self-Managed Super Fund

Let’s talk about buying property using a self-managed super fund and how I bought properties through my SMSF, using super money as the deposit. Superannuation is a deposit to buy properties before I even get started, I’m not a financial advisor or self-managed super fund expert or anything. However, I have bought properties using my self-managed super fund and probably one of the youngest people to do it in Australia.

I’m 28 years old, and I have 20 investment properties plus in my property portfolio, 3 going on four of those are in my self-managed super fund. Basically, I’m going to take it back and explain a little bit about my first transaction property that I bought using my super as a deposit. Basically, I had about $50,000 in my superannuation.

Buying Australian Property Using SMSF

What I had to do and behind the scenes, there’s a lot of trial and error. I spoke with hundreds of people; financial advisors, and mortgage brokers and there’s a lot of misinformation out there. However, this is a very simplified version of what I did. I took that 50k in my superannuation account and I had to roll over and create a self-managed super fund.

So, to roll over the self-managed super fund you have to get I had to get an accountant and a financial advisor to set up that self-managed super fund. It entails creating things like trusts, entities, companies, a bare trust, etc so there’s like two or three kinds of trusts.

I’m not going to go into the technical side of it, however, you got to create a trust basically and it’s called a basic self-managed super fund. So, you roll your money over I had to roll basically my money. So my $50,000 I had to roll over roughly behind the scenes cost me almost about $4,000 to set up all the company trust structures to set up all him all that stuff, you have to register it with ASIC and all that stuff.

It is a business, so it has to get an ABN number, etc etcetera. It’s pretty confusing and the paperwork I signed was ridiculous; there were folders and folders of paperwork.

Basically, there’s a lot of information to go through and it is very very complex and complicated however I’m going to try to simplify it for this article. (Self-Managed Super Fund):

A long story short, I had 50k, paid four grand rolled over to a self-managed super fund, right? The money was no longer in a company, I had to do a lot of behind-the-scenes things from roll that money from here to there and then the money the $46,000 that was in now what they call a self-managed super fund and cash management account.

I basically just have an account with about $46,000 dollars sitting in there. What I did was I took some of my own money and savings as let’s say it was about $20,000 for argument’s sake and I dumped it in there. So, instead of a holiday in Bali, it brought the balance from forty-six thousand up to $66,000. I then had sixty six thousand in that self-managed super fund account. The money was just sitting there and I then went to get a learning pre-approval or talk to a broker.

I already knew how much I could borrow if that happened, however, the broker said hey you can borrow about $300,000 as an example so what happened is I had $50,000 then I spent 4 grand rolled it over then I have $46k in the SMSF yeah and then I added 20 bringing it to about 66 K that I had in there.

So had about sixty six thousand super then I bought a property let’s say for argument’s sake it was about $200,000 so I bought a property for 200k, and out of that, I got the loan.

Now in terms of banks and lending criteria and policies, very few banks do a self-managed super fund anymore, some will be able to lend you money away easier through self-managed super funds.

So that’s a little bit of the very basic simplified version of growing your wealth with property, and how I bought the property using my self-managed super fund. You’re basically using your superannuation as a deposit to buy investment properties. I’ll give you an example of how leveraging property through your super is very beneficial.

This is going to have these properties are going to have tax deductions for rent that are coming in if there is about a 7% rental return it’s going to cash flow itself paid account select award rates magic.

The property is going up in value, and the loans going down in value, so you’re increasing your wealth and you’ve got $1.2m worth of assets with the same amount of capital as opposed to just going over 150 to 300k.

Remember, this is not financial advice, however, this is what I see. This is what I’m personally doing because it makes much much more sense to me to do this as opposed to doing this because that super money is just you’re not using leverage to the advantage.

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Paul Austin

Paul is a writer living in the Great Lakes Region. He dabbles in research of historical events, places, and people on his website at Michigan4You. When he isn't under a deadline, you can find him on the beach with a good book and a cold beer.

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