The details in relation to property investment through an SMSF can be confusing, tricky and complicated. But it is not as complicated as it appears. Here is how you can buy an investment property in your SMSF in 3 easy steps:
Step 1:
Set up your SMSF. You will need the following structure to buy a property though your SMSF.
- SMSF Trust with corporate trustee
- Bare Trust with corporate Trustee (to be set up later on once property is found)
We can help you to set up your SMSF correctly. Please reach out to us so we can give a tailored quote based on your unique requirements.
Step 2:
Get SMSF loan pre-approval. Purchasing a property is a bit of a balancing act, and before you start looking at properties and areas to buy in, it is a MUST that you need to know your loan borrowing capacity (that is what is the loan amount that a lender is willing to give you to buy your investment property). And a pre-approval will do just that.
A pre-approval is a tick from the lender that you’re eligible to apply for an investment loan up to a certain limit. The lender will look at your income and your expenses and decide whether you can aord the loan amount and its repayments. The lender will also consider your savings deposit versus the amount you’re requesting the bank to lend to you.
Having a pre-approved loan in place will give you confidence about how much you can borrow, the lending limitations, and how much you can spend on a purchase. This will make you a “qualified buyer” in eyes of selling agents giving you negotiating power.
Step 3:
Become an expert in the area you’d like to buy or use our professional service as a buyer’s agent. As an investor, I am sure you like to buy a property with good rental yield and solid long term capital growth. But do you really have time and skill to do these all yourself? Mistakes can be costly and may cost you thousands of dollars in long run. This is something that you must decide first.
Once property is selected and your oer is accepted, send us a signed copy of contract of sale so that we can do property valuation and get your SMSF loan unconditionally approved.
Once loan is unconditionally approved, your conveyance or solicitor will assist you with settlement (this is the day you will become owner of the property that you have bought).
