There are many options available to you when you choose to invest in a property. You can take out financing such as a low documentation loan, or an interest-only loan. One option that appeals to many Australians is using their self-managed super fund loan to obtain a property. This isn’t an option that’s suited to everyone, but for those than can use their SMSF to buy into a home, there are some important restrictions on the property to remember.
One and only
When you take a loan out with your super to buy a property, it’s called a limited recourse borrowing arrangement. What you should remember with this setup is that it can only be used to buy one piece of property. It can be a retail space or a residential one, but you cannot buy anything more with the fund. You also can’t borrow from the fund to improve the property, so make sure to get thorough checks done on the building if funding renovations yourself is out of the question.
Keep it out of the family
While your super gives you the purchasing power to invest in a home with a loan, remember that you can’t purchase any real estate from a relative. This applies to any partners in the fund you may have as well. Relatives also cannot live in or rent out the property, either – keep it out of the family to keep yourself within regulations!
Once you have these regulations under wraps, you will find that there are so many options available when you take out an SMSF loan. You could buy out land in a shopping centre to be let out as a retail space, or purchase a residential property in the city to make strong rental yields.
For more information, don’t hesitate to contact Redrock to discuss your options.
