Our First Smsf Purchase - A Step By Step Guide

I've answered your questions above in bold
My observation in general is that you are ill-informed and you are missing the point of my thread, I'm not advising anyone to do this. I thought it will be of benefit to some people.

I chose to manage my own money because I know I can do a better job than the fund managers.
The operational costs of doing it myself will be the same as if my super was managed by a super company but the end result will be much different.

May I suggest that you go to a few SMSF seminars and get up to speed with the concept and then come up and give us your opinion in your own thread.
and not in mine. Thank you

 

response

Hi Billv.
Thanks for reading my 1st post. I am not posting as an expert. That post is part of my experience dealing with smsf loans as a loan writer. As the super fund is what most of us are going to rely on when retired, it is very important to get the facts and numbers right. As a finance person, our reward should be based on the benefits generated for the clients instead of the transactions have been done. That is why the cause of the Financial Crisis disgusted me and some financial planners/brokers get paid commission while the customers are losing money. It is not right to advertise a product with flawed info which is vital to a person's welfare when retired. I am sure we can survive many housing market crashes when we are young but not sure how many of us will survive well with an empty purse when we are old. Nothing personal, just a thought. Always a right thing to do to associate our personal gains with social welfare.
Respectively, Tangible

 

No worries mate but do research the subject because there are many options out there.

Here is a very good thread which talks about a new and innovative way of super gearing
Why buy Negatively Geared Properties? I think the calculations are wrong - Somersoft Property Investment Forums

and here is a more up to date version of the above thread
Our First Smsf Purchase - A Step By Step Guide - Somersoft Property Investment Forums

 

Personal Guarantees and Individual Trustees

Giving Personal Guarantees don't usually make a Superfund non-compliant. I'm not sure why there is confusion over this.

With respect to individual trustees I beg to differ. There are numerous reasons why one should use a Corporate Trustee. Aside from the administrative benefits already mentioned, once a fund moves to pension phase it is restricted to solely paying pension benefits as income streams if there are individual trustees. i.e. it is prohibited under SIS for a fund with individual trustees to pay a lump sum benefit.

regards
Jason

 

Jason

At the time there was a lot of talk about non compliance due to personal guarantees and poorly worded loan documents.
IMO this wasn't a big issue but the mortgage broker had suggested STGeorge and the interest rates between lenders were similar so I went with them.

Jason
I could update the deed docs and add a corporate trustee later can't I?

 

Personal guarantees are now ok

Yes the ATO now accepts this arrangement
Please see ATO ID 2010/170

ATO ID 2010/170 - Self managed superannuation fund: limited recourse borrowing arrangement - third party guarantee

 

Just wondering if Mr Tangible has any affiliation or connection to TangibleAssets ?

To reiterate some of my previous comments, I have found Bill's series of posts on this topic very informative.

I have enjoyed seeing it from the investors side - I am normally on the adviser side - so the different perspective is really helpful.

SM

 

good thread

Hi Bill,

I just joined up to say "good Thread", to me you appear to be level headed and have a good understanding of SMSF, they are a complex world but once you get a good understanding of the they are a great asset (not asset class for the idiot about to respond). I am a FP and have dealt with SMSF's for over 10years and it still shocks me how many planners I meet that are so called specialist that have no idea. I wish more of my clients could be more like you.

Mr Ed

 

Mr. Ed

Welcome to the forum and thank you for your kind words.
I don't know how much you've read of this thread but I use the SMSF in addition to my other property investments.

I think my SMSF is a great tool and now that I have the ability to access more equity I'll lend money to my SMSF and buy 1 more property.

2 properties is a good number because later on I can sell 1 and pay off the 2nd. I just have to convince my lender...

 

Thanks for the welcome Bill,

I've read enough to get the gyst of things. I skimmed through the back and forth debates over legislation and the likes.

I am preparing to buy my 2nd property in the SMSF as we head into this buyer market, the borrowing is a plus. the rest of my funds will remain in mainly Shares however at this stage, I do believe in diversity.

Financial Review today had an interesting article on the growth of property in SMSF.

Interesting point on the lender, they will never encourage you to pay off a propery, always the opposite.

B

 

Mr Ed
I signed a contract to buy a 2nd property in my SMSF 2 weeks ago but had to pull out because I could not get finance.
My main lender STG plus NAB went very conservative on me and I didn't have time to look for an alternative lender.
A very dissaponting result really.
Lucky I had asked for an extended cooling off period or I would have been in trouble.

 

Billv

God! the world is really round....

i started that above first post on somersoft website - i am told that now it is the most read thread in the history of somersoft.... as it was very upstream when it was written - i stopped commenting on it due to many reasons... and ditched the idea of ever going on any forum due to negativity of some people.... - forums is where you get to know other people's ideas - you read - use it if you like or press the exit button if you do not like it - but some people make negative comments even if they do not like the idea - anyhow to cut the long story short... i do not like negative comments .... so please either make a positive comment or zip it...

here is my opinion... btw ... my opinion keeps on changing as time changes...
i think "super gearing" is super duper idea - that is why i own the website called www.supergearing.com.au

Below is after helping 1241 smsf to borrow from SMSF Borrowing

Opinion
i do not like negative gearing - i do not like negative gearing outside of super , i do no like negative gearing inside of super and here are the reasons...

Reasons
A) investment is tax driven and not for its very nature - return (capital or annual)
B) when you can buy an asset which gives a return which is more than the cost of capital (interest rate) then why should you buy a loser
C) If i can get income over the cost of borrowing - i can invest that income to make more income or in other words "income" on income > compound income and the effect of compound income with 15% tax rate and no CGT means that i can achive $6M i need to retire quickly.

to explain the above....
If i get a an asset which gives me 10%+ return and i am borrowing only 70% of the assest value at say 8% - i am left with a lot of $'s which along with my contributions can be used to purchase property no 2 in the smsf. With negative super gearing all contributions will be used up in paying the interest shortfall

Never pay back any loan in super - the more loan you have > the more positive income you will have in super - the more the loan the more the income - No one has used "refinance" in super - i wonder why - it is ok with SIS Act - when property values goes up in value - from StGeorge i can go to NAB and get more for it - this means more of my equity can be released to buy more asset which will give move + income (i know i will pay 15% tax on it)...

Lastly i need $6M lump sum to retire.... this will give me enough forever - i have worked that out, has everyone else....???

And please don't let me start another problem here "How to find 10% return (not growth) properties" - if you are looking at duplex lounges and backyard granny flats etc, you are looking at the wrong place....

10% rent is paid by the people who sell you newspapers, milk & bread...and mine pay me 15% and sell peri peri chooks..... nandos...

Who cares about growth, I don't - growth is like a "tooth fairy" reward - can't see it, but happens ... you may find it under the pillow when you wake up.... only when you are young.... but when you grow up you can't see the tooth fairy reward any more as now you have become experienced .... you learn that "growth" is nothing but "inflation"....

Manoj


SMSF Specialist Advisor, SMSF Specialist Auditor, Fellow Taxation Institute of Australia, Registered Tax Agent, Licenced Real Estate Agent
(qualifications mentioned for the benifit of Mr Tangible only)

 

Manoj
You are a wealth of information, I'm glad you decided to contribute again
cheers