More Australians Using SMSF’s to Buy Investment Properties
Announcement posted by Smartline Rockingham 12 Feb 2015
Mortgage brokers from Rockingham reveal why this trend has become so prevalent in the Perth area.
Rockingham, WA, 12 February 2015 - In more than 25 years in the finance industry, Justin Smith has seen trends come and go. Mr Smith is currently the principal mortgage broker for Smartline Rockingham and is in a unique position in the real estate business. His clients represent a cross section of Rockingham, Baldivis, Kwinana and other Perth suburbs.
Mr Smith has noticed a growing trend towards small investors using rental properties as a vehicle for investing their self managed superannuation funds (SMSF’s). Consequently, he has helped procure home loans for many Perth area investors from his Rockingham office. Recently, Mr Smith decided to use the Smartline Rockingham company blog to explain some of the mechanics of how SMSF’s work when investing in real estate and why so many people are using SMSF’s to invest in real estate.
How SMSF’s Work
An SMSF, or self managed superannuation fund, is an option that all Australians have for super fund management. While many choose to invest their supers in retail funds, industry funds or whatever their workplace provides, any Australian can choose to manage his or her own fund. This choice is usually made by those who have a higher risk tolerance or an entrepreneurial mindset.
The upside is that an SMSF can provide more profit for the investor than many retail and industry funds do, especially if the SMSF invests more aggressively than a typical industry fund. The downside is that an SMSF can lose money or make less than industry funds if they don’t invest wisely.
Why SMSF Trustees are Choosing Investment Properties
Real estate has the potential to accelerate retirement for those who use their supers for investing, especially if they team with other investment partners to pool resources and create more working capital. Capital gains can be leveraged to produce more investment capital for investors. This compounding can produce much more profit in the long term.
In addition, capital gains on real estate are greatly diminished when investing in an SMSF and can be delayed until one has retired. This allows an SMSF to use capital that would have been paid in taxes to further compound SMSF earnings.
Lenders’ Point of View
Due to the speculative nature of property investing, lenders want between 30-50% of a property’s value as a down payment. They also want to see a pattern demonstrating that the SMSF is making enough money to help make payments in times of vacancy and enough money to keep up with management and maintenance.
What Mortgage Brokers Say
According to Mr Smith: “Because so many small property investors are doing so well with their SMSF’s, we don’t see the trend disappearing any time soon. However, it is important that you have a great mortgage broker and financial advisor on board. Anything less could result in a financial disaster.”
Smartline Rockingham, formerly known as The Mortgage Gallery Rockingham, are mortgage brokers who help procure home loans for people in Rockingham, Baldivis and Kwinana. They have been in business since 1999 and can provide access to 28 different lenders. To learn more or to talk to a mortgage broker, call 1300 958 730 or visit their website: http://www.mortgagebrokersrockingham.com.au/.
Mr Smith has noticed a growing trend towards small investors using rental properties as a vehicle for investing their self managed superannuation funds (SMSF’s). Consequently, he has helped procure home loans for many Perth area investors from his Rockingham office. Recently, Mr Smith decided to use the Smartline Rockingham company blog to explain some of the mechanics of how SMSF’s work when investing in real estate and why so many people are using SMSF’s to invest in real estate.
How SMSF’s Work
An SMSF, or self managed superannuation fund, is an option that all Australians have for super fund management. While many choose to invest their supers in retail funds, industry funds or whatever their workplace provides, any Australian can choose to manage his or her own fund. This choice is usually made by those who have a higher risk tolerance or an entrepreneurial mindset.
The upside is that an SMSF can provide more profit for the investor than many retail and industry funds do, especially if the SMSF invests more aggressively than a typical industry fund. The downside is that an SMSF can lose money or make less than industry funds if they don’t invest wisely.
Why SMSF Trustees are Choosing Investment Properties
Real estate has the potential to accelerate retirement for those who use their supers for investing, especially if they team with other investment partners to pool resources and create more working capital. Capital gains can be leveraged to produce more investment capital for investors. This compounding can produce much more profit in the long term.
In addition, capital gains on real estate are greatly diminished when investing in an SMSF and can be delayed until one has retired. This allows an SMSF to use capital that would have been paid in taxes to further compound SMSF earnings.
Lenders’ Point of View
Due to the speculative nature of property investing, lenders want between 30-50% of a property’s value as a down payment. They also want to see a pattern demonstrating that the SMSF is making enough money to help make payments in times of vacancy and enough money to keep up with management and maintenance.
What Mortgage Brokers Say
According to Mr Smith: “Because so many small property investors are doing so well with their SMSF’s, we don’t see the trend disappearing any time soon. However, it is important that you have a great mortgage broker and financial advisor on board. Anything less could result in a financial disaster.”
Smartline Rockingham, formerly known as The Mortgage Gallery Rockingham, are mortgage brokers who help procure home loans for people in Rockingham, Baldivis and Kwinana. They have been in business since 1999 and can provide access to 28 different lenders. To learn more or to talk to a mortgage broker, call 1300 958 730 or visit their website: http://www.mortgagebrokersrockingham.com.au/.