Owning an investment property is one of the best ways that individuals can secure their retirement income but sadly they are still out of reach for many people.
It has become commonplace for companies to show you how to ‘Negative Gear’ an investment property but it still means that quite often you need to refinance an existing owner occupied property, pay mortgage insurance, take a new loan against your current income, deal with the ATO for tax minimisation, consolidate other debts and then, even after all this is done it still costs you money out of your pay to contribute to the new loan. This can all come to a grinding halt if you have a small mark on your credit file, even if the debt has been paid. There is still more to buying and maintaining the property with property management involved and if the property became vacant, your monthly contribution will go up to cover the rental loss.
What can you do if you don’t have an existing property to use as additional security?
What can you do if you don’t have any or enough deposit?
You may have the deposit required but not the many thousands of dollars for additional costs of Lenders Mortgage Insurance (LMI) stamp duty, legal fees etc.
There is another way to buy your first and many subsequent investment properties without any cash outlay from you, no refinancing of your existing Home Loan, if you have one, and even if you have some issues with your personal credit file, this may not matter.
How does it work?
You are looking to set up a self-managed super fund (SMSF) or currently have one. After obtaining financial advice, you decide to borrow to invest through your self-managed super fund. Your SMSF appoints a Security Custodian to purchase investment residential property on its behalf, as security for the loan. The SMSF contributes cash to pay the deposit and to meet legal costs and stamp duty. The SMSF then manages the property in the same way as any other real estate investment. The property is held in trust and the legal title is either transferred to the SMSF when the loan has been repaid or the property may be sold.
Where to from here?
Call us or come in to our office. We will walk you through the steps and even show you a range of suitable properties for purchase however you are under no obligation to purchase any of our properties. We DO NOT establish the SMSF, we leave that to professionals but can assist you in the document preparation you will need.
How much do we charge?
This is where we differ from most companies who can do this. We could use long winded stories to justify our fees and charges like a lot do but since we charge you NOTHING, we don’t have to.
How can we do this for FREE?
Of course we make money, your chosen lender will pay us if you decide to proceed after you have had independent financial advice. Also, if you do proceed, all of the establishment costs, legal fees, independent financial advice, duties etc. are paid by your SMSF, not out of your pocket.
What else do I need to know?
Not a lot really. This is designed to be simple and you will need a lot less in your current Superannuation than you probably think, which is pretty handy considering how Superannuation Funds have performed over the last few years.
None of the properties we have involve Gold Coast High Rise or get rich quick schemes (just in case you were wondering).