Buying property through your SMSF is quite complex, but there are many common mistakes when buying an SMSF property that can be easily avoided. The key is to ensure you understand the detailed regulations surrounding SMSF investing before diving in. For a smooth and uncomplicated SMSF investment property purchasing experience you should also engage the help of a licensed financial advisor.
How Hard Can It Be?
If you have ever bought property before you might be tempted to think that SMSF property investment will be just as straightforward. However, purchasing a residential property through your self-managed super fund comes with many rules and regulations that must be strictly adhered to.
Investing through your SMSF is heavily regulated by APRA, the ATO and ASIC. Failure to comply with these regulations can lead to heavy fines and possible jail time so it is critical to approach SMSF investing from an informed and cautious position.
6 Common Mistakes When Buying an SMSF Property
So, what are the major pitfalls to avoid?
Failure to seek qualified professional advice:
A financial advisor and a mortgage broker are not the same things. When it comes to advice surrounding your SMSF you need to ensure you are speaking with an experienced and fully licensed financial advisor that understands the ins and outs of SMSFs.
Poor property selection:
Not spending ample time researching a property and whether it will offer the return on investment you want is a mistake. One of the most common mistakes made when buying an SMSF property is that buyers go with their emotions over proven numbers. Remember, you’re not buying to live in it but to earn from it, there are also professionals that are there to support you through the process of choosing your property.
Inadequate lending advice:
SMSF loans or LRBAs are vastly different from a standard mortgage loan. Ensure you only speak to someone experienced in these loans and not a standard mortgage broker when seeking a loan or you may run into difficulties.
Paying too much for financial advice:
Expertise is vital, but it shouldn’t be exorbitantly expensive and drain your SMSF of vital funds. It is normal to budget a few thousand for advice, however, if it runs into the tens of thousands, you are paying too much.
Overstretching your fund to make the purchase:
All your investments need to be in the best interests of fund members and the long-term goals of your SMSF. Overstretching is a risk as it may leave you without essential funds to pay out a member if needed or cover the ongoing costs of your investment property.
Not choosing the right solicitor or conveyancer:
Just as with lending or SMSF advice, you should only engage legal representation that understands SMSF regulations in depth. Failure to do so could lead to delays and breaches of compliance.
Where to Seek Help
If you are ready to invest through your SMSF but want to avoid these common mistakes when buying an SMSF property, you need Corbwood & Associates. Our fully qualified, experienced and licensed financial advisors can walk you through all aspects of SMSFs and winning investment strategies, making your experience as stress-free and streamlined as possible.
Contact us today on 07 5609 8874 to arrange a consultation to see how we can help secure your financial future.