People use their self managed superannuation fund all the time to purchase property. This can truly be a useful way to invest and it certainly opens the door to potential too. However, a lot of people aren’t sure how this can work, if at all! It’s easy to see why it looks very complicated and difficult in making superannuation funds work but it can be far easier if you think about it. Want to know ways in which you can make purchasing simple? Read on to find out more.
A Joint Venture Investment
When you look into a joint venture investment it means at least two parties must come to agreement over a property. This can often be highly sought after as it means even if one or two parties don’t have sufficient funds, another party can be brought in to help complete the deal. It’s something which a lot of people are looking into with their self managed superannuation funds. You really can get a lot of help from this.
Tenants In Common Clause
With tenants in common clause it essentially means two or more parties will be involved in owning a percent of the property. For instance, an individual can own thirty five percent of the property with the super fund owning the remaining fixed percent of the property. It could be a smaller or larger percentage depending on the property. The fund cannot be used to purchase the other percent of the property unless it’s a business property. A self managed super fund cannot be used to buy property from someone the fund’s executors know.
A Unit Trust Deal
In order to get a unit trust for property, there must be two parties at least, who will buy a percentage (fixed) of the property up for sale. These deals really have become highly sought after as they can offer so much to those who want to invest. It’s a good option for most people and it’s not too difficult to work with either.
A Direct Purchase
In order to opt for a direct purchase route the fund must have sufficient funds to purchase one hundred percent of the home. If you are able to look at this method, it’s great because it means you’ve bought the home outright and it’s certainly a good investment too. Anyone who wants to invest in property and has self managed superannuation funds can benefit from direct purchasing. However, the amount you have within the fund can limit the type of property you’re able to purchase.
An Instalment Warrant
These types of arrangement can seem quite confusing so let’s make it as simple as possible. If you were to choose this route there will be a trust that owns the title to the property while you have a recourse loan. The fund is the one who receive any and all income resulting from income from the property. However, the funds are also responsible for any expenses which might come as a result of the purchase such as repayments. After the loan has been repaid in full, the title can be then transferred to the fund. To find out more, check out smsfselfmanagedsuperfund.com.au.
A Pre-99 Unit Trust Deal
For most, a pre-99 unit trust deal is not an option open to them. Why? Well, because very few investors have the ability to structure their investment in the manner in which this uses. However, that doesn’t mean to say this can’t be something that works for you but you certainly have to be careful. You really need to research this topic closely if you wanted to look into it further. Self managed superannuation funds can be useful but you need to be wary as to how you use the money from it.
Make It Work
When you have a SMSF and you want to make it work, you have to think very carefully and sensibly over how you approach your investments. It’s not only important to ensure the investments are good for your overall investment portfolio but that you also have the ability to earn back from the investment. You have to be very careful when it comes to investing but if you can be smart about it, you can hopefully see some level of success. Use your self managed superannuation fund with caution.