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Property Investment And SMSF’s

Investment Property and Your SMSF

Property Investment and SMSF’s (self-managed super funds) requires a thorough understanding of the governing rules and laws. Failure to comply with property investment and SMSF’ laws can have serious repercussions to your wealth creation strategies. If you’re able to understand to and can adhere to the laws and complicated regulations, including a property as an SMSF asset can be very beneficial to your wealth creation strategy. Here are a few reasons why it might be beneficial to invest in property through your super.

High Leverage

A property investment and SMSF combination offers the opportunity of a high degree of leverage compared to any other form of investments. As a result you can potentially get very high return on your investment in %% terms.

Safety and Stability

Property prices in Australia are not subject to frequent fluctuations when compared to the stock markets. Most banks consider property as a low risk investment and offer to lend a vast majority of the asset value (leverage). Property bought at the right time, in the right place and the right price tends to increase over a period of time more often than decrease.

No Margin Calls

As the Australian property market rarely wildly fluctuates (unless you over paid for property to start with), banks rarely require property to be re-valued. A consequence of this is that investment properties are rarely subject to any form of margin calls; unlike Option Contracts or CFD’s.

Long-Term Market

As SMSFs are, by name “self-managed”, there is a wide scope for changing the allocation of funds. An investment property, is not a liquid asset does not allow for fast and emotive or reactive changing of fund allocation – it is harder for you to get sucked into the latest investment fad. The long-term nature of the property market is more suitable to those who are wary of the frequent highs and lows of the stock market and like a consistent and proven performing asset class.

Higher Control

For individual investors it is probably impossible to influence the value of shares in your share portfolio – really what can you do to influence the share price of BHP or Westpac bank for example? However, when it comes to property, you can increase its value by developing the land, undertaking a renovation etc. This also applies to any property held under SMSF. But you must take care to comply with all SMSF rules as renovations and improvements are strictly regulated.

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