Superannuation - Investment property

[harmechelectrical]

Hi all,
I was approached by a company saying the benefits of putting my super into an investment property, positively geared with future super and rental income.
Anyone familiar with this?
We are meeting on the 20th.
Does the investment property have to residential or can I buy a commercial property and lease it to my company.
Cheers
Royden

[Burgo]

Property as an investment is as good if not better than investing with a super scheme, however you need to be extremely careful if dealing with unknown companies offering investment properties.

DHA, Defence Housing Authority is a very good on to invest with as they guarantee rent and will replace capets etc once lease term has expired.

A friend of mine bought up a heep of industrial units about 30 years ago for an average of $ 50,000 each. These same units are currently selling for beteen $ 450,000 to $ 55o,ooo and in that time he has recieved a handsome income. 30 years ago around $ 90,000 per year to day he would be receiving aroung $ 810,000 per year +

Not bad if you are prepared to handle the risks, such as bad tennants.Periods of no or little rent, and small business going broke owing you money.

[Farid Zaki]

Originally Posted by harmechelectrical

can I buy a commercial property and lease it to my company ?

Hi Royden

If the property is commercial, the lease to your company, as long as, the rent and other terms are at market conditions, is specifically excluded from being an in-house asset because it is "business real property" and therefore is allowed.

You need to speak to your Financial Planner and get their advice about you specific situation before you do anything.

[V.Vanderbuilt]

Originally Posted by harmechelectrical

Hi all,
I was approached by a company saying the benefits of putting my super into an investment property, positively geared with future super and rental income.
Anyone familiar with this?
We are meeting on the 20th.
Does the investment property have to residential or can I buy a commercial property and lease it to my company.
Cheers
Royden

Hi Royden,

You can buy investment properties through a Self Managed Superannuation Fund (SMSF). This is a relatively new law and allows the investor to only have a 20% deposit and gear the rest of the investment. When thinking about entering a SMSF account there are a few things you need to know:
1. Do I have enough money in the fund for it to be viable?
If you have less than $150K in your superannuation then chances are that once fees are taken from advisors and end of year auditing you would have been better off with your regular superannuation account.

2. Am I going to implement my own financial plan or will I seek advice?

The main benefits of a SMSF are:
1. Higher levels of control
2. Wider range on investment options
3. Lower fees (if you have more than 150K as a general rule of thumb)
4. Tax strategies that can be employed for immediate returns

For further advice speak to a SMSF advisor, someone at Synergy could help you over the phone or by meeting in person.

You may also find handy our free ebook investing 101 its available for download at: www.synergyic.com.au

Ph: 02 9375 2252.

We are also giving away 10 free subscriptions to our investment newsletter for three months valued at $300. Get in quick to miss disappointment email newsletter to v.vanderbuilt@synergyic.com.au

[RapidEntryBiz]

Hi

I assume you're talking about Self Managed Super as you cant direct the investment choices of retail Super Funds (but you knew that). So I'll assume you're talking about a SMSF.

First and lastly, lets talk Risk.
The main reason why you would invest through a reputable financial planning firm and not a possible fly by night scheme is the RISK.
With all that's been in the news about shonky property hawkers and their property investment seminars, why would you go down that road? Why take the RISK?

"...positively geared with future super and rental income..."

Property usually isnt a positively geared investment so I question that. I think they're using semantics to convey a position that isnt inherently true.
Since super funds can now borrow money (see below), the repayments of the loan will of course consist of super contributions but as usual the rent collected will probably not exceed your repayments over the long term.

Moreover and finally, any investment should be considered in the light of your entire portfolio, never in isolation.

Considering what's at stake, I'd consult a financial planner about this investment before going forward.