Deprecated: iconv_set_encoding(): Use of iconv.internal_encoding is deprecated in /home/danaffgroup/public_html/site/libraries/joomla/string/string.php on line 27

Deprecated: iconv_set_encoding(): Use of iconv.input_encoding is deprecated in /home/danaffgroup/public_html/site/libraries/joomla/string/string.php on line 28

Deprecated: iconv_set_encoding(): Use of iconv.output_encoding is deprecated in /home/danaffgroup/public_html/site/libraries/joomla/string/string.php on line 29

Deprecated: preg_replace(): The /e modifier is deprecated, use preg_replace_callback instead in /home/danaffgroup/public_html/site/libraries/joomla/filter/input.php on line 656

Deprecated: preg_replace(): The /e modifier is deprecated, use preg_replace_callback instead in /home/danaffgroup/public_html/site/libraries/joomla/filter/input.php on line 659

Deprecated: preg_replace(): The /e modifier is deprecated, use preg_replace_callback instead in /home/danaffgroup/public_html/site/libraries/joomla/filter/input.php on line 656

Deprecated: preg_replace(): The /e modifier is deprecated, use preg_replace_callback instead in /home/danaffgroup/public_html/site/libraries/joomla/filter/input.php on line 659
Kadeya Villas

Kadeya Villas

kadeya villas kadeya villas

Having included property as an asset in your investment strategy, you are able to purchase most kinds of established property through your fund, providing the purchase is made at arm’s length (not from a related party). Generally speaking, a superannuation fund cannot develop property, because this usually changes the nature of the asset and is therefore in breach of Australian Tax Office (ATO) regulations.

 

Common investment choices include units, houses and other residential properties; commercial properties such as offices, retail space and factories; and also listed and unlisted property trusts.

 These options are all open to you and have their own benefits and challenges, but you must first take the time to consider what you need from your super and what types of investment can provide for that need, while meeting your financial obligations. If you get it right, you might expect substantial long-term returns; but if you take the plunge without the right preparation and without the necessary dedication, you could lose a lot of money.

 Residential property

 A SMSF investment is a long-term strategy that needs to sustain you through your retirement. These days, more and more people are also choosing investments that will allow their SMSF to benefit the next generation of their family, once they pass on. Therefore, it is important you look for properties with enough longevity to suit this plan.

 Three important attributes to consider are location, yield and maintenance needs. Ideally, you should look for a reasonably new property, with long-term capital growth prospects and a high rental return.

 Location

 Growth is traditionally safer and more sustainable in and around capital cities, or in large regional centres with multiple industries in place to support the local economy. An investment in these areas will give you a good chance of achieving long-term capital return, with much greater security than a speculative purchase in a one-mine town or in other volatile areas.

 According to David Shaw, WSC Group director, it is important to understand the connection between a good location and a high quality of tenant, which is a key factor to success.

 “If you’re too far out, say 50km out of the city, it can be too hard to get tenants,” Shaw says. “A lot of our clients say they are getting their properties trashed. It is now more crucial than ever to get the right tenants and these are often found in the inner-city. This may mean paying a higher premium, but it’s worth it.”

 Yield

 If you have enough money in your super to purchase a property outright, you will not be as dependant on rental return as someone who needs to borrow to invest.

 Otherwise, it is important to remember that a lender only considers your super contributions and expected rental income, when assessing whether or not you can service a loan. Considering that your super contributions are only 9% of your regular income, it stands to reason that your weekly rental income will need to cover the rest of the repayments.

 Therefore, you will be looking for a yield of ideally 6% or more from your tenants. Location is important once again from the yield perspective, because there is no point getting a high return if your property spends chunks of time empty. You need access to a robust rental market with low vacancy rates to make sure you have a steady flow of tenants, lining up to keep your loan repayments ticking over.