Investing with Super

Now, please don’t take this as super investing advice, I just want to give you a window into my own experience arranging a SMSF and buying an investment property myself!

If you’re not all aware, if you have a superannuation fund (everyone that works nowadays has to have one), you can arrange that to be taken out of your chosen fund (for me I had been with host plus for years) put it into a special bank account under your own superfund name, and, arrange to buy an investment property (outright, or with borrowings).

I’m in the process of doing this as I type.  I started in September… and here we are in January more than 3 months later and I’m still working on it, but I can see the finish line!  For me, this is how it worked out;

  1. Signed up with esuper and created an account.
  2. Created a super fund under our names (me and hubby)
  3. Opened bank accounts and trading share accounts (all included with esuper)
  4. Started looking at properties in November.  Now here is where the challenge comes.  Liked some properties, but can’t put in an offer until you set up the super bare trust (the business that the house will be purchased under, it’s usually a pty ltd).
  5. Submitted a pre-approval application for a loan (borrowing approximately 60% paying the rest with super)
  6. Sorted out our pty ltd and negotiated prices on properties that we looked at and finally in December, signed for one subject to finance and building inspection. Paid the initial $1000 deposit from our own pocket as you can’t just access your super so easy!
  7. Arranged for the transfer of my super funds to our self managed super fund (beware, this can take 30days!!!)
  8. Identified ourselves at the bank (finally) – this took 8 trips between myself and hubby to fill out the stupid bank forms and have the stupid bank people sign in the stupid right place on their own stupid forms… Needless to say this was not fun.
  9. January comes around, had to ask for an extension on the finance clause as even though you think that when your super is putting up 40% + and it’s an asset, it would be a no brainer yeah?  But this is where paperwork and banks come in… (grumble)
  10. As of now – should have final approval for the loan in the next 24 hours!  To add to this, it took 48 hours, but who was counting, but now the contract is unconditional!

After that, if it all goes to plan, I get to have 2 open for inspections prior to settlement to try and lease it as close to settlement date as possible to minimise vacancy (a savvy clause to have in the contract of sale in case you’re playing along at home).  That being done, esuper (or your accountant if you set up a smsf with them) will arrange the annual auditing and hubby and I get to sit back while a tenant pays off our asset and our investment property gains in capital growth!  In 20 years time it will be paid off and I’ll be 5 years off retirement (unless the law changes in that respect, but that’s another story).

Want to have a chat about your investment or potentially buying something out of your super fund so you too can have an awesome asset to look after you in retirement?  Let me know, you can experience the personalised property management service.

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