Our First Smsf Purchase - A Step By Step Guide

Billv · 03-02-2010, 08:40 AM

Quote:

Originally Posted by Tangible

Bill, there are a few points in your blog are inaccurate:
No they are not, you have no idea...
I suggest you study the subject before you come up with assumptions

1. Smsf should be postively geared. If your purpose is negative gearing, there will not be much left in your smsf when you retire.

says who?
Depends on your age, how much money you have in your super, how much
your employer contributes, what amount of depreciation you are claiming, if you get tax credits from dividends etc etc. mine is neutrally geared and as rents go up it will start paying itself off. It depends on your retirement age which will determine the length of your investment. If you are in your 60's ofcourse this is not for you

2. Capital growth. The property needs to be in an area that has long term sustainable growth potential as well as good rental returns. 3. Legal docs. It is noticed that on line legal docs cost a lot more than in real life as to enable smsf to borrow, it is required a few legal docs and most on line docs charge item by item and when you add up the whole lot, they cost a couple of thousand dollars more than from a professional smsf specialist.
Again, Bollocks.
Who can guarantee that an area which had 20% capital gain this year will have the same growth next year.
Anywhere in our growing capital cities is good for me but since you know better you can buy in Vaucluse if you like.

4. Professional advice. It is very important to get advice from a licenced adviser in smsf and the best this adviser can write the loan as well.

Where do you get these smart ideas from?
SMSF advisers don't act as mortgage brokers at the same time.
Mortgage brokers are not allowed to give advice due to conflict of interest. It's the law.

If your broker and the adviser are two different people, you may find the Certificate of Independent Advice (part of the final loan documents) can be signed by any licenced adviser if he does not do the loan.
So what are you saying here is that an adviser cannot be a mortgage broker which contradicts what you said above.

5. Personal guarantee. This is irrelevant. The money is lent to you as fund trustee. This is self-evident in the loan contract (you can see the account name of the loan is you as trustee of the super fund). Also, whatever the bank has control over is limited to the property itself.
This could be irrelevant to you but read the ATO guidelines on compliance and then you'll understand.In recent times the lenders have been wording their documents better so the guarantee could be less of an issue but you still need to be know what you are signing

6. Lenders available. The best are NAB and St George. NAB has bad services, St George has higher rate and fees. Westpac charges commercial rate and CBA basically makes it impossible for normal smsf (smaller than $200k) to borrow.
Most of all, smsf loan is very easy because it is all black or white according to the banks' lending guidelines. Yet as an investment/taxation strategy, it is a complicated process. The best is to seek professional advice from an independent party instead of following misleading advice.
Ofcourse you need to see a professional and you need to understand the concept and what you are getting into it before you start.
This applies to all major investment decisions and not only to self managed super. I certainly wouldn't seek your advice though even if it was free
SMSF is to make money for yourself, not for those such as banks, financial advisers, or brokers. Agree and this is what I'm doing

I've answered your questions above in bold
My observation in general is that you are ill-informed and you are missing the point of my thread, I'm not advising anyone to do this. I thought it will be of benefit to some people.

I chose to manage my own money because I know I can do a better job than the fund managers.
The operational costs of doing it myself will be the same as if my super was managed by a super company but the end result will be much different.

May I suggest that you go to a few SMSF seminars and get up to speed with the concept and then come up and give us your opinion in your own thread.
and not in mine. Thank you

Tangible · 03-02-2010, 11:21 AM

Hi Billv.
Thanks for reading my 1st post. I am not posting as an expert. That post is part of my experience dealing with smsf loans as a loan writer. As the super fund is what most of us are going to rely on when retired, it is very important to get the facts and numbers right. As a finance person, our reward should be based on the benefits generated for the clients instead of the transactions have been done. That is why the cause of the Financial Crisis disgusted me and some financial planners/brokers get paid commission while the customers are losing money. It is not right to advertise a product with flawed info which is vital to a person's welfare when retired. I am sure we can survive many housing market crashes when we are young but not sure how many of us will survive well with an empty purse when we are old. Nothing personal, just a thought. Always a right thing to do to associate our personal gains with social welfare.
Respectively, Tangible

Quote:

Originally Posted by Billv

Tangible

That's a strong 1st post there and you also forgot to introduce yourself.
Are you posting as some type of an expert?

Billv · 03-02-2010, 02:57 PM

Quote:

Originally Posted by Tangible

Hi Billv.
Thanks for reading my 1st post. I am not posting as an expert. That post is part of my experience dealing with smsf loans as a loan writer. As the super fund is what most of us are going to rely on when retired, it is very important to get the facts and numbers right.
Respectively, Tangible

No worries mate but do research the subject because there are many options out there.

Here is a very good thread which talks about a new and innovative way of super gearing
Why buy Negatively Geared Properties? I think the calculations are wrong - Somersoft Property Investment Forums

and here is a more up to date version of the above thread
Our First Smsf Purchase - A Step By Step Guide - Somersoft Property Investment Forums

Dolfinwise · 07-04-2010, 01:45 PM

Giving Personal Guarantees don't usually make a Superfund non-compliant. I'm not sure why there is confusion over this.

With respect to individual trustees I beg to differ. There are numerous reasons why one should use a Corporate Trustee. Aside from the administrative benefits already mentioned, once a fund moves to pension phase it is restricted to solely paying pension benefits as income streams if there are individual trustees. i.e. it is prohibited under SIS for a fund with individual trustees to pay a lump sum benefit.

regards
Jason

Billv · 07-04-2010, 02:28 PM

Quote:

Originally Posted by Dolfinwise

Giving Personal Guarantees don't usually make a Superfund non-compliant. I'm not sure why there is confusion over this.
regards
Jason

Jason

At the time there was a lot of talk about non compliance due to personal guarantees and poorly worded loan documents.
IMO this wasn't a big issue but the mortgage broker had suggested STGeorge and the interest rates between lenders were similar so I went with them.

Quote:

With respect to individual trustees I beg to differ. There are numerous reasons why one should use a Corporate Trustee. Aside from the administrative benefits already mentioned, once a fund moves to pension phase it is restricted to solely paying pension benefits as income streams if there are individual trustees. i.e. it is prohibited under SIS for a fund with individual trustees to pay a lump sum benefit.

Jason
I could update the deed docs and add a corporate trustee later can't I?