Buying investment property via your SMSF
While is it relatively unknown; it is possible to buy investment property in your SMSF. As well as being able to buy property with your SMSF, it is also possible to borrow money using a limited recourse borrowing arrangement. This arrangement means that the lender only has "security against the single property investment and not the other assets in the super fund".
Borrowing for SMSF property has quadrupled over the past 18 months, while it has grown in popularity, the take up is not as high as expected. This may be due to a glut in the market as rents fall, prices stagnate and supply upstages demand particularly in the unit markets in Sydney, Melbourne, and Brisbane.
Supply will be the biggest challenge in the coming 24 months as an influx of units hit the market massively affecting the supply equation. This oversupply has lead to banks excluding certain postcodes from their lending regimen.
The property bubble is set to burst, and property as a long term investment is a great option for SMSF owners, that said managing risk is essential, and research is needed to ensure buyers don’t jump in without adequate advice.
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