A super idea for property investors

With more than 400,000 Self-Managed Super Funds (SMSF) now registered in Australia, it’s no surprise property is becoming an increasingly popular asset option for these investors, writes Lisa Montgomery


There are some pretty compelling reasons for the popularity of SMSFs.

Firstly, investing in property through your SMSF offers the opportunity to diversify your portfolio to include property in a combination of asset classes which offers a hedge when one may not be performing so well. And secondly, many investors feel comfortable investing in the property market because as homeowners, they are already familiar with it.

So if you’re contemplating whether this could be the right choice for you, you need to make sure you carry out a comprehensive level of research which gives you a clear understanding of all the costs and risks, as well as what types of properties you can purchase.


The first thing to do is to surround yourself with a range of experts who are experienced in the area and have the relevant expertise to not only advise you in the initial stages, but can also continue to educate and empower you more with your financial decisions over time.

Once you have done your initial research, then there are a series of successive steps you will need to follow:

1.    Set up your Self-Managed Super Fund. You can do this by enlisting the help of a reputable accountant, solicitor or SMSF professional administrator. They can provide you with the expertise to set up all the legal framework and structures which are necessary to establish the fund.

As part of establishing a Fund, you will need to provide in writing a detailed investment strategy, of which the property will become a part as this is a compulsory part of operating any SMSF. So doing this needs some serious thought, time and effort.

2.    Set up a Property Trust.  Also known as a Bare Trust, this can be set up through a solicitor or accountant and allows you to legally hold the property as an asset through the Trust, as part of your superannuation.

However, this cannot be done until your SMSF is up and running, so allow adequate time for your Fund to be fully operational, before you apply for your Trust.

You will also need to determine what taxation implications investing in a property will have on your personal circumstances, both in the short and long term. So seek clear professional advice regarding tax issues from the onset, as this will continue to be an essential and ongoing part of managing both your Fund and Trust.

3.    Investigate and allow for all the relevant set up costs as well as ongoing costs such as auditing of your Fund. Some of these costs can be negotiated with the relevant professional you use, but ensure you allow for these costs nonetheless.

4.    Arrange your finances for the property. When you look around at what various lenders are offering, you may find that rates could be a bit higher because there are more checks and balances in place.

However, there are a range of products on the market that are reasonably priced and some organisations will also be able to assist you in setting up your SMSF and Trust.

You may also find that different lenders may apply different criteria as part of their approval process and may also have their own limitations on the type of property you are able to purchase, so ensure you investigate the specific requirements of each lender you speak to.

5.    Keep up to date with all ATO draft rulings on SMSFs and property such as improvements to the property and matters of depreciation so you are aware of any changes in legislation which may impact your investment. This is essential.

As with any investment, property is not a set-and-forget arrangement, particularly when it becomes part of your superannuation plans. But if you decide that this is a natural fit for you,   be diligent about managing it so it can provide you with the security you need when you retire.  

Lisa Montgomery is CEO of Resi Mortgage Corp

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