SMSF investors should think about purchasing property within their SMSF in their 30s rather than postponing it until they are in their 40s, but only after seeking professional advice, according to wealth advisory group Omniwealth.
Omniwealth SMSF lending specialist Aaron Fuda said investing in property through an SMSF when members are in their 30s would give them sufficient time to maximise investment potential as the loan would be paid off by the time they retire or rental income could cover repayments while generating a profit for the fund.
“Contributing to superannuation does not hurt personal cash flow or lending options, especially for PAYG (pay-as-you-go) employed, meaning you can still live a comfortable lifestyle while planning for your retirement,” Fuda said.
“The younger the SMSF members are, the easier the loan approval is to obtain, provided you have sufficient liquid assets in the fund and are making sufficient contributions.”
However, he told selfmanagedsuper the strategy does pose risks for someone in their 30s, especially the fact members cannot touch what they put into their fund until they retire.
Investors who invest in property outside of super and decide to sell it can realise that asset paid in cash, but investors selling that asset inside an SMSF need to be aware the funds will go into the SMSF.
“And you can’t touch it. That’s the only real drawback, that if you start putting too much into super too early, you’re investing for your future but your current lifestyle isn’t as good,” Fuda said.
Seeking professional financial advice is vital for SMSF members in their 30s before venturing into SMSF property investing.
“Every loan I write pretty much the clients either have had advice from their accountant or financial planner to do this. I wouldn’t recommend anyone investing in anything they didn’t understand,” Fuda said.
