Investing SMSF Property Mistakes and How to Spot Them

Property InvestmentThanks to self-managed super funds (SMSF), more Aussies are now able to make the most of every available investing option and secure their retirement better. One of the most popular options is investing in properties.

Investing in a property through an SMSF is a rewarding investing strategy, but it’s not exempt to mistakes. Some Aussies jump into property investing without considering other factors that might affect their financial future. More often than not, they aren’t able to maximise the returns of their investment because of one simple mistake.

Fortunately, you can avoid such outcome and improve your portfolio. Here are some of the SMSF property investing blunders you might be making:

Thinking it’s the same as buying a property in your name

Buying property in SMSF is different from buying a property in your name. You have to be mindful of the special laws and borrowing rules you need to comply with. You also have to follow a different set of lending requirements depending on the bank.

Following the crowd

The importance of property location can’t be stressed enough. It can have a huge impact on the capital growth of property and rental vacancy rates. The problem now is the new investors who go where others go and get a house without thinking twice about it. As a rule of thumb, you need to do your research and see which property fits your portfolio. More often, the most popular neighbourhood isn’t the one for you in the long run.

Forgetting about the insurance

Be prepared for unexpected expenses. Fires, lawsuits, floods and other events can damage your property and might mean digging deep into your pockets for repairs. Look for an adequate insurance cover that can protect you and your super fund from unforeseen expenses.

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No clear agreement among the SMSF members

Keep in mind that an SMSF can have multiple trustees or members. Everyone needs to be informed and agree on every investing decision. This means there should be a clear agreement on how expenses and profits should be shared, especially when the property needs to be sold.

Investing in a property through SMSF needs careful consideration and planning. When done right, rest assured that your financial future is well secured.