The main benefit of buying property through Super,  is that it provides an alternative to property investing that has little impact on your personal finances and future borrowing capacity.

Here are 5 quick tips from RealRenta if you are thinking of investing in property with your Super.

1. Generally lenders won’t approve high loan to value ratios in excess of 80% ie generally a balance of $200 000 or more is required to borrow for an investment property
2. You will need a Self Managed Super Fund and these have an establishment cost of $3000.  
3. A holding trust is required until the loan is repaid and the SMSF will have beneficial ownership. Your SMSF will be credited with income and capital growth and the trust will have legal ownership. Legal ownership can be transferred to your fund once the asset is fully repaid. This structure protects other investments in your SMSF.
4. Unlike standard mortgages, there are a limited number of lending institutions that will lend to SMSF’s. You will also need a “Limited Recourse Borrowing Arrangement” (LRBA) which limits the lenders liability to the asset within the trust and does not include any other investments in the SMSF. As a rule, lending institutions require 10% of the proposed property value to remain in the SMSF as liquidity post transaction ie cash or managed funds.
5. When selecting property, consider income and capital growth potential rather than choosing a property based on a desire to retire in that location.

Stop handing over your investment income to a Property Manager!