Buying property in SMSF, thoughts on this?

Asking for a friend:

My friend and his wife already have an SMSF set up and managed by Sequoia. They currently have $106000 sitting in cash in the cash management account.

They really like the idea of investing in property with that money now and understand they wont be able to touch it until they retire. They are currently 36 and 33 years old so it will be quite some time before they retire. Currently their combined income is approx. 170k per year.

Given the amount of cash they have in their SMSF, is now a good time to invest in property, or should they wait a few more years before investing in property and for the time being maybe look at shares?

Thoughts they have are if they buy a property now for somewhere between 350k-400k in a "good" location and hold it, that over the next approx. 30 years it would appreciate substantially.

Anyone here with experience in this area that may be able to give their views on Pros and Cons of this scenario?

Thanks,

 

Dont superfunds have rules against asset concentration?

 

Not advice , but .... 106k is really not enough. generally speaking , you need 30% Deposit plus stamp duty plus 10% liquidity to qualify for a LRBA. So for a 350k property that will look something like 105k plus 14k plus 35k

there are lenders that offer 75 or even 80% LVR which would help address these challenges , but they are dearer . And there are 7.5% liquidity tests available from one funder - but even if they could make it all work they would have no buffer and no safety net and because of that I would be suggesting to your friends that they get the balance of their super up a decent amount before taking this route .

Not advice

 

Some time ago I bought a property via my SMSF when I had approx the same amount as your friend. I see no problems with the amount, it is more about who is willing to provide you with the loan. With 106K, it is a challenge but options are still in place.

In terms of what is possible to purchase, with LVR equal to 70% or 80% plus you need to cover the stamp duty, it is still viable to go regionals.

 

I think they should be very careful, unless leopards can change their spots Sequioa are a little dodgey, test and push the boundaries on products they sell and how they are renumerated., Were once JB Global got introuble with the wet lettuce, ASIC . for giving misinformation, I think Justin Beetoon was restricted in what he could advise so he left JB Global started SMSF property buisiness and JB Global became Sequioa ran by Scot Beeton. I have found them very pushy and would ring up a number of times wouldnt take no for an answer tried to sign me up for product I didnt want and got abusive when I refused. Conned me onto a a SMSF wrap account an advisor controlled , my intention was to invest in US shares probably cost me millions because I wanted to invest 250k in FAANG stocks, told me I could, but after signing up told me I couldnt ! I had to wait 2 years to get out,while paying high fees negative returns. They just but my funds in STW and tried to get me to invest in dodgey product they could make high fees from. I had to get my accountant/buisiness consultant to write to them explain the law and make threats to get control of my funds. I did see a report in a paper by a finance journalist who went to a Justin Beeton semminar pretending to be an investor saying their was a lot of dodgey spruiking. and wondering why ASIC wasnt being held accountable and letting him get away with it .