High risk (high reward?) SMSF property wanted

Obviously clickbait as no one wants a high risk investment, however I'm not as risk adverse with my super as I am with "real money".

I haven't even started my SMSF yet, but it's something I'm seriously considering. We've got just over $100k (I know not that much) combined.

So where would you buy if you had around $300k to spend (assuming LVR of 70%, might have to be lower for some properties though)?

 

I recommend you read Super Smart Money before deciding your super is not real money. Property is really not a suitable asset to hold in super. Many reasons described in the book.

https://www.amazon.com.au/Super-Smart-Money-retirement-Australians-ebook/dp/B00PRRSVNE

 

If you are buying property in an SMSF just to add another knotch to the belt then I would suggest you revisit why.

Myself personally SMSF is for shares and outside super hold property, many reasons why I prefer this method but mainly.
1. You can leverage more outside super than inside
2. You can draw down equity to make further purchases outside super whereas in SMSF you cannot so required to sell and then rebuy (not ideal).
3. When getting into pension phase and you are required to pay 4-5% p.a. (or more up to 13% IIRC) of your total super so if it is tied up in 1 or two large assets (property) then how are you going to give yourself a pension besides selling a property? With shares you can sell the amount of shares required to give yourself the pension.

More reasons than this but hope it gives you food for thought .

 

Some reasons to buy property in an SMSF...
1. If you are buying and holding til preservation age, you can sell the property and it’s capital gains tax free.
2. Leverage is very useful even if it’s 70% LVR
3. You can combine points one and two and then convert the capital gains free sale into high dividend yielding shares at preservation. This is the obvious thing you would probably do at 60/65yrs old
4. Even if your SMSF property is slightly “negative geared”. Your mandatory super contributions will likely cover your shortfall so it doesn’t effect your lifestyle.

We have one property in our SMSF that would be valued at about 700k now. We used about a 150k deposit.
My property is compounding based on a 700k value. 150k in shares would compound off a much lower base.

 

@spludgey - go Regional major towns eg Brisbane, Adelaide, Perth, Newcastle etc knowing that the property may remain vacant for a few years.

 

Property can and is a suitable asset to hold in super for a myriad of reasons. The issue of the type and nature of the property and whether its long term growth etc are all relevant. As is whether borrowed funds or cash are used to fund the acquisition.

Its very poor sighted to offer a blanket view. Thats like saying term deposits are bad. Sure the returns suck but for someone who is 100% risk averse it may be very sound.

 

Agreed. If you are holding the property within SMSF for a long time, Id pick a property in the locations @Scott No Mates picked with a focus on long term CG potential and an acceptable yield. The CG is going to be reason you bought it, not the yield.
Rural properties chasing yield doesn’t seem logical in SMSF if the plan is to hold it for 20-30 years when the big payday bonus of an SMSF will be the tax free capital growth.