Smsf - recommendation for set up and structure

Discussion in 'Legal Issues' started by Vanders, 25th May, 2016.

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  1. L3ha7

    L3ha7 Well-Known Member

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    Hi @CosmicTrevor , thanks for being honest and giving the clear picture.

    Could i ask if we do get into SMSF whatelse we can do other than property or shares?
     
  2. L3ha7

    L3ha7 Well-Known Member

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    Hi @RPI THANKS FOR the advise, i will check. We got excited as they have 3 years no fee offer plus no set up cost and prodyct review website they are 5 srar with great reviews.

    Any other organization you can advise for smsf?
     
  3. L3ha7

    L3ha7 Well-Known Member

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    Hi @JacM , thanks for the tip.

    Just wondering if y9u can advise or recommend any other organization?

    Esuperfund had great reviews on product review site had had oromotion thats why we decided to go with them.
     
  4. JacM

    JacM VIC Buyer's Agent - Melbourne, Geelong, Ballarat Business Member

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  5. L3ha7

    L3ha7 Well-Known Member

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    Hi @CosmicTrevor ,

    I did crunch my numbers again. If bank gives 210K and we put 90K and still have 10K left in super account.

    Other charges stamp futu, we have some saved up money which we can use...and buying an IP with 280-320$ rent pw would be a good buy ?

    Thanks
    Nav
     
  6. Greyghost

    Greyghost Well-Known Member

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    My gut feel is that you should wait longer before commuting to this. You are cutting your fund balance too fine, may be purchasing a sub par asset at that price range, will most likely have to make additional contributions to fund the asset holding costs.

    You may also have difficult with obtaining finance. The asset will most likely rely on additional concessional contributions to hold it, above your standard SGC 9.5% ATM (assumption).
    The banks will usually want to see a history of additional contributions (in your case to your industry fund) in order to pass servicing. You may find some 2nd tier lenders who can get around this, but be prepared for large acceptance fees etc from them..
    I know you are trying to do this in a cost effective manner, but I feel if you hold off a little longer and build a larger balance and buy a better asset in time, you may end up in a better position than currently proposed.

    Disclaimer:
    However my advice is just an opinion. I suggest you speak to a property savy licenced financial planner who has a lot of experience in SMSF property purchases and strategies..
     
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  7. RPI

    RPI SDA Provider, Town Planner, Former Property Lawyer

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    They are not a charity, there is a reason they can do no fees and no setup cost. Clients who have used them have shown me some very expensive invoices for insurance, expensive corporate custodian and bare trust setup fees and also expensive loans. My understanding is that you are stuck with certain service providers
     
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  8. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    What about set up costs - 4 'entities'
    Loan fees
    stamp duty

    and you will need a buffer
     
  9. 158

    158 Well-Known Member

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    I really struggle to make sense of anyone who will treat their Superannuation with such disrespect by buying a single resi property with their whole funds available. I find that these people really only do it because its an extra deposit available to satisfy further purchases when they clearly cant get together another deposit outside Superannuation. And if people cant generate extra deposits via equity gain or reasonable income outside Super, what do they think will happen with their Super funds - magically return mega % returns?

    Think about it. You can't equity release funds so once the purchase is made, you either have to wait 10 years and sell it to reshuffle funds to better investment with all the associated costs, or P&I payments to reduce the debt to $0 over 20 odd years to generate a mere $300-$500/week (depending what rents are worth in the future for a 50 year old house). Then you have all the SMSF costs which will eat up any likely return anyway - for what?....the next 10/20/30 years?

    $100k Super balance invested in decent dividend yield shares and franking credits already can return $10k/pa (or $200/week) doing absolutely nothing. Why not be happy with that until you can actually purchase something decent with more than mediocre returns possible? Again, its that mentality of 'oh here's a deposit, Ill use it straight away because I have no other funds to play with'. People really need to realize the power of compounding. Im not anti-property, Im just anti purchasing the wrong investment in the wrong entity.

    Suggested balances of $200k plus is a valid for a reason. SMSF property purchases should be regulated to more sophisticated investors who have proven track records outside Super, to get the people with the above mentality away from potentially messing up and sending their Super balances backwards in a spiralling manner. That could be purchasing several resi properties, or perhaps business real property, or larger chunks of high yield shares. These purchases put the SMSF fees into insignificant costs, because they return more value than any single resi purchase will. Absolutely you have to do some homework with these purchases as well, hence suggesting being a bit more sophisticated in investing rather than diving all in with a single resi purchase.

    pinkboy
     
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  10. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    Good point PB.
    Sometimes there is a feeling that 'super is not my money' so some tend to gamble with it.
     
  11. JacM

    JacM VIC Buyer's Agent - Melbourne, Geelong, Ballarat Business Member

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    @Newfast

    By my approx calcs, $100k in super won't get you a $300k house. Aside from 30% deposit and stamp duty there are costs to set up the SMSF. Also the bank charges a few thousand to read trust deeds during a loan application. Also you'll want to do a building and pest inspection, pay the conveyancer, buy insurance etc. By my approx calcs, $100k in super would get you a $250k house. For a $300k house you'd likely need more like $116k. With that said, by the time the SMSF has been set up, bank account created and rollovers completed, a few months will elapse so you'd likely have more $$ in super by then, presuming you are working and thus making superannuation contributions.
     
  12. Greyghost

    Greyghost Well-Known Member

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    I agree mostly.
    However I have seen it work well when say:
    Mr and Mrs purchase commercial factory/office via SMSF.
    Commercial site is rented out to the business entity controlled by mr and Mrs.

    Many times I have seen this be much more cost effective than renting an equivalent site off a 3rd party. Even with commercial rental agreements/leases in place at arms length.
    Plus they will own the property within 15 years too.

    Caveat emptor though..
     
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  13. 158

    158 Well-Known Member

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    My Commercial Purchase.

    This is exactly how I'm set up, as you can see.

    I did stress a single resi property in my post above.

    pinkboy
     
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  14. Shady

    Shady Well-Known Member

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    I cant recommend any of these but I'm looking to move the administration from eSuper elsewhere.

    Comparison Table of Setup & Administration Services - SMSF Review

    eSuper has done us well over the past few years as we've kept to eSuper's strengths and just had a share portfolio. We've used gearing within this portfolio with some long dated warrants. We now want to include property in our portfolio and not confident in using eSuper nor happy with their restrictions on purchasing property so looking at our options.
     
  15. D.T.

    D.T. Specialist Property Manager Business Member

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    Corey Batt on the forums also has a financial advice company which can help with smsf setup or reviewing www.precisionpw.com.au
     
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  16. CosmicTrevor

    CosmicTrevor Well-Known Member

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    With respect, the question you really need to ask yourself is "what objective is going to be fulfilled by the establishment of an SMSF?" Instead it appears more that you are going to try to figure that out once you have set up an SMSF. Again with respect, I suggest you hold off until you know what you are trying to achieve. $100k is not a lot of super and locking it all up in one asset is not smart.
     
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  17. Ted Varrick

    Ted Varrick Well-Known Member

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    My thoughts exactly.

    Why do you think this would work better than any other given financial arrangement?
     

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