What were your experiences with SMSF?

I am curious to hear from people who habe used an SMSF to purchase property.
Was it worth it for you? Would you do it again? What were the unexpected things you hadn't accounted for when making the switch from a regular super fund? Did you keep a traditional super fund in conjunction?

We have been tossing around with the idea for years, and now we have reached a point where I think we either need to make the change or simply abandon the idea altogether.

 

I have seen a large cohort of people over more than 10 years since laws changed and some do well from it ...over a long term. However some do very poorly. The smaller the super the less successful it will be. The right sort of property can also be gold. HIGH yield, low leverage. Well demanded.

A fund with one predominant asset that is highly leveraged is usually a bad idea. Super for property is different to all other property investment.
Looking at super and considering how you can use that cash to further leverage is often illogical and driven by lack of alternatives and desperation as its seen as easy funds to buy something. The tax rate in super is low so you want low leverage and even positive income. But the smaller the super the higher the leverage. And the more interest at a high rate you pay. You WANT to pay tax as its a low rate. You also dont want to commit years of contributions to merely maintain paying for the property while it doesnt appreciate in value. Its like treading water in the pacific ocean. Eventually you will drown.

The present economy is possibly trying to run the race well after its started. Given the entry costs to property include duty and legals and selling costs you need that back first and that may be harder now than before. There is a better probability of downside than upside. And depending on your age retirement may be 10 years away and never recover that. Or be 30 years away and be OK.

Also consider fund costs for its size. And lost life cover (or very costly replacement) could be a factor from some. Retaining a industry fund with minimal balance just adds to costs of course. That doesnt make it wrong but may be a sign its not a great choice.

 

Thank you Paul, that was really helpful.