July Real Estate Market Investment Choices and SMSF

Weekly Real Estate Market Sales Results as recorded on Saturday 25 July 2015:

A clearance rate of 79 per cent was recorded on the weekend of Saturday 25 July 2015, compared to 75 per cent the weekend prior and 70 per cent this weekend last year. There were 671 auctions reported to the REIV (Real Estate Institute of Victoria) on the 25 July 2015, with 531 selling and 140 being passed in, 54 of those on a vendor bid. A number of Melbourne suburbs have recorded annual capital growth of more than 20 per cent. These include Mount Waverley (28 per cent), Doncaster (28 per cent), Burwood (27 per cent) and Balwyn North (23 per cent).

In the month of July although Master Advocates have secured some great investment purchases for our clients within 20km of the Melbourne CBD. We like many buyers in the market would like more choices of property to select from. However, August generally is a month that is stimulated with new listings from vendors that want to hit the market with the first auctions in Spring. This will be good in someways as there will be more property to select from providing that one has a trained and experienced eye and knowledge to assess and negotiate an increasingly competitive market.

At present there is an obvious shortage of approximately 10% less across the board than this time last year, which along with other factors such as the Bank Interest Rates remaining at an all time low is contributing to the rising prices. There are also more buyers seeking investment properties in concentrated areas around Melbourne where supply is low, which does not help matters for the average buyer.

Having the skills and networks of an experienced Buyers Agent to negotiate and make the successful purchase of the right property in a promising location may be the advantage that you need.

Building an investment portfolio and acquiring the right type of property that possess strong capital growth potential and rental yields as well as being low maintenance with minimal outgoings and expenses is something that takes time, experience and skill to perform the due diligence and current market knowledge.

If considering to choose a Buyers Agent to assist with this process, the selection of the right Buyers Agent is almost as important as the selection of the right property. Always consider consulting a Buyers Agent that is an Accredited Member of REBAA (Real Estate Buyers Agents Association of Australia) before enlisting anyone who offers their services as a Buyers Agent.

For further information or to arrange a no obligation consultation, contact Mark or Michelle Errichiello:

+61 3 9379 1919; +61 408 988 118; info@masteradvocates.com.au; www.masteradvocates.com.au/about-us

Buying property in a SMSF

If the ultimate long term goal in choosing your investment property is to secure a passive income from your investment portfolio in retirement. Considering establishing a SMSF (Self Managed Super Fund) may be the right choice to consider. We at Master Advocates take pleasure in seeking options for our clients to consider and making connections with industry related professionals that can provide benefits and value through their consultation and services. We have included some related points below that have been shared by an industry expert on SMSF:

A Self Managed Superannuation Fund (SMSF) is an investment vehicle set up for the purpose of providing retirement benefits (i.e. pension and/or death benefit) for its members.

A SMSF has an advantage over other superannuation funds in that it provides its members with greater control over their investment decisions and the type of investments it can make.

One such investment decision is buying property (residential or commercial) directly in a SMSF.

There are a number of ways that property can be purchased in a SMSF. Briefly these include:

SMSF buys property with its own funds

This scenario sees the SMSF use its own funds to purchase the property in full. The SMSF has accumulated enough funds via transferring or rolling over monies from other superannuation fund(s) into their SMSF together with any contributions made by their employer and the member(s).

SMSF buys property in partnership

This structure sees the SMSF and another entity purchase a property in partnership. The SMSF may not have sufficient funds to purchase the property outright and seeks another entity to share the cost of the property. Both income and expenses are split according to what each entity can afford to pay for the property.

SMSF borrows to buy property

In this structure the SMSF borrows under a Limited Recourse Borrowing Arrangement (LRBA) to purchase a property. The SMSF borrows from a third party i.e. a bank or a related party. The third party only has recourse on the property should the SMSF fail to meet its debt obligations.

There are a number of rules and restrictions placed on a SMSF purchasing property. Two of these are:

No charge (i.e. borrowing) can exist over a property unless held under a Limited Recourse Borrowing Arrangement;
A SMSF cannot purchase residential property from its members or a related party (i.e. family members) of a member or companies or trusts that they are associated with.

Ultimately any investment decision made in the SMSF needs to be made for the purpose for providing retirement benefits for its members.

If you have any questions please contact Fabio Salvatore at Concise Super.

The above information has been prepared to provide you with general information only and is not intended to be relied upon as advice.