In recent years the capacity to manage your own superannuation funds (SMSF) and invest in property using them has been in the spotlight
It has been suggested that the use of SMSF for property investors has increased the activity in the property market, and also of unscrupulous spruikers seeking to take advantage of less experienced investors looking to get into the property market.
As a consequence ASIC have increased their focus on unlicensed property spruikers, and illustrated the damage they can do through unqualified advice.
Ben Kingsley from the Property Investment Professionals of Australia organisation (PIPA) said that investors can certainly profit from using an SMSF fund to invest in property – but with some very careful considerations
He said there were two main concerns as far as PIPA were concerned.
- That ‘Trustees of SMSF’s need to get it right because a wrong move will affect their retirement plans in a big way’
- PIPA have ‘Concerns with who is giving investment advice in the property investment strategy, once the SMSF has been set up. Almost all financial planners and accountants giving advice within the direct property investment space have no formal qualifications or training in terms of what makes for a good quality property investment and what property investment is most appropriate for trustees. So we don’t want them giving advice or sending their clients to property marketeers who are actually selling agents who do not have SMSF’s best interest in mind when making property recommendations. Marketeers are just interested in earning their commissions.’
Mr Kingsley also said that with the right advice then property within an SMSF can make for an excellent investment both in terms of income and growth returns.
Property selection and timing of course then becomes critical, as well as working with a licenced, experienced and independent property adviser.
The use of judgement and skill from those giving advice becomes paramount when a retirement plan is being devised
PIPA’s message is very clear. Work with experienced and qualified professionals if you are considering managing your own super fund and venturing into property investment through it. The risk is simply too great to risk these large investments with salesmen or those whose motives are not entirely linked to your success. This partly explains the recent significant growth in the use of independent property agents and advisers.
Many commentators note that once people understand the power of SMSF’s then the number of people choosing to invest in property within the structure will grow significantly, as we have already seen in recent years
In a low interest environment people are looking for alternative options to low interest investments, and so it is suggested that there will continue to be sharp growth in the number of people getting involved in SMSF’s, and in using them to invest in property – wherein they can have more control over how their retirement funds are invested.