So, you want to invest in property? What to do when your deposit doesn’t cut it.

So, your career’s in a good place right now. You’ve found your feet in the corporate world and things are looking up. Or, perhaps you’re running your own small business. The hard work has paid off, and the money’s coming in. But despite all that, the bills seem to keep growing faster than your salary. The mortgage, the school fees, the car loan and the credit card debts. By the time the end of the month rolls around, there isn’t a whole lot left.

If a sudden pay boost isn’t on the horizon, you’ll need to start investigating other options if you want to start actually making money to save. For many Australians, the obvious choice is investing in property. Provided you do your research, property is still a popular investment vehicle with the potential for great rewards.

But of course, buying property requires a deposit. And that’s not always easy to come by.

According to some researchers, Gen Xers (sometimes known as the Sandwich Generation – squeezed between looking after their kids and caring for their aging parents) have on average only saved around 30% of what they expect they’ll need for retirement. Across the board, working Australians are struggling to save. Many misjudge how much they’ll need to sustain their retirement, and start saving much later than they should. A large proportion of people between 35 and 55 are finding it difficult to save enough money for a deposit on an investment property.

Starting a Self-Managed Super Fund (SMSF) and using your super is one option for borrowing to invest in property. Because an SMSFs requires hands-on involvement from its members, they aren’t ideal for everyone, but because legislation allows you to borrow via SMSF,  it can provide an opportunity to invest for those who wouldn’t otherwise be able afford it outside their super . SMSF investments are strictly regulated by the Superannuation Industry Supervision (SIS) Act and done under strict borrowing conditions.

If you want to buy property via an SMSF, the property cannot be acquired from a member of the SMSF, or any related party of a member. In addition, any party related to a member is not permitted to live in or rent the property. The only exemption is what’s known as a business real property. This refers to property that is exclusively for commercial use. A business real property can be leased directly from the SMSF to one of its members, or a related party. So, if you are a business owner requiring a commercial premise, leasing it from your SMSF has obvious advantages.

Of course, there are costs involved in setting up and running an SMSF. If you are thinking of using an SMSF to invest in property, the right advice is crucial.

Interested in finding out more? Call us on 0432 366 690 or 1800 327 978.

Give yourself a head start by downloading our e-book, a guide to making the process of setting up your own fund as smooth and simple as possible.