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Hello,
My Partner and I (mostly me) have been thinking about starting an SMSF to invest in studio apartments in Kings Cross area.
We have a combined balance of around $120K, we are both late 20's, combined monthly super contributions of around $1,300.00 with the potential to increase that to $1,600.00 PM.
The plan would to live of the rental income in retirement, from what i've said do you think its worth visiting a FP?
Responses
You should definitely visit a FP. Appreciate the costs of firstly setting up an SMSF and then the ongoing costs including annual audits.
In our office we prefer for people to have in excess of $250k in super balances before transitioning to a SMSF.
There is certainly no "one size fits all" however.
So do investigate this and make a decision from a position of knowing all the facts.
Hi JT,
I would definitely recommend you see a financial planner. There are a huge amount of considerations for you to think about and there are many different outcomes from each decision.
You will be able to have the initial discussion over one to two hours before committing to anything.
Best of luck
Scott
Hi J T,
I’m a financial planner and do a lot of work in this space. It’s a great idea you have, problem is you don’t have enough combined super to start with.
The finance brokers will be able to confirm but the banks have made SMSF borrowing a lot harder. Most banks want to see a combined balance of $200-$250k before they will approve finance.
For the next few years you should concentrate on building your combined super balance, then revisit your plans regarding the SMSF.
Regards
James
Hi JT,
I think it's great that you are thinking about your super and trying to plan for retirement at such a young age.
But, I think this is a bad idea for what has been mentioned previously.
Concentrate on keeping your costs low and having an appropriate asset allocation for your long term goals, investment time horizon and willingness to accept market volatility. Making additional contributions via salary sacrifice is a great idea, but the appropriateness of that would also depend on your personal situation.
Cheers
Glenn
Studio apartments are a security that lenders are not generally fond of, let alone purchasing one inside a SMSF LRBA structure. See if you can find out all associated running costs and analyse the investment potential of the asset you like.
A FP might be a reasonable place to start in assessing what you want. Having written that they will want to know what YOU want to achieve to structure a statement of advice which will cost you somewhere around 2/4K.
May I suggest you and your lovely open a bottle of red, get a pen and paper and write down what your long term goals are and work backwards on what it will take to achieve them. There are numerous books on the topic of property investment. Margaret Lomas a good place to start.