Three Things to Consider Before Getting SMSF Loans
There are few things more vexing than having your Superannuation fund barely growing when some well placed real estate investments could enable you to retire much earlier. Self Managed Super Fund Loans (SMSF Loans) can help you tap into that retirement fund even if your credit rating is less than perfect. As good as this may sound, there are three important factors to consider before you begin the application process.
Your Age and Proximity to Retirement
If you are interested in investing, then you know that Australia is a rising star in many areas of the economy. On the other hand, people in their 50’s and 60’s that lost everything during the 2007 Recession in the United States can tell you that there are no guarantees when it comes to investment. Therefore if you are within 10 – 15 years of retirement, try to avoid putting more than 20% of your Super at risk. A SMSF Loan may still be a viable option at this stage if you can live on 80% or less of your total retirement fund.
Current and 5 Year Projected Value of Potential Real Estate Investments
Foreign citizens and business owners are more eager than ever to tap Australian markets, open shopping centres, and engage in other wealth promoting activities. From that perspective, having one or two key real estate investments in your retirement portfolio can ensure a wealthy retirement with plenty left for the next generation. When appraising the value of any given property:
- Ask local business owners about other companies that may be interested in moving to your area
- Take a survey of the local people and find out which products and services they are interested in
- Find out which businesses offer these services and find out how soon they can build in your area
- Evaluate timing to make sure that you choose a point where you have enough time to obtain the SMSF loan, but not so much time that it would take years on end to attract a buyer.
What Limits Will You Set for Property Management?
Regardless of your age, property ownership will also come with a range of expenses. This includes taxes, building maintenance, code compliance, and interest on any loans taken using the property as collateral. Once you know the current and 5 Year projected value of the property, it is time to decide how much money you are willing to spend before selling the property. If you miscalculate the projected value, or wind up taking more loans to maintain the property, you will have to sell it at a loss in order to prevent further financial problems. At the very least, if you have a target number in mind, making that decision will be a bit easier when and if the time comes.
SMSF loans are a tool you can use to generate increased wealth. While Australia’s economy may be very strong right now, keeping three key things in mind can help you protect your investment and ensure that you get the most out of each investment. As an added bonus, when you start doing basic real estate research, you are sure to find out all kinds of fascinating things that may lead to other money making opportunities.
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