This is the full transcript of our popular video “Why SMSFs are such a popular vehicle for property investment“.
I just wanted to have a quick chat about why people invest in property through their self managed super fund – why is it so popular? Why are we so busy at the moment writing loans for people who want to buy property with their SMSF?
There are a number of reasons that really stand out when we talk to clients as to why they’re going down that path. One is that it’s an asset class that most people understand. They’ve either purchased a property in the past to live in and they’ve seen it grow in value over time and think ‘wow that’s going pretty well, I understand that’.
A lot of people have purchased investment property in their name and understand the benefits of borrowing money and purchasing an asset that’s worth a lot more. Borrowing is another reason. You can take $100K or $150k worth of Super and acquire an asset that’s worth $400k or $450k – so leveraging is a big reason. People often see property as being less volatile than shares – rightly or not that very much is the view out there. So it’s a more slow and steady – or often not so slow, but stead investment.
Another reason that people are looking at property is that they’re thinking of Estate planning. They want to think about the kids and see them as being locked out of the property market. They see that if they invest their Super into property and the Super pays the property off and they can live off the rent in retirement, then when they pass away the property is still there ready for the kids. These are pretty common reasons why we find our clients want to invest their Superannuation in property.