Self-managed super fund purchases are still quite a new frontier in the realm of property buying.
The shyness for many investors on entering financial markets has helped create this trend.
However, it has a few more challenges than conventional property buying, such as the level of deposit required and the type of property you are allowed to acquire.
We’ve found a list of unacceptable properties that will stop a bank or lending institution providing credit for a self-managed super fund property purchase:
• Units or apartments with less than 45 square metres of living area
• Converted Hotels or motels
• Churches or places of worship (converted or otherwise)
• Residential property with a commercial content or used for a commercial purpose
• Commercial or industrial property
• Relocatable homes
• Leasehold other than Crown Leasehold
• Any property in excess of 50% per borrower in any one completed development that has a maximum of 8 properties in the development (duplexes are acceptable), or any property in excess of 4 per borrower in any one completed development where there are more than 8 properties in the development.
• Boarding houses or hostels
• Specialised student accommodation
• Any property subject to a rental guarantee (display homes and state and federal government properties are acceptable however)
• Any property that is subject to a ‘two tier’ market
• Home units attached to management rights of the complex
• Any property located in a flood zone greater than 1:100 year frequency
• Any property located on a contaminated site, or land holding greater than 40 hectares (100 acres)
• Any property that is used for the purpose of farming
• Specialised or unique dwellings
• ‘Over 55?s dwellings
• Property with a capital value less than $60,000 (land and improvements)
• Any property that will require developments of more than two dwellings on it
• Boundary of property located within 50 metres of high voltage transmission lines
• Properties with partly finished construction work
• Serviced apartments
• Studio apartments or bedsitters
• Any property located on a island that is not accessible by road
• Any property with a ‘lease for life’ covenant on the title
SMSF purchasers should seek advice before committing to a property contract, as the rules are tight.
As always, do your homework!
By Paul Osborne
Tuesday, 07 May 2013