SMSF Property Investing is Ramping Up

·       SMSF property investment isn't just for the wealthy - 15% of new SMSF trustees earn between $100k-$150k annually

·       Business owners can purchase their commercial premises through an SMSF and lease it back to their business, effectively paying rent to themselves

·       PAYG employees can leverage their employer's super contributions to build a property portfolio, even if they've reached their personal borrowing limits

·       New SMSFs are being set up by 35-44 year olds, showing a shift towards younger Australians taking control of their super

·       SMSFs can invest in both commercial and residential property, though residential properties can't be lived in by the fund members or their relatives

Source: data,gov,au

SMSF property inquiries coming across my desk have spiked. But it's not from who you might think.

Instead, I'm chatting with tradies wanting to own their storage and warehouse facilities, medical professionals no longer wanting to split their revenues with their landlord, young professionals eyeing their first investment property, and everyday couples who simply want more control over how their super is invested.

And I'm not the only one noticing this shift. SMSF lending has exploded nationally, with loans growing, on average, by a whopping $1.2 billion each quarter since FY19. Even more interesting? We're seeing lenders creeping back into this space after the big banks backed away post-Royal Commission.

So what's driving this SMSF renaissance?

SMSF Property Investment

Let me break down why SMSF Property Investment is gaining traction.

For business owners, instead of paying rent to a stranger, you can actually purchase your business premises through your SMSF and lease it back to your business. Think about it - your rent payments are paying down your SMSF loan, pre-tax.

For PAYG employees, you too can purchase a residential (or commercial) investment property through your SMSF (just remember the golden rule - you or your relatives can't live in it). But here's the real magic: your employer is essentially helping you buy that investment property every time they make a super contribution. And because these contributions are taxed at just 15% instead of your marginal rate of 37% or 45%, your money goes further, faster.

I've helped plenty of professionals use this strategy, especially when they've hit their personal borrowing limits.

The Numbers Might Surprise You

Let's bust some myths with real data:

·       We have over 621k SMSFs in Australia

·       68% are couples who've combined their super to help it grow faster

·       38.5% of new SMSFs are set up by people aged 35-44

·       Over 15% of new SMSF trustees earn between $100k-$150k annually

·       Not exactly the exclusive millionaires' club you might have imagined, right?

Why are we seeing this increase?

·       People want control. They're tired of watching their super do its own thing and want to be more hands-on and invest in assets they understand or are passionate about.

·       Younger Australians see SMSFs as a smart way to step into property investment, often viewing it as a lower risk approach than diving straight into personal property investment.

·       Every day property investors have hit a ceiling on their borrowing capacity in their personal names and trusts, and using an SMSF allows them to continue to build their portfolio without impacting future borrowings in their own name.

The Bottom Line

The SMSF landscape is changing rapidly, and it's opening doors for everyday Australians to build wealth in ways that were once considered exclusive to the wealthy. Whether you're a tradie looking to own your warehouse, a medical professional tired of paying rent, or a PAYG employee wanting to expand your investment portfolio - an SMSF could be your next smart move.

But here's the most important thing is there's no one-size-fits-all approach. Every situation is unique, and the strategy needs to match your specific circumstances.

Interested to Explore Your Options?

If you've ever thought about:

·       Owning your business premises

·       Expanding your property portfolio

·       Taking more control of your super

·       Or simply understanding if an SMSF is right for you

Let's have a conversation. I'll help you understand the numbers that matter for your situation and explore whether an SMSF property investment strategy aligns with your goals.

This information has been prepared by PHA Financial Services and does not take into account your objectives, financial situation or needs. Before acting on this information you should consider whether it is appropriate to your situation. We recommend you obtain financial, legal and taxation advice before making any financial investment decision. The information provided was accurate at the time of publication and changes in circumstances after a document is published may impact on the accuracy of information. Some information may have been collated from various third parties and we make no assertion that the information was originally ours.