Is Geared Property in your SMSF a good thing?

Chris Magnus from Ark Total Wealth says most of his clients want to have their own home debt-free with super savings that will provide them  with a regular income.

If you are 55 and the gap between what you’ve got and what you need to retire is large - you may need to take remedial action and make some geared investments 

Work backwards 

• How much money  do you need when you retire 

• What do you have now

• How do you get there?

If you want to add a geared investment property to your retirement savings, there are a few things you need to think about.

Can a geared property or a few geared properties in an smsf help you to get there?

Is a 10 year investment time horizon between buying a property and when you plan to retire deliver the capital gains required ?

• yes if the property doubles in 10 years -
• and if it doesn’t - can you wait a further 5 years ? 

⁉️What to buy , ⁉️where to buy and ⁉️when to buy are key questions 

Here are my 3 tips from experience 

• Do your research and use professionals who you know like and trust …..
• Be wary of the property spruikers 
• Get independent advice - who does not have a vested interest in your decision of what to buy! 

If you wish to make money from gearing, Shane Oliver of AMP says to consider geared share funds.

If your property asset grows to be about $2 million in combined member benefits, and you move to pension phase at 65, super rules will oblige you to withdraw 5 per cent of the SMSF, or $100,000, each year.

Will the investment property be able to deliver the rental income to allow this level of income to be withdrawn as a statutory minimum. Or will the asset need to be sold to fund the retirement income?

I suppose  this is not a bad problem to have 

Inspired by an article by John Wasiliev of the afr - sharing  his views on investing in geared property in your smsf  :-

Click here to read it 

Start Embracing AI

If you haven’t embraced AI yet - speak to the team at BSI Learning for a crash course! 

click Here for the link

Here is a great email from Chris Gray about aI  Hi Ivan, I'm not sure about you, though I'm still not entirely certain what to think about the rise of AI? One one hand, it's incredible what it can do already, though on the other hand, you can't help but think it's a little scary. And that got me thinking... Artificial Intelligence is here to stay whether we like it or not. It's no longer a pipe dream or science fiction.  Right now, we're in exactly the same place that everyone was when they introduced the telephone, internet, smart phone and several other technologies that changed the way we lived. People think they have a decision as to whether they adopt the technology in their business and life. They don't. The technology is being adapted whether we like it or not (although I do still know people who have fax machines). So the decision is really whether to be at the forefront of adoption, or to find yourself playing catch up as everyone else adopts the technology around you.  Pete from our marketing team was sharing with me on Monday how there has just been another giant step forward in the ability of AI, though rather than try to explain to me what that step was, he simply sent me a few text messages and this email: Hi Chris, GPT just updated their model to something called ChatGPT 4o. It's basically faster and more capable, though the big change was that they added the ability to have natural conversation. It's not available to use on the computer yet, but I can use it already on my GPT app. You literally press a button and start talking. So out of curiosity, first thing this morning I wanted to see what that looked like for Your Empire. I hit record on the computer and had a conversation, not knowing what would actually happen.  Here's a link to the recording:

The above button links to the audio he posted. Take a listen. I was absolutely surprised and shocked. Below is the text message conversation I had with Pete:

Pros: Speed and Efficiency: ChatGPT quickly provided a wealth of information that would have taken me hours to gather on my own. Broad Knowledge: It offered insights from various sources, giving me a comprehensive view of Your Empire’s offerings. Convenience: I could get the information I needed anytime, without having to schedule calls or meetings. Cons: Contextual Understanding: While ChatGPT is great at providing information, it sometimes lacks the deeper contextual understanding a human expert might have. Verification Needed: It’s always a good idea to verify the information from multiple sources to ensure accuracy.

Here's what I really want to know... Are you using AI already? What is the one thing that has blown your mind about the capabilities of AI and how it can be used in the real world.

Help to Buy Scheme for frontline and essential workers - A Free Service

The Help to Buy Scheme is a Labor Government incentive which allows first home buyers (or second home buyers without a current property) to purchase with only a 2% deposit. The Government will then fund and own 30%-40% of the property.

Yes, you have the opportunity to partner with the government to buy your own home!!!

This will then allow the home buyer to get into the market quicker with a lower deposit, lower income, and lower ongoing home loan repayments. The applicant can then choose to buy the Government out at a later date.

Advantages of the Help to Buy Scheme

The main advantage is that it will get you into home ownership sooner. This can be broken down into a few

points...

Eligibility for the Help to Buy Scheme Australia

Expected eligibility criteria for the Help to Buy Scheme

Income of less than $90,000 p.a. for a single applicant, or $120k for joint applicants.

Must be purchasing a property to live in & must not currently own a property in Australia or overseas.

Must be over 18 years of age.

Must be an Australian Citizen.

Must have a 2% deposit.

There will only be 10,000 spots made available initially.

The Scheme is expected to run for 4 years, with 10,000 spots available each year, for a total of 40,000 spots.

These places will be released to individual participating States & Territories on a per capita basis.

Help to Buy Scheme: Expected start date

The Scheme is expected to start "Early 2024". Although, 01/07/2024 wouldn't be too surprising.

More details on the Housing Australia's Media Release Can be seen here , and Julie Collin's interview on ABC,

They should be  releasing the Scheme in early 2024.

If you'd like to be kept updated, please sign up here and type waitlist 

How to apply for the Help to Buy Scheme

You currently are unable to apply until it is released. 

We will be watching the scheme carefully and contacting all interested applicants as soon as the scheme is ready for release. 

If you'd like to be contacted when the scheme is ready, please register here. 

We will use this information to keep you updated and to check your eligibility and prepare your submission. 

That way we can get you one of the 10,000 spots ASAP and ensure you don't miss out. 

Register here for a free service. 

How do you find a property in an area that grows faster than others?

There are many factors that determine what property to buy !!

One is location location location 

Make sure that your area  has consistent buyer demand!

But what research has shown is that some properties in the same location increases more than others!!

So, How do you find a property in  an area that grows faster than others? 

Easy says Robbie Baskin! -  find a property where the LVPP is a 5 Quintile 

Hmmmm 🤔🤔🤔🤔🤔🤔🤔🤔🤔

What is the LVPP? 

And 

What is a 5 Quintile ?

LVPP

The LVPP identifies  how much of the purchase price is derived from land vs. the building. 

The formula is pretty simple - find the land value of a house or unit and divide it by the purchase price!!

Land Value / Purchase Price. 

Quintiles

A 5  quintile represents the top 20% of properties with the highest Land Value Contribution for that area, and 1 represents the bottom 20%.

Robbie Baskin of Frontya’s research shows that the LVPP formula is a strong indication of how your property will increase in an area compared to others! 

So here’s the trick 

Buy a house or an apartment  where it's Land Value Contribution is in the top 20% for its area then chances are you'll achieve an annual property growth rate of 1.5x to the market.