Using super to buy an investment property.
A plain-language guide to using superannuation for property investment. SMSF setup, the LRBA borrowing structure, the end-to-end process at Opes, and the common mistakes that derail otherwise good files.
How using super to buy property works.
An APRA-regulated super fund (the kind most Australians are in) cannot buy a specific investment property for you. A self-managed super fund (SMSF) can. You set up the fund, become the trustee, transfer your super into it, and the fund buys the property. If the fund needs to borrow, it does so through a Limited Recourse Borrowing Arrangement.
That is the structure in two sentences. The execution is where most files get complicated, and where the difference between a generalist broker and a practitioner who has done this 30+ times starts to matter. The longer SMSF property investment guide digs into the strategy reasoning, and the connection to retirement planning is where most of these conversations start.
What setting up an SMSF involves.
Six things to sort out before the property hunt starts. Most of this is your accountant or solicitor’s work, coordinated with the advice and lending.
Establish the fund
Trust deed, member application, trustee declaration, ABN and TFN registration with the ATO. Typically a fortnight through your accountant.
Corporate trustee
Almost always required for SMSF property. The corporate trustee structure keeps things tidy for lenders and for succession.
Investment strategy
Written investment strategy covering risk, liquidity, diversification, and member insurance needs. The property purchase has to fit this strategy.
Roll-over of super
Members roll their existing super into the SMSF. Insurance cover in the old fund should be reviewed before the rollover to avoid loss of cover.
Cash buffer
Lenders expect liquidity after settlement, usually around 10 per cent of the loan amount, sitting in the fund.
Bare trust
Separate trust to hold legal title of the property until the loan is paid off. Set up by your accountant or solicitor, coordinated with the lender.
The end-to-end Opes process.
The advice and the loan are both written under the same roof. Your accountant or solicitor sits alongside for the bare trust and the fund administration.
Free 30-minute feasibility call to start.
- 01Feasibility conversation
Free. Do the numbers stack? Is the fund balance enough? Does the strategy make sense? Honest read in the first 30 minutes.
- 02Statement of Advice
Formal advice covering the SMSF investment strategy, the borrowing arrangement, member insurance, and rollover plan.
- 03Fund setup and rollover
Run by your accountant. Opes coordinates timing with the lending side so neither one drags.
- 04Lender shortlist
Three to four specialist lenders, matched to the fund and the property. Reasoning included.
- 05Application and bare trust
Application submitted. Bare trust established. Conditions worked through with the lender.
- 06Settlement
Property settles. SMSF holds the beneficial interest. Bare trust holds the legal title until the loan is repaid.
- 07Annual reviews
On the advice and the loan. Not separate. Same practitioner, same file.
Common mistakes that derail SMSF property files.
The structure is unforgiving. Most of these are easy to avoid if the strategy and the loan are sitting with one adviser.
Signing the contract before the fund is ready
Most common single mistake. The contract is in personal names because the fund or bare trust is not set up. Walking that back is messy and sometimes impossible.
Generalist broker, no SMSF experience
Standard mortgage brokers can be excellent. SMSF is a different policy world. We have picked up several files mid-application where the wrong lender was chosen for the structure.
Inadequate liquidity buffer
Lenders want cash left in the fund after settlement. Forgetting this drives last-minute scrambles or forces a smaller loan than the strategy assumed.
Renovating beyond repairs
Under an LRBA, the property cannot be substantially altered. Repairs and maintenance are fine. Knock-down rebuild, structural extensions, and substantial improvements are not.
Related-party leasing on residential
You cannot lease the SMSF’s residential property to yourself, your kids, or your parents. Not at market rent, not at any rent. This is the in-house asset rule.
Treating the SMSF as a personal bank
Moving money in and out beyond proper contribution and pension rules is a contravention. Once the fund holds property, this discipline matters even more.
Who is writing this advice.
- Practitioner
- Balki Balakrishnan
- Experience
- 12+ years across advice and lending
- Advice authorisation (AFSL)
- AR 409415 of La Verne Capital Pty Ltd
- Credit authorisation (ACL)
- CR 45250 of Outsource Financial Pty Ltd
- Track record
- 30+ SMSF loan clients written
- Memberships
- FAAA, FBAA
This page is general information, not personal advice. SMSF strategies are personal by nature. See the Financial Services Guide for the scope of advice.
Questions we get from first-time SMSF investors.
Not your APRA-regulated super fund directly. You buy property through a self-managed super fund (SMSF) that you control. The fund can borrow to do this through a Limited Recourse Borrowing Arrangement (LRBA). It is the only legal borrowing structure for SMSF property.
Not necessarily. Many members keep a smaller balance in their existing fund for the insurance cover, and roll the rest. The SMSF needs enough balance to support the purchase and the post-settlement liquidity buffer the lender will require. The advice piece sorts this out before you commit.
Most files start to make sense once the fund has $200k or more, though it depends on the property value, the LVR, and the contribution capacity going forward. Under $150k the numbers usually do not justify the fixed running costs of an SMSF.
No. Residential property owned by the SMSF cannot be lived in or rented by you, your relatives, or any related party. Ever. This is the in-house asset rule and it is one of the most common ways funds get into trouble.
SMSF setup, deed, bare trust, legal and accounting work usually adds $3,000 to $6,000 in one-off costs through your accountant or solicitor. The advice and lending sit alongside. The free initial feasibility call covers whether the numbers stack before you spend anything.
Because SMSF property needs the advice and the loan to agree. Brokers cannot write the strategy. Standalone advisers refer the loan out, often to a generalist broker who has not done SMSF before. Opes holds both authorisations and has written 30+ SMSF loans.
If the fund is already set up, six to ten weeks is realistic. If the fund needs to be established first, allow another four to six weeks before that. Starting the structure work before contract signing is the single biggest factor in keeping the settlement date safe.
Read further
- SMSF hubThe pillar overview.
- SMSF property loansLRBA structure, bare trust, eligibility detail.
- SMSF lenders comparedSide-by-side guide to the specialist panel.
- SMSF commercial propertyBusiness real property and related-party leasing.
- SMSF borrowing guideRules, pitfalls, and when SMSF property does not suit.
- Superannuation adviceContribution settings and insurance review before the rollover.
- Retirement planning hubWhere SMSF property fits in the wider retirement picture.
Start with a free feasibility call.
Thirty minutes to read whether SMSF property fits your super and your goals. No paperwork to start.