How George and Yasmin Can Use Their SMSF to Buy Property: Strategy & Structure Explained
George and Yasmin have no personal savings and a high debt load, yet they hold $250,000 in superannuation. By setting up a Self-Managed Super Fund (SMSF) and using a limited recourse borrowing arrangement (LRBA), they can leverage their super balance to acquire an investment property and generate rental income.
Key Financial Facts
- Superannuation: $250,000
- Combined Income: $322,117 p.a.
- Liabilities: $2.12 million total (mortgage, personal loan, credit cards)
- Cash Flow: Slightly negative
SMSF Property Plan
1. Set Up the SMSF
Establish the SMSF using a corporate trustee structure. Estimated costs are $2,800 for setup and $2,000–$3,000 per year for audit and compliance.
2. Target Investment
Identify a $500,000 property—such as a unit in Canberra or a high-yield regional town. Use $100,000 from the SMSF as a deposit and borrow $400,000 via an LRBA. Projected gross rent is around $500 per week.
3. Contributions & Cash Flow
Combine rental income with concessional contributions (~$3,167 per month) to service the loan repayments. After SMSF fees and property management expenses, the fund could net a surplus of approximately $917 per month.
Action Plan
- Pay off $23,000 in credit card debt to free up ~$690 per month.
- Establish the SMSF and corporate trustee.
- Draft an investment strategy targeting 40–60% property, 20–30% equities, and 10–20% cash.
- Source the property and secure an LRBA loan.
- Allocate ~$118,500 for deposit and associated costs.
- Maintain liquidity and compliance within the SMSF.
Ready to use your super to invest in property? Talk to our SMSF specialists today and unlock your retirement potential.
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