Top Five Tips For Investing In Off The Plan Apartments

Investing in off the plan markets can produce some serious financial returns.

However, this is not achieved by chance; but rather through a scrutinous and succinct level of detail, understanding and planning.

Whilst it can be intimidating to even the most seasoned of investors, making the right choice when it comes to off the plan apartments, can make a huge investment, with little to no effort.

Here are the top five tips for investing in property and especially off the plan apartments in your self-managed super fund. 

1. GOOD NEWS - YES YOU CAN
   A self-managed super fund is a great low taxed vehicle that is different to the run of the mill industry or retail superannuation funds in that it can purchase property including off the plan apartments.
   
   This is appealing for a lot of people because of Aussie’s  love of property and seeing their money invested in bricks and mortar. 
   
   They see this as being a safer and more stable option than shares.
    
2. ​YOU CAN EVEN BORROW TO BUY
   Since 2007 it has been possible for a self-managed super fund to borrow to purchase property.
   
   There are however,  a lot of hoops that you have to jump through to do it.  There are also some complicated terms associated with borrowing such as limited recourse borrowing and bare trusts.
   
   Basically a separate trust (bare trust) has to be set up to hold the property in trust for the super fund until the loan is paid off and the property can then be transferred to the super fund.
   
   Money that is borrowed to purchase can only be tied to the property and the bank has then only a limited recourse if something does go wrong of taking the property and nothing else in the super fund. The bank may however insist on personal guarantees. 
    
3. ​BAD NEWS – YOU CAN’T LIVE IN IT
   Those inevitable “yes you can” and “no you can’t” rules state that your super fund can invest in an off the plan apartment,  but no,  you can’t live in it or rent if from your self-managed super fund.   
    
4. RISK  - IS IT RIGHT FOR YOU?
   Where are you in your super fund life cycle?  Are you close to retirement?  How much of a risk appetite do you have?
   
   Chances are that the closer you are to retirement,  the less risk that you would want to take .
   
   Also the larger your super fund balance, the less risk you would probably want take.  Think about how purchasing property fits in with your retirement plans.    
   
   One of the most important things you can do from a risk reduction perspective is to diversify the investments that your super fund has so you are spreading the risk.
   
   In other words, don’t have all your eggs in one basket. If you invest all your super fund in real estate then what happens if it is hard to rent and the super fund can’t pay the repayments or other bills associated with the property?     
    
5. SEEK THE RIGHT ADVICE
   This is the biggie and I can’t emphasise this enough.
   
   Seek advice from your trusted financial advisors – your financial planner as to how does this sort of investment fits in with your retirement future; your accountant as to how the numbers stack up and how it should be structured: and also the auditor of your fund to confirm the compliance aspects.  This could save you a lot of angst, tears and money in the long run.