Product Info

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BAFG have sourced Property Super Warrants, a product structured to provide a convenient way for investors to use gearing to invest in direct real property, with the financing, acquisition and management of the Property being undertaken on your behalf.

Property Super Warrants may be suitable for Self Managed Super Funds, subject to the fund’s governing documents and investment criteria.

Opportunities

• Borrow to invest into real property through SMSF
• Unlock cash inside your SMSF to take advantage of other investment opportunities
• Business owners may be able to buy their business premises through SMSF using borrowed funds

Benefits

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• Simple derivative structure (no complicated bare trusts schemes) acceptable to the ATO and with legislative approval.
• We take care of all the property management, insurance, rates etc on your behalf.
• Each financial year we send you a statement showing all income and expenses.
• The SMSF can request sale of the property at any time and pay out the loan.

Costs
The usual costs of purchasing a property will apply to the purchase.

The additional costs of using a Property Super Warrant are:

• Application fee of $550.
• If approved upfront fees of $3,080 or 0.77% of Purchase Price of Property (whichever is greater), plus a loan service fee.
• Ongoing fees of $176 per month for the life of the Warrant (subject to increases in line with inflation).

Extra Info

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How do I proceed?

• You choose a residential or commercial property and the SMSF applies for a DIY Super Warrant.
• The Property Trustee for Property Super Warrants takes care of the purchase.
• A Bank provides a limited recourse loan (max 70%) to the Property Trustee and the SMSF pays the difference.
• The Property Manager manages the property and the SMSF receives rental income and pays all related property costs
• At maturity of the Warrant (or any time) the SMSF has the opportunity to repay the loan amount (taking full ownership of property) or sell the property (meaning the fund will receive the net proceeds of sale)

Important Information

• The Federal Government passed legislation in 2007 allowing a Self Managed Superannuation Fund to acquire and hold an instalment warrant, paying off a loan.
• The Property Super Warrant structure does not require the SMSF to enter into new trust deeds or to create its own company to hold the property. The Property Trustee negotiates the loan and signs all documents. The property is held in trust by the Property Trustee, which passes on all income and expenses relating to the property. The SMSF will receive an annual tax statement.
• A Property Super Warrant is a unique derivative allowing your SMSF to make a first instalment (deposit and establishment costs), monthly payments (interest and charges), and a final payment on sale or maturity.