A Must Read for Anyone Considering Purchasing Property through Super
There has been mention in the media lately of a financial services company overvalued second-rate properties and calling it ‘independent financial advice’. We have also witnessed other companies in the market pushing substandard real estate products to unsuspecting investors. Unfortunately, it’s usually case of buyer beware but here are our tips on avoiding some of the traps others have fallen into.
Any company offering Financial Advice in Australia needs to do so under an Australian Financial Services License (AFSL) and provide a Financial Services Guide (FSG) which discloses exactly how they are remunerated including what commissions they earn by recommending or selling products. Fusion moved to being a “Fee for Service” practice over two years ago and developed our ‘One Lens’ approach to add more value to our clients – we develop tailored financial strategies for our clients and issue this advice formally as a Statement of Advice (SOA) well before any products are considered.
Purchasing property through a Self Managed Super Fund (SMSF) can be a powerful wealth accumulation strategy if it is done right. The number one risk for most people considering a SMSF is compliance and unfortunately many people are falling into the trap of not investing in professional advice to ensure their fund is compliant and not understanding the penalties that apply for getting it wrong. Every SMSF needs a documented investment strategy and since 14 August, amendments to the Superannuation Industry (Supervision) Act 1993 requires “trustees of self-managed superannuation funds to consider insurance for their members as part of the fund’s investment strategy”. Fusion uniquely offers an end-to-end SMSF solution where we guarantee that the super fund will be compliant in it’s setup, strategy and ongoing operation. We recommend and use independent property advisors and specialist SMSF conveyancers to our clients to mitigate the risk of bad investment decisions.
When looking for property, you need to choose a real estate agent that follows an educational approach to help you find the right property for your needs. You should never buy from an agent that pressures you into purchasing property. If you are unsure or uncomfortable about any aspect of the property you have been shown, do not proceed. It’s always wise to get a second opinion on any property you are considering or order a comparative market analysis CMA report or full property valuation. Agents are also required to provide you with Section 27C forms disclosing commissions for any properties sold in QLD.
Although regional markets can sometimes deliver better returns than capital cities, there’s an associated and significant risk that they won’t. Your agent needs to explain the valuation cycles that property goes through and the reasons why they are recommending a specific investment property for you.
To find out more, please contact Fusion here or by phone on 1300 038 746.