Buying Property Can Take your Life in a Positive Direction
A good news story about buying property from a very happy client.
Years ago, I ran an ad where two women were talking and one said that I had saved her marriage by sorting out their financials, starting their residential property investment portfolio and giving their life a positive aim.
From depression to elation
The other lady in question was very depressed with no marriage left to save. She has two teenage daughters, temporary work for the last 12 months, no experience with buying property and no savings. Fortunately, we turned her depression to elation.
The lady that I write about today is well educated with many skills, divorced, two children and does not own a home. She had an interview for a job with a government department, but wanted to know if she could do anything with the $220,000 she had in Super.
The job she was applying for was permanent and whilst the salary was $80k per annum, the employer Super contribution was 13.5%. I explained that within these parameters we could set up a Self Managed Super Fund (SMSF). She could buy property, a brand new 5 bedroom executive home at North Harbour, Brisbane and her employer Super contribution will be sufficient to pay all outgoings and pay the loan off Principal and Interest.
With this positive outlook on life, she got the job and is now looking at a positive future for herself and children. It was a pleasure for my team to help her.
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As I have stated previously for a Self Managed Super Fund (SMSF) to buy one of my $550,000 homes, a gross income of $110,000 per annum would be required. If the employer contribution was the basic 9.5%
I tend to be very conservative with my figures. A person with $220,000 in Super (either self or combined with partners), on $90,000 per annum with an employer contribution of 9.5% would have the ability to buy one of my $550,000 investment homes, but with little buffer.
With this lady, she was on less than $80,000 per annum but her employer Super contribution is 13.5%.
How much does the employer contribution need to be to pay off one of these $550,000 homes?
When buying property such as a $550,000 house with a Self Managed Super Fund, I ask that you have $220,000 in Super. We use $150,000 for the deposit and the balance covers setting up the Self Managed Super Fund, Stamp Duty, Bank Fees etc and still leaves a comfortable buffer.
To pay off that loan Principal and Interest plus cover all outgoings like rates, insurance etc, the employer Super contribution would need to be just over $10,000 per annum.
What do I mean by “buffer”?
As I said previously, my figures are always conservative and I like my clients to have a conservative approach to their borrowings to allow for unforeseen events. We also encourage clients to borrow principal and interest over 30 years but build a buffer by paying the loan off sooner.
If you are interested in buying property to start your Residential Property Portfolio, please contact our office to schedule a free, no-obligation consultation and find out if our service is suitable to your needs.
Until next week …
Steve Taylor
DISCLAIMER
Steve Taylor & Partners blog is opinion and not advice. Readers should seek their own professional advice on the above subject. The figures stated in this article were accurate at the time of publication. For up to date figures, please contact our office.
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