When selecting an investment property for a SMSF Trustees have a responsibility to choose wisely.
The investment must be the result of agreement that property is an appropriate strategy for the Fund at this time and that the Trustee(s) seeks to create equity for the fund through the investment.
ASIC supervision of these funds stipulates that Trustees must develop the strategy before agreeing to invest.
The role of the Property Strategist is to provide the Trustee with property choices most likely to achieve desired outcomes. There is never a guarantee that that these outcomes will occur to the fullest extent, however, the choice must be one with the best prospects for growth under all circumstances.
It follows that if the choice is a quality property in a well planned, well maintained development and the Fund maintains the property to a high standard it has the best prospects for capital growth and to be one of the best of its type in the area at the time of sale or bank revaluation.
When selecting properties for SMSF investment we seek locations where extensive infrastructure development is taking place or has taken place recently with population expectations supporting the long term continuous growth of the location.
Having satisfied ourselves that the location has the capital growth potential we seek, consideration as to the type of property comes down to what is the most popular type of accommodation current and planned. It makes no sense to buy house and land in an area where apartments are the popular choice.
The current state of the market has great influence on the pricing. We must be careful not to invest where there is likely to be an oversupply of the type of property the Fund is buying.
We are also concerned that the SMSF property does not come on to the rental market at a time when a large number of similar properties are being released to market.
If the market for the area is in a recovery phase this may be the best time to buy rather than at a time when the market is nearing or has reached the peak.
To provide an example of the right properties in the right locations at the right prices we have selected the Sunshine Coast – neglected by the market due the GFC causing downturn and now in the recovery phase as the result of massive infrastructure expenditure by local, state and federal governments.
As is our practice we do not make recommendations for locations without doing our own due diligence.
What do we look for? Perhaps there some investment treasures out there!
History tells us what happened in the past but that is no indicator for the future. It is the future or present planning and local, state and federal government, commitment to infrastructure development that is an indicator of population growth which creates demand which results in capital gain particularly for the ‘early bird’ investors.
The development of infrastructure whether it is health or transport or other requires a large workforce, many of whom choose to live nearby for periods up to five years or more until completion which then leads to commercial and private developments who employ thousands, most of whom wish to live nearby.
I have spent all of my life involved in residential property investment, the last 15 of which assisting clients to make informed choices – particularly locations.
For no good reason I had not really researched the Sunshine Coast due, I guess, to the downturn resulting from the GFC.
An energetic and imaginative council has approved plans to pour $ billions into infrastructure with employment potential for at least 40000 commencing in 2014 and into the following decade.
Having previously been hampered by a struggling tourism economy, an over-supply of dwellings and poor affordability, the coast moved into a strong growth phase. The market is being helped by multiple factors. The tourism industry is stronger; the market is more balanced in terms of supply–demand; previous price decline has made property more affordable; apartments are increasing in popularity with both home-buyers and investors; and some serious infrastructure is being built in the area.
This last factor is important. Nothing supports property price growth like major new infrastructure, which generates jobs, economic activity and improved amenity for residents. The big-ticket item is the $2 billion Sunshine Coast University Hospital, There is also the $150 million private hospital built in association with it, as well as the Oceanside Kawana Health Hub. The Sunshine Coast University continues to expand, with a $37 million engineering learning hub the latest project to be announced. That combination of medical and education facilities is always powerful in driving real estate demand. “
See the link to infrastructure and major projects underway.
The treasure is there waiting for keen investors. I have done the digging – it is now up to you to grab the treasure.
If you would like to visit some or all of these sites with us please contact us stating ‘Sunshine Coast ‘ and we will contact you.
Don Duncan F.A.I.M.
Don is the Principal Consultant at Mediwealth Australia, with over forty years experience in developing successful residential property investment strategies, and extensive experience in the financial sector, Don is uniquely qualified to provide you with the best property investment advice available. He is supported by experienced property investment consultants in both Brisbane and Sydney.