I am loving that you are loving the money insights I give (it honestly makes me so happy to heart this, so sincerely – thank you). Now, I don’t give Advice in the SMSF space and I know next to nothing about Commercial Property.

So I am going to say upfront, this is not my area of expertise at all. Therefore take my thoughts and ideas with that in mind and it may be worth reaching out to a Financial Adviser who specialises in this space.

A few years ago I worked inside an Investment Bank when lending through SMSF’s was the newest and hottest kid on the block. Every man, his dog and his collectable car wanted one.

It was almost more of a status symbol, to brag about or discuss with your friends whilst indulging in a round of golf at a prestigious golf club (I’m imagining like a three piece suit and cigar in hand, but I am 99.9% sure that's not the exact look on a golf course, but you get the idea).

There was an eruption of SMSF Property ‘Experts’ who gave out kool-aid and people drank it by the gallons.

See, lots of people liked the idea that they had control of their money, that they could buy real property, art and collectable (not, of course, use them or hand them in the house for more bragging rights).

And in some instances it can be a really sound strategy. It might even be the perfect thing for some peoples situations. But its not for everyone and I think many people get lured in by the bright lights and don’t do all their research beforehand. And obviously, I want people to do their research beforehand.

So here are, in no particular order, some things I would want you to consider/discuss with a Financial Adviser/SMSF Professional:

• Costs: Sounds like you already have a SMSF so you're probably fully across the fact that running a SMSF comes with a lot of ongoing obligations, you are likely to need a Professional help you manage this to ensure you remain compliant as a trustee. These can be expensive to create and maintain. Always be on the lookout for any regulatory changes or pay to get advice to make sure you're doing everything by the book.
• All your eggs in one basket (or factory): When you buy property through your SMSF, it's easy to end up with a lot of your super tied up in a single asset. This creates concentration risk, meaning if the property market takes a downturn, your entire super balance could suffer. Relying on one asset class—like property—can expose you to greater volatility and risk, especially if it's your SMSF's primary investment.
• Repayments: Have you done the numbers to know what the loan repayments would be and if they are appropriate based on your situation? Will there be any money left to;
• Diversify: Ultimately, we never want to just have all our hopes and dreams wedded to one asset. We want to make sure we have enough money in the pot to be able to invest across a bunch of different assets to give us broader exposure, which not only spreads the risk and downside, but helps make sure we have the ability to get gains from different asset types when they do well too.
• The Property Itself: I would want to do a shedload (get it?!) of research on the history of a potential property. What's the rental history like? What is the market like more broadly in the area/category you’re looking into? If there are issues or things that need repairing, it gets a hell of a lot more expensive when you are potentially talking about a giant space, so consider that. And of course, if there is a period where it is untenanted, how will you manage?
• Long-term Commitment: Property purchased through an SMSF is a long-term investment. Your super is meant for retirement, so make sure the property aligns with your long-term financial goals. Are you prepared to hold onto this property for a long period of time?
• Liquidity: Property is not a liquid asset. Consider whether you'll have enough cash flow in your SMSF to cover expenses like property maintenance, mortgage repayments, and other super obligations. You probs can't sell half of it if the costs became too much to manage (maybe you can, I have no idea).
• Compliance & Regulations: There are strict rules around buying property through an SMSF. Can you actually handle the paperwork and compliance responsibilities? If you hate financial life admin, just know it will most definitely significantly increase if you choose this route.

So, look, I will never profess to be an expert in all the money areas (anyone who does is either naive to their own shortfalls or telling you fibs).

This is not something I have helped clients with (other to get out of a few which were made during the SMSF Property Stampede where they made poor property decisions off the back of some shonky property developers telling them it was going to be rainbows and lollipops and it was all negative equity and piles of paperwork).

Hope this is (somewhat) helpful.

Jess

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Obvs all of this is general advice only... especially important to note any and all of the comments above do not take into account your objectives, financial situation or needs. Before acting on any information, you should consider the appropriateness of the information provided and the nature of the relevant financial product having regard to your objectives, financial situation and needs.