Send us Fan Mail Commercial Property Uncovered: SMSF Commercial Property, Lending & Getting the Structure Right In this episode of Commercial Property Uncovered: Beyond the Contract, Vicki Likoudis, Nicole Faid and Richele Janjatovic unpack the growing interest in purchasing commercial property through a self-managed super fund (SMSF). With proposed changes to residential property purchases through SMSF limited recourse borrowing arrangements creating plenty of noise in the market, the team cuts through the headlines and focuses on what business owners and investors actually need to understand before making a decision. The conversation covers how SMSF lending works, the role of an LRBA, borrowing capacity, GST, legal structures, settlement timeframes and the importance of having the right specialist advisory team in place before you find and fall in love with a property. Most importantly, the team explains why FOMO should never be the reason you make a retirement investment decision. In this episode, we discuss: What the proposed changes to residential SMSF property purchases could meanWhy the changes do not necessarily mean SMSFs can no longer borrowWhy commercial property may become increasingly attractive to SMSF investorsWhat a Limited Recourse Borrowing Arrangement (LRBA) actually isHow an LRBA protects the other assets held within an SMSFThe guarantees members may still need to provide when borrowing through an SMSFWhy independent legal advice is required as part of the lending processWhy the right starting point is understanding your financial and retirement strategy, not finding a propertyThe different roles of the financial adviser, accountant, finance broker, lawyer and buyer's advocateWhy business owners may consider purchasing their own commercial premises through an SMSFHow member contributions and rental income can affect borrowing capacityWhy you generally need a 20% deposit plus costsThe often-overlooked issue of GST funding when purchasing vacant commercial propertyHow GST can significantly increase the upfront funds requiredWhy Victorian stamp duty on a GST-inclusive purchase can create an additional costHow lenders assess rental income, contributions, dividends and other SMSF incomeWhy commercial SMSF lending is generally offered by specialist and second-tier lendersWhy a residential mortgage broker may not have access to the commercial SMSF lending products you needWhy you need to establish your SMSF before receiving formal finance approvalWhy you generally can't release equity from an SMSF commercial property to purchase another propertyThe restrictions imposed by the SIS ActWhy you can't simply cross-collateralise SMSF propertiesThe importance of allowing enough time for SMSF establishment, rollovers, finance and legal workWhy 60 days should be considered a minimum settlement timeframe, with 90 days preferable in many SMSF transactionsThe single acquirable asset test and why multiple titles, including car parks, can create complicationsWhy the legal structure and correct entity need to be considered before signing a contractHow signing as "and/or nominee" may work in Victoria, subject to legal adviceWhy getting the sequence right is critical: strategy, finance, structure, property search and contractWhy buying a property personally and trying to transfer it into your SMSF later can trigger additional stamp dutyWhy asset selection is particularly important when you're investing retirement fundsWins & Warnings ⚠️ Warning: Don't buy based on FOMO The team discusses the growing pressure in the market for people to rush into residential SMSF property purchases before potential legislative changes. The key message is simple: don't make a retirement investment decision because you're afraid of missing out. Your SMSF strategy needs to be based on your individual circumstances, financial goals and long-term plan. 🚩 Warning: Be careful of "too good to be true" property promises A real-world example highlights the risks of investing in a highly specialised residential property based on promises of 10%+ guaranteed returns and the expectation that SMSF lending would be available. The investor committed approximately $250,000 of superannuation funds, only to discover that the property was extremely difficult to finance and potentially difficult to sell because of its specialised nature. If the returns sound too good to be true, stop and investigate before committing your money. 💡 The importance of independent advice The team explains why you should challenge the information you're being given and avoid confirmation bias. Your advisers should be appropriately qualified and independent, and you should understand why a particular structure, lender or property is being recommended. Quick Fire How relevant is pre-approval for commercial property? Pre-approvals generally last around 90 days, but the right approach depends on your circumstances and whether you've identified a property. Before starting your property search, it's still worth establishing your borrowing capacity and budget. What does Nicole look for first in a commercial contract? The title, followed by the GST position. The title can reveal issues including whether the property satisfies the single acquirable asset test, as well as encroachments, notices, building orders and other potential problems. What should business owners consider when assessing location? It's not just about whether the location works for the business today. Consider accessibility, parking, public transport, infrastructure, population growth, clearway restrictions, fit-out requirements and the property's potential as a long-term asset. Key Takeaways Pause before you act. Don't let headlines or FOMO drive a major retirement decision.Build the right advisory team early. SMSF transactions require specialist financial, legal, accounting and property expertise.Get the sequence right. Establish the strategy and finance parameters before committing to a property.Understand the structure. SMSF property purchases involve strict rules and significant legal and financial obligations.Don't underestimate GST and costs. The upfront funding requirements can be considerably higher than expected.Allow enough time. SMSF purchases have multiple moving parts, so rushing toward settlement creates unnecessary risk.Choose the asset carefully. You're investing retirement money, so the property needs to work not only for your business today but also as a long-term asset.Challenge the advice you're given. Don't simply seek information that confirms what you already want to hear.The biggest takeaway? Your SMSF property decision should start with your strategy, not the property. If you're considering commercial property through an SMSF, pause, get the right specialists around you, understand the structure and only then start looking for the right asset. Follow and subscribe to Commercial Property Uncovered: Beyond the Contract, leave a review or send through a question for a future episode. Commercial Property Uncovered: Beyond the Contract Hosted by Vicki Likoudis, Richele Janjatovich and Nicole Faid. 🏢 Richele Janjatovich | Finance: [Mecca Finance Group] + LinkedIn 🏢 Vicki Likoudis | Buyer & Tenant Advocacy: [Impacta Commercial Advocates + LinkedIn] 🏢 Nicole Fade | Property Contracts: [Accord Conveyancing + LinkedIn] 📧 Have a commercial property question you'd like us to answer? Send it to commercialpropertypodcast@gmail.com Follow us on Instagram: @CommercialPropertyUncovered Subscribe, follow and leave us a review wherever you listen to podcasts. **DISCLAIMER:** This podcast provides general information and is for educational purposes only. The hosts are not financial advisers, and this content is not personal financial, legal or investment advice. Seek advice from appropriately qualified professionals before making financial, SMSF, investment or property decisions.
