SMSF Property Choices

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There are different types of property exposures that an SMSF may add into its portfolio mix. Here is a comparison of three (3) types of property assets

Property
Ownership Beneficial Legal ( Torrens Title) legal Title
Loan NIL NIL 70%
Cost $50 - + $20,000 - $100,000 $350,000 - $900,000
Setup cost $10* plus 0.5% buy / Sell cost $0 1% of value
Liquidity Liquid Semi-Liquid Illiquid
Stamp Duty Covered by BrickX $1,285 3% -5%
Provider /Developer Risk Low Low Low
Time Cost 1 hour p.a 1 hour p.a 5 hours p.a
Management cost time 6% + $0.09 per Brick 30 min p.a 3.89% 30 min p.a 5% p.a

BrickX

The most affordable fractional property choice. The ownership is a beneficial ownership structure, like a managed fund, where the provider owns the property and investors receive the capital and income benefits. It is a great first entry into property, with geographical diversity available,less work to setup and no leverage risks of direct property. Ongoing costs are slightly higher.

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How It Works

A Brick represents a fraction of a property

Choose your property, or
use the smart invest platform

Buy Bricks

Earn Rental Income
Per Brick

Sell your Brick to earn
capital returns

Bricklet

A great product, with entry level benefits of property ownership. Bricklet’s are transparent and affordable form of fractional property ownership, without the time costs entailed with managing a physical property. Bricklet, is a great way for younger SMSF members to diversify their portfolio’s and get on the property ladder.

Pre  Sale Period

During the pre-sale period Bricklets can be purchased, subject to the minimum being sold.

Note: make sure you seek advice and obtain the PDS, Trust Deed and POA for this product. Seek legal advice before entering into a Bricklet Purchase

Direct Property

Very illiquid, higher setup and ongoing costs as well as time costs and is typically leveraged via an SMSF Loan. Although the volatility is low, direct property has; historically; been one of the best performing asset classes in Australia over the last thirty years and its simple to understand with rental returns keeping up with inflation costs making it an attractive low risk investment for retirement.

Summary

So, which is superior ? well it’s a case of assessing your risk appetite, available funds, suitability of location and servicing.Clearly the Bricklet investment is one of the most innovative products to hit the market with clear title and blockchain management of audit trails. Direct property is an age old favourite in SMSF portfolio’s and BrickX is affordable with the ability to diversify into many geographic locations by buying multiple bricks around Australia. It is however, best that advice is sort where in doubt with all types of SMSF investments. Read the PDS and seek legal advice before proceeding.