THE problem with self-managed super funds is not that they’re buying residential property, it’s that they’re surrounded by sharks as they do it.
Tax breaks tend to reduce one’s critical faculties. We saw that with agricultural investment schemes, which paid commissions of 10 per cent to financial planners and mostly collapsed, and now property developers are paying similar commissions to get SMSF cash.
Noel Whittaker, the author and financial adviser, has been campaigning against property spruikers for a while and in a recent newsletter related the story of a Rockhampton couple who were cold-called by an investment “consultant” who offered to fly them to the Gold Coast for a consultation.
“When we entered their offices in the Gold Coast, it was immediately evident that their only approach was property, that they purchase the land (where they felt was a ‘growth area’), they build the house, they find the tenants, they look after all the maintenance.
“They (if I remember correctly) promised that we would own the house outright within five to seven years with minimal outlay as we use the equity in our own house; and the depreciation on the new house, rental income and minimal outlay from our current income would cover the cost of repayments for the house and land.
“There were no other options for ‘financial advice’ — this was their only push.”
They didn’t sign despite heavy pressure, but their driver back to the airport said they were among the few who didn’t.
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