Are you planning to secure a private money loan for a property that is not located within your state? SMSF loans are great resources to tap for this purpose and other pressing needs.
While most private money lenders offer loans for mortgage and SMSF loans for property to individuals and businesses, a good number of them also offer other types such as vehicle finance, risk insurance, development finance, etc.
A SMSF home loan is a Self-Managed Super Fund to purchase investment properties. The investment returns from your SMSF loan – whether it is rental or capital gains – are funneled back into your super fund. This can fatten your retirement savings as more and more funds will be added to your SMFS account through this loan scheme.
Remember though that a SMSF loan comes with restrictions imposed on the part of the borrower. For instance, you are not allowed to use the money for your enjoyment/benefit for the moment because the money is intended for a future purpose – that is, your retirement.
If you intend to buy a car with the loan, make sure that you will not use the vehicle as a means of personal transportation or your relatives’. This is a violation of the laws governing your SMSF accounts.
The car should rather be used as an income-generating instrument such as a rental vehicle, and whatever earnings this generates, you are duty-bound to add it to your SMSF account or savings.
Investing in an out-of-state property is an attractive option if you live in a location where real estate is too expensive for your budget. That allows you to cut down a bit on financing your investment.
Another thing to keep in mind is to work with a local private money lender as much as possible. Because they are local, you can easily reach out to them in case there are issues you want to discuss face to face.
Private loans are resource-based loans. This means that the property guarantee backs the loan more than the financial qualifications of the person applying.