Borrowing within your SMSF to purchase a residential investment property. This is one of the most popular SMSF lending strategies — but it comes with strict rules.

Key Features:

• Property must be for investment only (cannot be lived in by members or related parties).
• Must be purchased through a Limited Recourse Borrowing Arrangement (LRBA).
• Held in a Bare Trust, with the SMSF as the beneficiary where there’s lending requirement
• Rent received goes into the SMSF, and loan repayments are made from SMSF income.

Ideal For:

• SMSFs looking to diversify into property.
• Investors wanting to hold residential real estate as part of their retirement strategy.

Considerations:

• Must maintain enough liquidity in the SMSF to service the loan.
• Property improvements are restricted while the loan is in place.
• Ongoing compliance and professional advice are essential.