Define the participation product
The product provider would set the investment terms, who could participate and how income and sale proceeds would be allocated.
Future use case / Property funding
SMSF property funding through investor participation
A proposed way for an SMSF and external investors to fund the purchase of a residential property. The SMSF would hold legal title, while investors would share in the financial outcome.
This is a future concept, not a current offering. It would need specialist legal, tax and SMSF regulatory review before development.
One property. Two sources of capital.
SMSF capital
External investor capital
Combined purchase funding
Residential investment propertySole legal and registered owner: SMSF trustee
Digital contractual interests record each investor's participation in returns. They do not represent registered title to the property.
Net rent + net sale proceedsallocated according to the participation terms
The customer need
When an SMSF cannot fund a property purchase on its own
An SMSF may have enough capital to fund part of a residential investment property, but not the whole purchase. For a fund looking to avoid borrowing, that gap can put the property beyond reach.
The proposed model would bring in external investors to contribute the remaining capital. In return, they would hold digital contractual interests that set out their participation in net rental income and net sale proceeds.
The SMSF would remain the property's sole legal and registered owner.
Our role
The administration behind your product
The provider would set the structure, commercial terms and proposition for its customers. We could bring participant onboarding, digital interest records, payments, distributions, reporting and transfers together in a platform carrying the provider's brand.
This could let a product provider develop a property funding model without having to build each part of the investment administration technology separately.
What investors would receive
Under this model, the proposed funding would be investment capital. The SMSF would not take out a loan or grant a mortgage, pay fixed interest or guarantee repayment of capital.
Investors' outcomes would depend on the property's income and value. Both could rise or fall.
How it could work
See the proposed operating steps
Bring the capital together
The SMSF and external investors would contribute purchase funding. We could support participant onboarding, payments and records of each investor's digital interest.
Acquire and hold the property
The SMSF trustee would purchase the property and remain its sole registered owner. External investors would hold contractual participation rights.
Distribute and report
We could support distributions under the product's terms, record transactions and report on interests, income and transfers.
Manage changes over time
The SMSF could acquire additional interests from investors willing to sell. A transfer would need a willing buyer and seller, and liquidity would not be guaranteed. If the property is sold, net proceeds would be allocated under the participation terms.
Where a provider could use it
SMSF property acquisition
Help cover the gap between an SMSF's available capital and the amount needed to buy a property.
Institutional participation
Allow eligible institutions and wholesale investors to participate in individual property opportunities.
Progressive investment
Allow an SMSF to increase its participation over time through agreed purchases of digital interests.
Branded property platforms
Bring eligible properties, SMSFs and investors together in a marketplace or white-label product.
Explore the model for your business
Talk through the customer need, proposed participants and funding structure to work out what the product and supporting platform would need.