Scam Alert: The SMSF Property Pitch

Don’t Get Caught – The Myths, the Risks, and the Red Flags.

At Clear Sky Financial, we’ve seen it far too often: A client is approached with a “hot tip” – set up a Self-Managed Super Fund (SMSF) and invest in a property. It sounds like a smart way to take control of your future. But scratch the surface, and it’s often just a dressed-up sales pitch with massive hidden risks.

If you’ve got less than $500,000 in super and you’re being encouraged to go down the SMSF property path, especially by someone selling the dream, you need to stop and ask the right questions.

Case Study: Mary’s $220,000 Close Call

Mary came to us after being pitched an SMSF structure that would allow her to buy a new townhouse with her $220,000 super balance. It all sounded promising, until we investigated.

• The person promoting the deal wasn’t even licensed under an Australian Financial Services Licence (AFSL).
• They were set to receive a $50,000 “marketing fee” just for getting her to sign.
• Similar townhouses were already selling $80,000 below the original sale price.
• Investors who had already bought in were reporting no tenants, poor construction standards, and serious delays.
• The people pushing her into the SMSF weren’t interested in what was best for Mary’s retirement; they were just trying to sell her a property.

Had she gone ahead, her entire super could have been at risk. We helped her walk away from a terrible deal, just in time.

Two Common SMSF Property Traps:

The “Buy This Property Through Super” Trap:

You’re told to set up an SMSF and use it to buy an investment property. It might sound smart, but here’s what they often don’t mention.

• You’ll likely put most or all of your super into one single asset, losing any diversification.
• You can’t live in it, and your family can’t use it; it must meet strict SMSF rules.
• You’ll probably need a Limited Recourse Borrowing Arrangement (LRBA), which is more expensive and harder to refinance.
• You’re responsible for property management, ongoing admin, and yearly audits.
• And if it doesn’t rent? Your SMSF has no income, and no backup plan.

The “Put Your Super in This Property Fund” Trap:

This version is even riskier. Instead of buying a property directly, you’re encouraged to set up an SMSF and invest in a high-risk property fund – often unlisted, illiquid, and marketed as “exclusive.”

These funds:

• Often have little transparency about where your money is going.
• Can freeze withdrawals, meaning you can’t get your super out if the fund runs into trouble.
• Are frequently promoted by unlicensed salespeople who pocket huge upfront commissions.

These are not minor concerns. We’ve seen multiple examples where these types of funds have gone into liquidation, leaving everyday Australians with nothing.

This is happening right now! This isn’t some theoretical risk; these schemes are playing out across Australia.

• The Australian Securities and Investments Commission (ASIC) has charged several individuals with SMSF-related investment scams. They were promoting property deals under the guise of “retirement planning” while not holding the required financial services licence. Full media release here: https://asic.gov.au/about-asic/news-centre/find-a-media-release/2024-releases/24-015mr-charges-laid-following-asic-s-investigation-into-suspected-self-managed-super-investment-scam/
• The Australian Tax Office (ATO) has issued a clear warning about illegal schemes targeting superannuation. These include unlicensed operators encouraging early access to super or pushing clients into inappropriate SMSFs. Read the ATO’s SMSF scam alert: https://www.ato.gov.au/individuals-and-families/super-for-individuals-and-families/self-managed-super-funds-smsf/smsf-newsroom/be-aware-of-smsf-schemes/

What Clear Sky Does Differently:

We provide solid, licensed financial advice based on what’s in your best interests.

• We don’t sell property.
• We don’t receive kickbacks.
• We don’t operate in grey areas.

Our role is simple:

• We help you weigh up the real pros and cons of SMSFs.
• We show you the actual numbers, not sales hype.
• We protect your retirement – not sell you a dream.

Yes, there are legitimate reasons to set up an SMSF. But it should never begin with someone selling you a property or pushing you into a “magic” property fund.

Don’t Gamble With Your Retirement:

Your super will likely be one of your biggest financial assets. And for many people, it’s the only real chance at financial freedom. One bad decision, one slick pitch from the wrong person – and it could cost you decades of hard work. If someone is pitching you a property deal using your super – pause, and call us first.

We’ll perform a thorough analysis. We’ll check who’s involved, and we’ll tell you clearly, honestly, and without bias – whether it stacks up. Because your future deserves more than a marketing brochure.

If someone offers you better performance or better returns, let us know. It’s pointless paying a new company a fee, when as a Clear Sky client, you already have access to our investment team and often we can do it as part of our service. We will happily put you into a better performing investment if it’s genuine and stands up to scrutiny. We want you to be getting great returns, so you stay with us long-term.

Need a second opinion on an SMSF or property proposal? Click here to book a no-obligation call with Clear Sky Financial. We’re here to help you retire smarter – not poorer.

Information contained in this document is considered to be true and correct at time of publication. In addition, the information provided is general information only, and does not take into account any individuals’ objectives, financial situation and needs. Before acting on any information contained herein, you should consider the appropriateness of the advice having regard to your personal objectives, financial situation and needs.