Defence Housing

From: Mike .


Defence Housing Australia
From: john Conde
Date: 9/19/99
Time: 3:43:37 PM

I recently received an information package from Defence Housing Australia. I was wondering is this a good investment for buying into property?

Bearing in mind that rental is guarenteed for a least a six year period, would this be a plus with the banks in securing a property loan?

Susan

Reply: 1
From: Mike .


Re: Defence Housing Australia
From: Susan
Date: 9/26/99
Time: 3:34:14 PM

I also have looked at the ads re Defence Force Housing but haven't gone so far as to enquire further. They look good to me. Maybe too good? And what happens after? So I also would like to know more.

This is my first time checking in here and I really like the forum idea. I'll have to check in regularly in future.

Sue1

Reply: 1.1
From: Mike .


Re: Defence Housing Australia
From: Sue1
Date: 9/28/99
Time: 12:11:56 PM

Hi John & Susan,

I too looked into Defence Housing as an investment and agree that on the surface it does look good, but there's no such thing as a free lunch. While I don't suggest that they aren't a good investment I dont think they are as a fantastic investment as they make out.

Sure they guarantee rent for 6 or even 9 years with a repaint and recarpet at the end but if you look into it closely you find that you pay for these pleasures. For a start instead of the normal 7.5 or 8% Management fee you pay a whopping 15% with Defence Housing. Now if you add that up over the years it probably adds up to that new paint and carpet. I'm sure there were other fees but its been a while since I looked into it and I cant remember all the details.

Also if you do want to sell the house (Heaven forbid!) down the road before the rental lease has expired you have to find a purchaser who is willing to take on the Defence Lease that is still in place. This wipes out any owner occupiers who might be interested. What I am saying is that you basically get what you pay for and as long as you don't mind being locked in and need the security of guaranteed rentals to get into property investing then its better than not investing at all. Just get your solicitor to explain it to you so you know what you are getting for your money.

The other thing was that turned me off DHA rentals was the inflated purchase price. If you do your homework and know the current market you soon realise that the asking price of these houses is quite often $20 thousand or so more than comparable "civilian" houses on the market.

Cheers Sue1