Adelaide nras

[Mick C]

Our office will ALWAYS carry out upfront val for NRAS and Standard off the plan....to many falling short ( note NRAS is priced the same as any other off the plan purchase form my exp- hence it doesn't matter if it's nras or standard off the plan the risk are the same)

Having said that in the last 2 month 2 NRAS projects ( off the plan 2 years ago) that set to complete in the next 1 month has all came back at purchase price and this is not just for 1 property in that complex but over 5. and surprisingly from QLd...lol

- Mackay QLD
- Glendale QLD

 

[RIC84]

Well the idea on general has merit but the whole scheme lacks transparency in the general public as to who are involved (not to mention of it was a different industry you would normally have a abundance of more useful information provided by the operators) and it seems very difficult work out who is competitive as a result.

I get the operators don't want to give up their pricing to just be marginally undercut but they are also in general making very difficult for customers to understand and make these kind of sizable purchasing decisions with their company over another.

I am sure Im not the only newish investor that feels this way

 

[pinkboy]

Our office will ALWAYS carry out upfront val for NRAS and Standard off the plan....to many falling short ( note NRAS is priced the same as any other off the plan purchase form my exp- hence it doesn't matter if it's nras or standard off the plan the risk are the same)

Having said that in the last 2 month 2 NRAS projects ( off the plan 2 years ago) that set to complete in the next 1 month has all came back at purchase price and this is not just for 1 property in that complex but over 5. and surprisingly from QLd...lol

- Mackay QLD
- Glendale QLD

Out of interest, where were these properties in Mackay Michael?

pinkboy

 

[Mick C]

19 Stevenson Street.

 

[euro73]

Just reading this euro

I would love to hear the numbers from the northern beaches too if you don't have any Adelaide figures.

Cheers

The numbers are

22 Units in the development. 11 are NRAS approved.

Studio Apartments 395K. Valued at 395K by LMWHegney, MVS, Valuecorp
One Bedroom 525K Valued at 525K by CBRE, MVS and Opteon
Two Bedroom 1 bath 600K Valued at 600K by CBRE, HTW and Propell
Two bed 2 bath 630K Valued at 630K by CBRE, Opteon


All borrowers secured 90% lending + LMI, meaning their contributions were 10% plus stamp duty plus legals ( and I always recommend a 10K cash flow buffer to carry the first years holding costs through to tax time, unless the investor prefers using a monthly variation strategy)

So, in the case of the Studio, 10% deposit is $39,500. Stamp Duty ( after 5K NSW rebate) is $8,578.50. 2K for legals, building and pest, and 10K cash flow buffer = investor contribution of $60,078.50. All other funds provided by 90% plus LMI. At a Marginal tax rate of 37% the Studio returns $7200 CF+ in year 1. That's a return of 11.98% Tax Free on the 60K of equity that is deployed towards the purchase

In the case of the 1 bed, 10% deposit is $52,500. Stamp Duty ( after 5K NSW rebate) is $14,428.50. 2K for legals, building and pest, and 10K cash flow buffer = investor contribution of $79,928.50 All other funds provided by 90% plus LMI. At a Marginal tax rate of 37% the 1 bed returns $7K CF+ in year 1. That's a return of 8.75% Tax Free on the 80K of equity that is deployed towards the purchase

In the case of the 2 bed, 10% deposit is $60,000. Stamp Duty ( after 5K NSW rebate) is $17,803.50. 2K for legals, building and pest, and 10K cash flow buffer = investor contribution of $89,803.50 All other funds provided by 90% plus LMI. At a Marginal tax rate of 37% the 2 bed returns $7400 CF+ in year 1. That's a return of 8.22% Tax Free on the 90K of equity that is deployed towards the purchase

The non NRAS Units in the development are all 2 bed and start @ 655K, and range up to 745K. They are 8m2 -12m2 larger than the NRAS 2 bedders which sold for 600K, as they have a 2nd bathroom/ensuite , and the 745K units also offer 2nd parking space and a small courtyard. However, all the Units have 1 x parking

So here's a perfect example of NRAS stock that is in a very good location, values on the money with EVERY valuer that has been through them, and is actually cheaper than the non NRAS stock in the project.

There are 2 x 2 bedders left @ 630K, and 2 x Studio's left @ 395K

 

[euro73]

Well the idea on general has merit but the whole scheme lacks transparency in the general public as to who are involved (not to mention of it was a different industry you would normally have a abundance of more useful information provided by the operators) and it seems very difficult work out who is competitive as a result.

I get the operators don't want to give up their pricing to just be marginally undercut but they are also in general making very difficult for customers to understand and make these kind of sizable purchasing decisions with their company over another.

I am sure Im not the only newish investor that feels this way

This is why you should get valuations done UP FRONT, and you'll soon find out whether the prices are reasonable or not. Your broker can organise this for you free of charge, within 72 hours.

 

[euro73]

As Brady has suggest euro, these comments were specific to the developer in question, not NRAS as a whole. The stock shown was largely in line with what you were suggest re; suppliers with 6-8% commissions. When a developer tries to over 'incentives' to pass on their stock to clients, they've lost me.

I'd be more than happy to know of purchaser-beneficial NRAS deals which are focused upon value-add, as opposed to extortionate pricing and misinformation, especially in Adelaide.

I can understand how you work in the industry and may take anti-NRAS comments as a personal affront. This is not the case, more of a reflection of the issue of certain market players which have been attracted to the NRAS marketplace. Liked Brady, I'd be very interested if you can link some Adelaide examples, as it is a type of investment which is generating interest amongst investors and those looking at gaining exposure to property without a cash flow burden - but to do date there haven't been too many success stories to back it in common occurrence.

Appreciate you clearing that up CJay. I do work in the industry, but I spent many years on the banking and broking side too, and I'm just saying- important to be clear and careful... the post can easily be read to be criticising NRAS in general, as overpriced junk. I'd just like people to be more careful and considered in their commentary, so as to not create a bias ( whether intended or otherwise) as there are plenty of cowboy operators out there doing a great job of that already They don't need any additional encouragement

I sell a reasonable number of NRAS properties, and go to enormous lengths to get things to stack up, before putting the stock into my network. If the numbers dont stack up- I dont touch it. There are lots of rogues out there using NRAS ( and other non NRAS new development stock) to try and make themselves rich, so yes, I am sensitive to comments that reinforce the negative stigma their greed creates, and especially because EVERY NRAS property I have ever sold ( 50 or so this year alone) has valued on the money, except for one property that came in 9K short - and it was a double NRAS generating @ 20K CF+ per annum, so the client was OK with the 9K shortfall in that context. So I'm doing pretty well for my clients, so far !!

I've just posted an example of 11 Studio's, 1 bed and 2 bed units on Sydney's Northern beaches that have all been valued at contract price. Similarly, just sold 6 units in Zillmere, Qld- where every valuation was spot on. Sold 9 x 2 bedders in Fairy Meadow NSW, all valued on the money. 6 x 2 bedders in Athol park SA, all valued on the money. Various 2 bedders in Ringwood, Dandenong and Noble Park VIC- all on the money.

So there's definitely good stuff around ... unfortunately I cant control the rogues though

PS - There's nothing in SA that I'd recommend at the moment.. several developers have contacted me to get me to move their stock, but when I ask for a COS so I can organise for valuations to be done, the calls usually stop... But I have several well priced projects that Ive made applications for under Round 5, so watch this space....

 

[Colin Rice]

50 or so this year alone

Good to see business is going well

 

[jrc77]

So here's a perfect example of NRAS stock that is in a very good location, values on the money with EVERY valuer that has been through them, and is actually cheaper than the non NRAS stock in the project.

There are 2 x 2 bedders left @ 630K, and 2 x Studio's left @ 395K

Do you have information on if the sold places have rented out, how long they took to find tenants, and if they achieved the expected rental prices?

Regards,

Jason

 

[euro73]

All of them have been tenanted. One hiccup with an Athol Park property being rented- but a change of tenancy manager fixed that immediately

 

[Brady]

All of them have been tenanted. One hiccup with an Athol Park property being rented- but a change of tenancy manager fixed that immediately

Do you have any links or addresses that you would be able to provide?

As mentioned previously very interested in knowing of some NRAS stock in Adelaide that has stacked up.

 

[euro73]

Athol Park was @ The Avenue, Athol Park

 

[MJD]

I have a development site in adelaide, would it be better to apply for nras? is there a bonus in floor space ratio of 0.5 ( as in NSW) for developer ? thanks for any help
MJD

 

[bez23]

I thought the due date for applications for round 5 has already past?

 

[euro73]

I thought the due date for applications for round 5 has already past?

Correct- applications for Round 5 closed on August 6, 2013. Successful applications have not been announced yet. Announcements are expected in the next month -6 weeks. You can be certain that "spare" or "unused" NRAS incentives will become available later in the year though, as dome developments don't end up using their full allocation.

When that occurs, you can make what is called a "change request", which is the process by which an approved incentive is transferred from a project where the incentive is not being used, to another suitable project. To organise a change request, you'd need assistance from someone who has the connections and know how to do so. i.e an NRAS approved particpant, and the stock itself cannot be delivered prior to July 1,2015 and no later than June 30,2016- as that's how the funding is structured for Round 5's 10,000 incentives.

 

[MJD]

Correct- applications for Round 5 closed on August 6, 2013. Successful applications have not been announced yet. Announcements are expected in the next month -6 weeks. You can be certain that "spare" or "unused" NRAS incentives will become available later in the year though, as dome developments don't end up using their full allocation.

When that occurs, you can make what is called a "change request", which is the process by which an approved incentive is transferred from a project where the incentive is not being used, to another suitable project. To organise a change request, you'd need assistance from someone who has the connections and know how to do so. i.e an NRAS approved particpant, and the stock itself cannot be delivered prior to July 1,2015 and no later than June 30,2016- as that's how the funding is structured for Round 5's 10,000 incentives.

Hi Euro73, thanks for the your information, very useful. what is the time frame for each round? say for the developer to apply for allocation until the project finish . thanks

 

[euro73]

Hi Euro73, thanks for the your information, very useful. what is the time frame for each round? say for the developer to apply for allocation until the project finish . thanks

The time frame is outlined above - Round 5b must be delivered ( available for tenants) between July 1,2015 and June 30,2016.

If you have a project that is delivering before July 1,2015 you would need to try and secure surplus/spare incentives from either Round 4 ( to be delivered by June 30,2014) or Round 5 a ( to be delivered by December 31,2014)