Defence Force Homes

Hi Chris.
Personally I don't know much about DHA, but if you click on the search function in this forum, and type Defence Housing, I'm sure you will get a fair bit of info. The only thing I heard regarding DHA is that they are fairly particular on their maintenance which is not a bad thing but if they use their own tradesmen, could be fairly pricey.

Regards
Marty
 
 
kissfan said:
Hi Chris.
Personally I don't know much about DHA, but if you click on the search function in this forum, and type Defence Housing, I'm sure you will get a fair bit of info. The only thing I heard regarding DHA is that they are fairly particular on their maintenance which is not a bad thing but if they use their own tradesmen, could be fairly pricey.

Regards
Marty
Click to expand...
DHA meet all these costs and hand back the property at the end of the lease repainted and with new carpets. And you get 52 weeks rent a year.

Nothing for nothing so you pay 15% management fee. Here in Townsville I think you pay a premium for the property if it's still got a long lease.

Thommo
 
Thanks for that. Must of done a wrong search some how.

The property is leased until Sep 05 @ $336pw, on the market for $238,000. A lot to look into I guess!
 
chris2004 said:
Thanks for that. Must of done a wrong search some how.

The property is leased until Sep 05 @ $336pw, on the market for $238,000. A lot to look into I guess!
Click to expand...

In other words, another investor is flogging it before the DHA lease runs out. to the best of my knowledge they prefer not to renew leases, but to go for something newer. You'll have less than a year of DHA leasing so you need to know how long the original lease was (i.e. what level of renovating DHA will undertake), whether either you or DHA want to continue the lease and what the property will rent for on the open market.
 
Muz said:
From memory GeoffW has one...why don't you email/pm him :)
Click to expand...
I do have one. Most of what I'd have to say has already been said :D

DHA is especially good for people new to investing- it's a good thing for sleeping at night- no vacancies to keep you awake.

Don't forget that 15% management fee- plus 1.5% GST, which will give you around $280pw. I make that at around 6.1% net, before rates- so a little negative- but depreciation will add a little to your pocket. Maintenance will be close to nil- UNLESS there's a MAJOR repair required. But that return is better than some I've seen recently from DHA. Make sure you evaluate the area, and the future growth potential, and not just the returns.
 
The way I look at it is that it's on the market for a slightly lower asking price because it only appeals to investors. Also I hope I can negotiate the price down a little as well, so I'm already infront if this goes my way.

It's a 7yo house, 4brms, 2 bathrooms in a nice area only minutes walk to a tourist attraction in the town, a good rental after the Defence force housing lease expires.

I know that management fees are high but I'm willing to pay this knowing that the house is hopefully well looked after and if not most maintenance done for free.

High management fee's are also tax deductable so that helps.

What do you think???
 
It sounds like a solid enough investment with guaranteed quality tenants, I doubt you could go too far wrong. If the area is not remote and would appeal to non-defence tenants after the lease runs out you could do a lot worse.
 
Sounds OK on the surface- as long as you're quite honest with evaluating, and look at any faults fairly as well as advantages.

16.5% is deductible- but so is a "normal" PM fee of 8.8%. But you won't get vacancies, relet fees and minor maintenance, which mitigates it a little.

Buying a DHA house towards the end of a lease (3 years anyway) can add a little more to future capital gain.

Do your homework on rents in the area. Rent can sometimes be below market.
 
About 4 years ago, friends of ours negotiated to purchase a "defence house" here in Canberra. They said there was a clause in the agreement stating that if there was substantial damage to the house ( fire etc) they were responsible for housing the tenants elsewhere to the same standard. Friends tried to have the clause removed but were unsuccessful and so didn't go ahead.

I remembered that scenario at the time of the Canberra bush fires nearly 2 years ago. Hundreds of families needed emergency accommodation and rentals went through the roof.

Perhaps the contracts have changed since then.
 
bawley said:
About 4 years ago, friends of ours negotiated to purchase a "defence house" here in Canberra. They said there was a clause in the agreement stating that if there was substantial damage to the house ( fire etc) they were responsible for housing the tenants elsewhere to the same standard. Friends tried to have the clause removed but were unsuccessful and so didn't go ahead.

I remembered that scenario at the time of the Canberra bush fires nearly 2 years ago. Hundreds of families needed emergency accommodation and rentals went through the roof.

Perhaps the contracts have changed since then.
Click to expand...
That's a sobering thought. Can you insure against that?

And what are your responsibilities to your tenant with a "standard" lease?

Thommo
 
DHA is a good worry free investment .
I have just exited from my lease.
Will they replace carpets and repaint as part of the deal you are taking over. They should as that is why you pay the high mgtment fee.
How rentable is the property upon the lease expirying..........important point.

read your lease agreement carefully and understand the implications of each clause would be my only real advise.
Ohterwise location and retuen sound excellent compard to other DHA properties
 
DHA property

I bought 2.

1. paid $275k in 1998 in MENAI rent $250 - now $ 608k $ 375 rent for 9yr+3
2. paid $375 in 2000 in FIVE DOCK rent $ 275 now $660k rent $375 for 3yr +3

1. replaced letter box $150 + replaced driveway bricks $ 650 in 5 yrs
2. Zip maintenance however similar townhouse in complex pulls $425 rent/wk

Rent paid 1 month ahead, zero vacancy, reviewed 1/yr - capital gain is the key not rate of return

Kevinb
 
kevinb said:
2. Zip maintenance however similar townhouse in complex pulls $425 rent/wk
Click to expand...
You'll have a rent review coming up shortly. If the revised rent is still below comparables, you will be able to appeal. But start doing homework now- if you can find 3 or 4 rents which are higher than what you are getting, you should have good groundfs for your appeal.

I appealed two years ago- the rent was raised a little that year, substantially more a year later.
 
I've got a DHA house currently for sale in Cairns which has shown good capital growth. DHA management fees are high but they take care of all minor repairs, they have just repainted inside, pay a month in advance on time every tim, no vacancy facor. Rent review every December last year rent went up $15 p.w. I have found it be a great investment :) :)
 
DHA homes are a capital growth play as the yields are usually low and management very high. IMHO, with no more cap. growth for years you should look elsewhere.
 
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