Defence Housing

[WebBoard]

From: Mike .


First IP - DHA
From: WayneC
Date: 7/19/00
Time: 6:32:07 PM

We are currently looking for our first IP. Have been aware of DHA for a while. Have possibility to get property - 2 x 3br double storey units 189K rental 300pw. Obviously good yield. Am concerned at capital growth. should we use P&I or IO only for property.

what capital growth should we expect. Outer suburb 35 kms from Brisbane. Property built in 1993.

Cheers Wayne

 

[WebBoard]

David

Reply: 1
From: Mike .


Re: First IP - DHA
From: David
Date: 7/20/00
Time: 4:28:16 PM

I read an article last year that suggested real estate values in inner brisbane suburbs would need to increase by 20% before there would be any increase in outer suburb values. However, the rental returns are generally lower than available to you through your DHA example. It's a toss up between good rental return (which might be important in allowing you to afford the IP) and better capital gain available from buying inner Brisbane properties.

I guess that DHA property investment provides a hassle-free option for those who would like that. There are some interesting letters about DHA property investment included in the early letters to this forum (November 1999) - worth a read.

 

[WebBoard]

Terry A

Reply: 1.1
From: Mike .


Re: First IP - DHA
From: Terry A
Date: 7/23/00
Time: 1:43:44 AM

Hi Wayne,

I own three DHA properties, one in Brisbane, am about to buy another in Melbourne so treat my comments with care as I don't know the Brisbane area too well.

I assume you are buying under one of the new leases, 15% management fee. One of mine is under that term but the property has shown very good capital growth, 10 kms from Melbourne. If yours is 35 km from Brisbane then I would worry about future capital growth. Also with the "15% lease" they have an out clause at 8 years and they repaint and recarpet at 9 years. I sought an undertaking that they would honour the commitment at 8 years as well and got a rather vague commitment but I went ahead anyway because the property is in one of Melbourne's hot spots.

The other condition of the lease is that the rent is valued to market by independent valuers, in my case it went up 20% after the first year but has not moved for the last two as the market has not changed (but that is the period when the capital gain went up).

What I am saying is that you should check out the rent growth in that area as in Darwin the rents went down and caused a lot of bitterness from buyers because they thought it was a sure bet. The property I own in Brisbane has showed some growth over the last ten years, average of 1.75% p.a. but the capital value is less than what I paid for it (first IP and it has taught me a lot through my mistakes but has been cash flow positive for a number of recent years so I will hang on to it).

Hope this helps - Terry A

 

[WebBoard]

WayneC

Reply: 1.1.1
From: Mike .


Re: First IP - DHA
From: WayneC
Date: 8/1/00
Time: 9:53:15 PM

Terry, Thanks for the good advice. Could you drop me a line on the Melbourne property and what other suburbs and city's you considered with DHA. We are looking to make the property cash flow positive from day one.

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