DHA...Defence Housing

N

nesta

To ask all the great achievers:-

Does anyone know anything about this kind of property investments?

Sound interested as-

1) Guaranteed rental income for 9 to 12 lease terms.
2) Yield at 4% p.a.
3) Rental income can only go up.
4) Lower entry-cost of property

But doubt if:-

1) Government has final discretion on the lease agreement, which mean is that possibly like selling back to tenant (government staff) with the original price?
2) All properties located far from CBD…it’s hard to sell or rarely see the growth of the area?
3) Anything we need to know before venture into it?

Thanks again.
 
Check the comparative sales for those types of proeprties in the area. They tend to be sold over the market price.
Management fees are also on the top end.
Rental income can also be below market value when compared to renting to a normal tenant.

Remember low risk is low return.

Personally, Not my style of investment!!!
 
nesta

We personally have never owned a DHA property - but we have lived in several (many years ago) and know quite a few people who have owned them - all, by the way, have since sold!

Their general comments have been:
Too expensive to purchase - lousy yields for the areas in which they are located
Usually can only sell to others who want to buy DHA homes to continue to rent to DHA (tho not always)
Property management fees are 15%!!!
There is not normally the opportunity to sell to tenants.
Re-painting and re-carpeting at end of lease period are of very poor quality
Maintenance is not done to a high standard

I agree with Xenia - I wouldn't 'invest' in a DHA property.

Cheers
LynnH
 
Do a search here as they have been discussed a lot.

They have some great advantages and some not so great disadvantages.

But it isn't as simple as good or bad more about what sort of investments suit you. If you want a hands off investment then these may well be perfect.
 
Thanks Xenia & LynnH for the advice of "low risk low return". Will do, to spot out the quality IP by own research.

Thanks Simon, that's true though. Rather than clever I should find the investment that suits me best, but I won't discover what this is until I start investing.

Thanks again!;)
 
You might find it faster by working out what your goals are instead of just a generic "collect investments".

Something I wish I did years ago - now I have them clearly written out.
 
DHA property investor

I have recently purchased a DHA property and I would have to agree that not all of them are located in very good areas. The photos they take often appear a lot better than they actually look.

However, if you do the research there are some good DHA investment opportunities. I recently purchased a property from DHA in Gungahlin in the ACT. Which is a suburb with a new shopping centre concept. Its suppose to open 24 hours a day and has restaurants below the shops and commercial district. DHA has purchased quite a bit of land in this area and has slowly released the new houses as they become available to maintain the demand.

The advantage is the stamp duty is tax deductible in Canberra. Most workers in Canberra are white collar workers. There is a demand for rental property. The rent is guaranteed and arrives on time every month. There are no vacancies to worry about. They maintain the properties. If you talk to real estate agents in the suburb of Gungahlin they believe the DHA houses in the area help keep the values of the other properties up because DHA properties are suppose to be well maintained. At the end of the lease they repaint or recarpet.

I would suggest you actually visit the house you are interested in. We had a look at the ones in Brisbane and they were located so far from the CBD and the estate they were in looked run down and of low socio economic status.

However, we have had the property in Gungahlin since September 2006 and have had no problems what so ever with the rent and don't have to worry about maintenance as we do with our other investment property in Brisbane. Albiet at a premium maintenance fee. There is also a proposed express way which would speed travel to Canberra CBD from 20 minutes to 10 minutes. The government also spends money on defence in Canberra hence the requirement for defence housing.

You need to keep an eye out for more release in Gungahlin at www.invest.dha.gov.au.

A good site for other properties in the area is www.allhomes.com.au.
 
You can often pick up DHA properties through a normal RE at market rates. Sometimes DHA prices seem a little inflated. DHA say they don't negotiate on asking prices as well which I don't like.
 
Seems I need to work out my investment goal first and don't go in blindly.

But questions, how do we find the positive cashflow investment property? Some said commercial property/warehouse/factory. It's required huge capital when just started out.

Still doing some researches now. :)

Thanks guys

Regards,

Nesta
 
I find the trick is to buy DHA properties towards the end of the original term (say 3-4 years left)... had made some very easy equity as the sale prices have been well below market as they were bitches to move (DHA are quite strict about access for prospective buyers). Makes them good to buy but hard to sell... not that I need to... buy and hold.

Yes the management fee of 15%+GST is rather high... but it includes maintenance and there is no need to worry about reletting, advertising, dodgy tenants, etc.

As for growth... once the lease is over, they will be worth market value plus a bit more due to being in good condition.

They make for a good worry free investment if you don't mind the potentially lower yield and taking 1-2 years to resell during the lease.
 
HeXa said:
I find the trick is to buy DHA properties towards the end of the original term (say 3-4 years left)... had made some very easy equity as the sale prices have been well below market as they were bitches to move (DHA are quite strict about access for prospective buyers). Makes them good to buy but hard to sell... not that I need to... buy and hold.
Click to expand...

Very good point. There have been a couple of DHA townhouses at below market value in the past 12 months.

The high recurring costs such as DHA Fees, body Corp and Land Tax make them look less attractive.
 
Hi All

I have lived in several DHA properties over the years and have owned a DHA property for the past 5 years. After owning and managing my own property in the past (after some terrible managers...) I have nothing but good things to say about DHA.

The management fee is high at 16.5% when you look at the figures in isolation, but when you look at what you get, you will realise that you are not comparing apples with apples when comparing the management fee of DHA properties verses a non-DHA properties. Picture this........

Your tenant realises on a public holiday that the plumbing requires urgent attention. In a 'civi' property the tenant would perhaps call the agent, who would organise the tradesman and send you the bill. In a DHA property the tenant would call a 1800 number that is manned 24/7 by DHA staff who are trained to deal with property repair situations. A tradesman will be sent around to the property and the problem fixed. You will not be billed, as the 16.5% management fee covers situations such as this for the term as the lease. The toughest thing in owning a DHA property is opening the rent statement each month and filing it. That's it. Not calls, no hassles and no paying for locksmiths or plumbers or sparkies to come out and fix things.

A DHA investment is not for everyone and as always do your own research. For me it adds an element of diversification to my investment portfolio that is a simple set and forget investment. I know the property will not be vacant for the term of the lease ( in my case 9 years) and if the tenant ever 'trashes' the property, they will have their Commanding Officer to answer to under the Military Justice System.

I'm happy,

Longshanks.
 
good points... though seeing how DHA properties tend to start off as brand new, the amount of maintenance costs should ideally be fairly low. Noticed 12+3 is common now... so yes... so by end of lease, the maintenance pool fund might have been used.

That said... hard to put a price on peace of mind :cool:

We bought two DHA properties after hearing a good report from a family friend... until I actually have time for non-salary related activities, DHA is my friend :p
 
I too like the idea of having one or 2 DHA houses in my portfolio, when I get a portfolio LOL. There's not that many good ones available at the moment though.
 
Purple Patch said:
Found this article from Terry Ryder.

Regards
Purple Patch

http://www.hotspotting.com.au/index.php?act=viewArticle&productId=66
Click to expand...
That's an interesting article, thanks.

Scott McGeever, who was quoted, has been a forum member.

I suspect that this statenment is slightly out
DHA charges a management fee of 16.5% of the gross rental income. This compares with mainstream property managers who charge 7.5% or 8%.
Click to expand...
The 16.5% includes GST, I suspect that the 7.5% or 8% does not.
 
Much of what that article says is true.... and based on accepted norms of property investment iirc.

Brand new DHA properties command a premium... one which IMHO isn't worth it. Here in the ACT they also tend to be in the new developments where capital growth in the early years are forecasted to be lower than established surrounding suburbs.

This is why I look out for DHA properties that are half way through their lease and have been undervalued in order to sell (limited to investor only buyers). Buying 2nd hand combined with the Canberra rental market makes the yield somewhat better than those low figures the article quoted...5% is easy (i.e. $500/week for $500k property). Capital growth has also started to pick up by then as the suburb has matured with little further development planned other than additional infrastructure.
 
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