Heya,
Lots to consider when it comes to financing NRAS properties. I've posted here on my experience on it (I own a few personally, and several of my clients are NRAS investors).
I posted on it earlier here:
http://somersoft.com/forums/showpost.php?p=1189733&postcount=4
Finance:
You really do have to plan for how you seek to get to your goals. NRAS has limitations that can hurt you from achieving those goals.
Shahin touched on valuations. This is a common issue with NRAS and MAY grow over time. Realistically though, most NRAS now are sold OTP. Round 4 requires stock to complete by 30 June 2016 - so if your purchasing now its LIKELY to be existing resales or OTP. Their are some pockets of existing properties, but they are few and far between.
With OTP, you have to put your money down before you do your finances. This means you need a strategy to control valuation risk as much as possible. I prefer to go with operators I've dealt with, thorough DD, and staying WELL away from MOST operators. You may like to have a contingency buffer too, in case vals do fall short. It may be harsh and unfair to say that, but I've met/spoken at length to lots of the big players around the country, and its risky business purchasing OTP from a lot of them (val shortfalls of 70k are not uncommon).
However though, valuations are not your only concern - you can manage this risk. Servicing is the next big issue. You reach your borrowing wall faster if your only receiving 80% of rent. Therefore with the vast majority of lenders, you'll end up borrowing as much as you can quicker than non NRAS properties. There are two lenders who accept NRAS grants in servicing (FirstMac and Adelaide, at 80% LVR), but you REALLY don't want to restrict yourself to 2 lenders, its a recipe for trouble.
Cash out is your next issue - banks won't let you do it (and definitely not in LMI territory). Therefore if your an aggressive 90% lender, who plans on using equity growth to fund your next few purchases, this plan may not work for you.
NRAS itself
Personally, I spent a fair bit of time getting to know the INS and OUTS of NRAS policy from all angles before going in. This was important to break down the usual 'stay away from it' that you'll hear from lots of investors.
Ask yourself what your goal is with the NRAS property(s) and see whether it helps you achieve that. You can get $250k NRAS properties that put $130k+ in your pocket over ten years. If you put that money in a fund and earn a good yield, that number goes up to 160-180k+. In CASH. WIth 0% capital gain.
Some may say that's bad, but i think its brilliant for such a hands off investment, IF you can make it work for you.
A well thought out investing strategy, mapped out finance plan, and dealing with the right operators are keys to success. NRAS can be very powerful and work to achieve certain goals much better than other stock can. Its also likely to be 'recession proof'. They will simple rent out first during high vacancy periods (and low employment), and will make you CASH every year you own them.
Cheers,
Redom