Housing Commission for IP?

[Easton]

I'm not sure there's any talk about it - so i'm assuming this is an outrageously bad idea.

But I was just wondering about providing your investment property for the government housing commission, I've been asked to look into it as there is a lot less for you to generally worry about? As your client is essentially the government and not the tenants themselves.

Pardon me if it sounds ridiculous, and I might just be getting bad advice filtered to my ears - but I figured there's no harm in asking and learning from your positive or negative experience.

 

[peastman]

I bought a place in Canberra a few years ago and A.C.T. Housing was the tenant. They had a student living in it. I had no problems, rent was paid on time. The rent was set to cpi and did not keep up with the private rental market, but I purchased the place well below market value, so the numbers still worked. The lease expired about a year ago now, so its now privately rented at over $100PW more than ACT housing were paying.

If the govt leased private properties and used them for public housing, I think it would help a lot of people who are finding it tough at the moment. The owners would get a slightly lower return but gaurenteed and hassle free. The underprivilidged would get somewhere reasonable to live. The govt solves the chronic public housing shortage at an affordable price. Sounds like win win win.

 

[boomtown]

If its leased to the government and they pay whether its vacant or not and also repair any damage - they could rent it to pot smoking martians and I wouldnt care.

The only question is whether the numbers stack up and whether its the "right" type of property for your strategy.

 

[Player]

The bottom two units (in my four pack in Parramatta) are leased to NSW govt for just such purposes.

Peastman makes some good points about public housing and contributing to the pool of somewhere reasonable to live or those who would not be availed such accomodation.

Mine are only slightly under market (re-negotiated recently) and leases are three years. Both of the occupants are on disability benefits. One is OK as a tenant. He is not a martion, but he enjoys the other thing to which boomtown alluded. The other is exceptional.....in fact he is the block's watchman. He doesn't miss a thing. They were inherited as part of the leases when I purchased 18 months ago. No problems to date and the security of long leases is welcome.

So, Easton, I can only report good things to date.

 

[boomtown]

Btw my comments only relate to stand alone IPs where I do not have another investment next door. There is always a risk that the pot smoking Martians could pull down the value of the property next door - which is fine - as long its not your property.

I take it Player that the balance of your tenants do not object to social housing in the same unit block?

P.S. You see a similar effect in CBD apartments where "working girls" bring their clientele back to their workspace. The girls are not so much the problem as their clients who tend knock on the wrong doors at 2 am, sleep in cars in the car park, leave lurid pornographic business cards lying around and engage in other unsocial behaviour.

If you dont have an onsite manager that evicts them quick smart - it can be very damaging to the building's reputation.

 

[Player]

No boomtown. Fortunately, there aren't any objections at all. I have outstanding property managers (God bless Maureen and Bobbie). In fact the four doors there make up quite a nice little community They all get on fine (for now).

It's been a great buy for my portfolio with strong yield and depreciation icing the cake. For the record though, once you've signed up the govt as the tentant, there is very little lee-way to evict their guest unless they pose risk to public safety and the quiet enjoyment of the other tenants.

I could only envisage how loose and fluffy those definitions would be though

 

[fernfurn]

Partner has had a very nice house in a very nice suburb rented to Dept Housing for 4 years, on a 4 year lease. Really good rent tied to % increases. Dept guarantees fix any damages (there has been none, we have a look occasionally and the garden is always smick - a very good indication of the type of tenant) It is rented to a mother and 2 kids and their grandmother