Information and Guidance about the NRAS

[Winnie_W]

NRAS Perth

There are govenment websites in which you can obtain plenty of information in regards to NRAS follow the link:

www.fahcsia.gov.au/sa/housing/progserv/affordability/nras

In true government style the website is as boring as bat .... informative non the less.

As per the fahcsia website the "tax free incentive" is actually paid annually by the Aus Gov $6,855 as a taxable offset. The State or Territory Government contributes by direct payment or other (discount stamp duty, etc) $2,285 giving a total of $9,140 p.a. This amount is indexed to National rental CPI (meaning it rises or falls with CPI) and continues for 10 years.

So to summarise this you have all the benefits of a brand new house inclusive of a 6-7 year structual warranty (depending on which State you are in). You can claim all tax benefits including holding costs and depreciation and in addition you have the NRAS incentive.

If your purchase price is around the mid $300k or less and depending on your combined income there is a good chance the property is positive cashflow, even with discounting the rent at 20%.

In regards to obtaining finance most banks believe their will be a registered interest on the title, this is not the case as a couple of the majors have addressed. All non bank lenders lend to NRAS product.

Don't take my word for it do the due diligence yourself and ask your accountant.

 

[Partha]

Advice please

I am researching NRAS property in Brisbane. A few are available in Bowen Hills near CBD. Developer is Brisbane Housing Company (A QLD GBE).

Typical prices are 1 BR + garage-$369000 and Studio $259000
Management fees: 15.4% incl. GST)

With outgoings such as Interst ( 7%) Starta, Council rates etc. and 80% of the rental return ( NRAS condition),
Net Cash flow for studio is : -$2500 and 1 BR:-$5800
However, if the tax deduction (assuming 30%) on depreciation is taken into account studio apartment will be cash flow positive and 1 BR will be cash flow neutral. It is difficult to get such cash flow with new apartments.
I guess 1 BR will have a better capital appreciation as compared to studio.

Can someone advice,
(a) Wheteher the apartments are overpriced?
(b)What are the risks?

Partha

 

[cuscal]

Another possible advantage of NRAS?

The tenant is getting cheap rent, "and they know this!"

You can raise rent as soon as CPI says you can and the tenant wouldnt want to complain because if they decide to move, they have to find another NRAS property to get their rental discount. And so their choices would be limited compared to regular renters.

Please correct me if i'm wrong but I believe that there are more NRAS eligible tenants out there than NRAS properties available.

This would put the landlord in a favourable position?

 

[Sol9]

NRAS comments

I've read a few threads and yes cuscal, there are many more tenants than there are NRAS properties. I work with the NRAS Scheme and there seems to be some confusion.
Properties cannot be offered or sold for more, just because they're NRAS. If a developer lists a property at a higher price then it will be because of land size or different house specs. Always best to check on this before you compare. Properties are just the same as any other investment property, same process etc except the scheme is added in and there's an extra expense for the owner with the annual consortium fee. Otherwise you have a fantastic investment offering positive cash flow in many situations, based on your taxable income.
Banks use to steer away from NRAS because of the old 'Headlease' model, but now we are dealing less with the 'Headlease' structure with most properties in WA and banks are far more accepting of NRAS properties now they've educated themselves (which they're not known for doing well).
We don't have any problem with financing NRAS properties.
You can opt out of the NRAS scheme at any time or pass it on to another investor if you decide to sell before the 10 yrs is up.
There's a few properties out there that are well priced and definitely a good investment, albeit I have seen a few very small m2 sized properties of which I would stay clear of for both tenant discomfort and CG reasons.
It's a very ethical way of building a healthy investment portfolio with diversification as both the investor and the tenant are benefiting greatly.
Hope that helps.