Nras #2

I've just recently heard of this and i'm really curious to know more about it....i'm hoping that it's more than just some government subsidy based on a tax advantage that's only realised later on.

I'm interested, but want to know more details...
 
NRAS Manager control?

How much control does the NRAS manager have over the property as opposed to the owner under say an Aspire managed property?
 
The big 4 bands will not finance NRAS projects:

http://www.theage.com.au/business/property/bank-blacklist-puts-floor-under-risk-20110911-1k455.html

This does a lot. IMO - if borrower defaults in short term, I believe the banks believe they will take a higher loss if there is a fire sale on open market again as it is a narrow type investment that doesn't suit all, and comes with a whole string of limitations if running it under the scheme.

When one buys generally if you can't get the thumbs up from the big 4 (even if their loan rate isn't the best), it does make it more speculative.
 
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Pretty tough finding funding for sub 50m2 studios at the best of times, but when you add NRAS - really tough.

Brisbane Housing Company operates a Head Lease Agreement and only Westpac, STG and RAMS lend against their model, as far as I'm aware.
(Although maaaaaaaaybe you can get NAB to take a look)

If the studio's you are referring to are in the Newstead development, I think they're well under 50m2, maybe down around 40m2, so you're probably going to have a pretty tough time with finance (but you would have a really tough time anyway, even if they didn't have NRAS allocations)

If that's the stock you are in fact referring to - those studio's have been on the market for quite some time- maybe about a year? It's probably fair to assume that's because finance isn't very easy to find for them.

Best bet is probably STG, who do NRAS and will consider sub 50m2 up to 65-70%LVR. But I'd be surprised if they hadn't already reached their maximum exposure inside that development, seeing as there are 19 or 20 of them there which are sub 50m2 and NRAS, and they've been around a year or thereabouts.

As I said earlier, NAB may also be an option, as they're apparently adding a couple of NRAS consortiums to their approved list this week (there will be 4 now, but I dont believe BHC is amongst them- I think its QAHC, Questus, Ethan and AMC) and they "may" look at it for you at 65-70%LVR, as they do sometimes take sub 50m2 stock. Worth asking them at least.

Westpac is out. Rams is out. Firstmac is out. Although all three might be willing to do a one off at a 60ish LVR.
Hi euro 73,
You seem tobe an authority on NRAS. I am considering buying a 1 br apt. In their Bowen Hill development. Are the prices RE agents quote negotiable like non NRAS properties? BHC being a non profit organization, is it correct to assume that they use a registered valued to determine market value? is there any regulatory contnrol for pricing of NRAs?
 
Hi

AbbyFresh, from reading some of these posts and talking to my broker yesterday, NAB and Westpac do have policies in place for NRAS with CBA and ANZ looking into it.

I got in on my first NRAS deal in Mackay yesterday which apparently was gone in 3hrs! http://nrasrealestate.com.au/index....0&ad_headline=NRAS Mackay&category=Queensland

Now I'm looking to finance and will be helping my broker come up with a list of possible banks using the post here, thanks guys! It's an Aspire scheme property and I have a 20% deposit. I'd like to know, with some of these other options, what sort of rates do they offer? Are professional package and basic loan discounts available for NRAS? I see FirstMac offers 7.2% for NRAS which is a bit higher than I'd get for a regular big 4 loan, is this the best I'll get?

thanks
Stephen
 
The big 4 bands will not finance NRAS projects:

http://www.theage.com.au/business/property/bank-blacklist-puts-floor-under-risk-20110911-1k455.html

This does a lot. IMO - if borrower defaults in short term, I believe the banks believe they will take a higher loss if there is a fire sale on open market again as it is a narrow type investment that doesn't suit all, and comes with a whole string of limitations if running it under the scheme.

When one buys generally if you can't get the thumbs up from the big 4 (even if their loan rate isn't the best), it does make it more speculative.

Hi abbyfresh- this has been addressed several times. The article is wrong. At least 2 years out of date. Westpac, NAB, STG, Rams and Firstmac will lend for NRAS. A few others will lend on a case by case basis. There is a huge amount of information about the lending options throughout this thread.
 
Hey Guys'

Its not the finance thats a problem.....

Its the fact that once you pay the premium....

You still don't get what you paid for if you buy of the plan.

To buy already built means that you don't have to pay intrest on the land while the builder stuffs arround for the next 13months.

My builder started on the 17th of August 2010 and I took control two weeks ago.

You don't have to pay intrest on progress payments.

Don't have to pay handovers.com etc

20k in intrest alone from the average builer.

Cheers
 
Hey Newbyinvestor,
I thought the price was a little high as well but that the gov incentive would more than compensate.... what I got caught with was the NRAS approved builder... they substituted inferior products then that stated on my contract and I lost between 30-50k in my vew.
If you were considering building be very aware of what you are actually going to get from your NRAS approved builder as the contract means nothing... at least thats my experience.

Cheers
 
90% lvr

Hi,

Sorry about the delayed reply. I was in Toowoomba over the weekend - which I was surprised to see in the latest edition of the Australian Property Investor... interesting - but for another thread eh?

I have too just re-read the entire thread. EURO73 is definitely on the money and I am sorry if this is a repeat of anything you have said Euro. Despite some of the vitriolic posts you have received back you have obviously done this before also.

I have found that if I supply this below list to a broker, they can make it work. Can I also not take the credit for this. This was a list supplied to me by my brother who is a developer in Central Queensland.;

Accelerated Wealth Systems ( Quantum) Firstmac. 80% LVR without LMI. They use 65% Gross Rental for servicing and they DO use 100% of the NRAS incentive as tax free income for servicing. They have the best borrowing capacity by far. for NRAS.

QAHC - Head Lease Agreement Westpac, St G and Rams, 70% LVR without LMI, 85% with LML They use 65% of Gross Rental Income for servicing, They do NOT use the NRAS incentive for servicing, Firstmac, 80% LVR without LML They use 65% Gross Rental for servicing and they DO use 100% of the NRAS incentive as tax free income for serviCing. They have the best borrowing capacity by far, for NRAS.

Affordable Management Corporation Firstmac. 80% LVR without LMI. They use 65% Gross Rental for servicing and they DO use 100% of the NRAS incentive as tax free income for servicing. They have the best borrowing capacity by far. for NRAS.

Bendigo Adelaide - 80% LVR without LMI. They use 65% Gross Rental for servicing and they do NOT use the NRAS incentive for servicing.

Questus - Non Entity Joint Venture via Managed Investment Scheme. Westpac, St G and Rams, 70% LVR without LMI, 85% with LML They use 65% of Gross Rental Income for servicing, They do NOT use the NRAS incentive for servicing,

Firstmac. 80% LVR without LMI. They use 65% Gross Rental for servicing and they DO use 100% of the NRAS incentive
as tax free income for servicing. They have the best borrowing capacity by far. for NRAS.

Aspire - Non Entity Joint Venture Westpac. St G and Rams. 70% LVR without LMI. 85% with LMI. They use 65% of Gross Rental Income for servicing. They do NOT use the NRAS incentive for servicing. Firstmac. 80% LVR without LMI. They use 65% Gross Rental for servicing and they DO use 100% of the NRAS incentive as tax free income for servicing. They have the best borrowing capacity by far. for NRAS

Yarran Group - Non Entity Joint Venture. Westpac.StGandRams. 70% LVR without LMI. 85% with LMI. They use 65% of Gross Rental Income for servicing. They do NOT use the NRAS incentive for servicing.

UAHA - Non Entity Joint Venture Firstmac. 80% LVR without LMI. They use 65% Gross Rental for servicing and they DO use 100% of the NRAS incentive as tax free income for servicing. They have the best borrowing capacity by far, for NRAS.

Ethan Affordable Housing - Non Entity Joint Venture Firstmac. 80% LVR without LMI. They use 65% Gross Rental for servicing and they DO use 100% of the NRAS incentive as tax free income for servicing. They have the best borrowing capacity by far, for NRAS.

Happy Hunting,
CP

P.S. - do I need a signature? - they just seem to get in the way of the post. Perhaps if I had something insightful or witty to say...?


Does any finance company offer 90% LVR for NRAS?
 
For all the non head lease models- Westpac , St George and RAMS offer 90%. For head lease models (QAHC, Providence and Brisbane Housing Company) they offer 85%.
Firstmac offers 80% across the board
NAB offers 75% across the board

There are a couple of other "randoms" out there where you might get lucky once in a while but the lenders above are the real deal for NRAS - or you could get 90% anywhere you like if you do what most people "appear" to be doing and go down the non disclosure road. This is "technically" possible because NRAS is not part of the title, and is almost never mentioned on the contract of sale, so I suppose you could fool the bank if you were inclined to do so, and their valuer didnt pick up on it.

** I make this comment simply because there have been @ 5,000 NRAS properties that have actually been delivered, and several thousand others under construction- and unless they were bought with cash, they would have needed finance. The banks named above have only funded about 1500 loans for NRAS combined, so some quick arithmetic might cause one to wonder where/how and by whom all the other properties got financed if NRAS was disclosed, as it should be? I also make the comment because I have read emails from several marketers and consortiums and brokers where the practice of non disclosure is not just mentioned, but encouraged.

Slippery slippery slope. Very slippery. Not for them though. They arent the people whose loans may be called in, properties repossessed and credit ratings savaged, if (and when) the banks figure out whats happening and conduct an audit. The thing is - no need for anyone to be deceptive when the lenders listed above offer a perfectly good product for NRAS. All very strange, really.
 
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Max. rent income before NRAS is not worth it ?

Hi there,

The NRAS approved property I am purchasing (H+L package) is in Gladstone. The market rents are climbing much faster than the Qld avg there due to the Coal Seam Gas boom in the Surat Basin area.

There is obviously a rental income amount above which it makes no sense to keep the property under the NRAS scheme because the rent you forego is not made up for with the Government's ~$10K tax offset. Has anybody worked that out yet for their NRAS property ?

My manual calcs for my specific situation resulted in a market rental threshold of $1077 per week, above which one would be financially better off without NRAS.
I used the example here as a start and substituted my specific numbers. I also added in the QAHC consortium fees of $57pm.

My after tax cash flow will be about +$50pw.

Any comments are welcome.
 
Firstmac are only doing 80% aren't they? If you want 90% then I suggest that including the gov't rebate for servicing will be a no go. If not needed then 90% is most likely possible.

Firstmac does allow a few dozen select brokers to do NRAS deals now, FYI
 
Yes I can see what you are saying, we were thinking of using the boost money from the QLD government for that but was told that many of the properties up there are over what we could afford. >$320k and that the vals for the properties are well under. We can rearrange out budget to a large degree so that we pay many of our monthly expenses yearly after July so that gives us an extra $800 a month but would like a few hundred more.

Victoria has got some lower entry level prices but Stamp Duty there is so much more. Is it possible to capitalise stamp duty or do you have to take it out of your equity or savings. We only have $8k in savings?

Look at NRAS house and land in VIC- settle on the land first so stamp duty is cheaper. You will be really stretching yourself if you go for a property in Qld. They're dearer, they're valuing badly and the 10K boost wont change that Im afraid.
 
Sorry not being a Queenslander I didn't realise that the Boost was in addition to the NRAS incentives. And yes your right, it is paid on settlement.

It's paid after the slab goes down. Not when the land settles. OSR website will confirm that :)
 
It's paid after the slab goes down. Not when the land settles. OSR website will confirm that :)

Hi guys, have their been any agreement in this thread, that NRAS isn't all that its made out to be with the mark up on NRAS property and the consortium fees, as well as the higher interest rates for an NRAS loan?
 
no its buyer beware, as always.

paying too much in this market for a product?

there is so much choice at present.

only you can decide.
 
Hi guys, have their been any agreement in this thread, that NRAS isn't all that its made out to be with the mark up on NRAS property and the consortium fees, as well as the higher interest rates for an NRAS loan?

Qi?

What 'higher interest rates' for loan to buy a property under the NRAS scheme?

A loan is a loan. There is no such thing as 'higher interest rates' - a residential property under the NRAS scheme is not a commercial property - not sure where you have got this information from that you will be charged a higher rate

Cheers
 
Qi?

What 'higher interest rates' for loan to buy a property under the NRAS scheme?

A loan is a loan. There is no such thing as 'higher interest rates' - a residential property under the NRAS scheme is not a commercial property - not sure where you have got this information from that you will be charged a higher rate

Cheers

Kristine is correct. I would have hoped by now that these forums would have demystified so many of these myths and untruths about NRAS. NRAS is simply a scheme. Its not a part of the property. Properties eligible for NRAS are standard properties, built in the same styles, streets and postcodes, by the same developers building properties that are not eligible for NRAS. NRAS is not on the title. NRAS is not a different roof colour or a different sized bathroom. The price/valuation issues some NRAS approved stock is experiencing is not peculiar to NRAS. It is peculiar to all new development stock and the marketing fees paid to the property marketers selling it. If LJ Hooker was selling this stuff instead or marketers, and the standard 3% commissions were being paid, you'd have far fewer problems. You'd probably still be seeing slight undervaluing simply because the SEQld market is falling, but the moral of the story is simple- if you dont buy NRAS in SeQld, you are going to find little or no issue with valuations. Look at Far North Qld or in other states. Values are much closer to the mark there.

PS - every NRAS loan in the market is under 7%.
 
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