NRAS dead?

[OKFFW]

It seems as though you have some 'savvyness' to be able to determine your strategy, work it through and understand where it will/could get you. Have you thought about your exit strategy (or will these become regular rental properties after the scheme ends for these - sorry haven't investigated NRAS latetly). Congrats on seeing it through and making it work.

Thanks for the kind words.

I have thought about the exit strategy but have not made up my mind as yet. Two options....
1: Keep them as regular rental properties.
2: Sell down entire portfolio over a few years once retired(to reduce tax) and put all proceeds into dividend paying stock index funds.

I really like the idea of the hassle free index fund approx and am leaning toward that. However, it will all depend on what kind of return I can expect at that time from each asset class, what sort of capital I'd be left with after selling what kind of tax implications there would be. Which I choose will be determined after weighing up all that.

 

[VaSSagO]

Hrmm

I have a property under construction which has 2 Round 4 NRAS allocations but doesn't look like it will be completed prior to the 30 June 2014 deadline.

Not worried though, I had included in the O&A that the builder (at my discretion) will purchase the property back off me at the total of the land contract, build contract, interest on associated loans and stamp duty within 60 days if NRAS accreditation is not received for the property.

 

[OKFFW]

That's a nice clause you have there VaSSagO.

 

[Guzz226]

I am not selling stock and have no ties to developers.

I love NRAS, fits me and my strategy like a dream. All my properties valued fine, are in areas I believe are set for growth and because of NRAS are each between 7K and 20K positive cash flow a year. The added cash flow of my 5 incentives is basically what has enabled me to go from 0 IP's to 4 IP's in under 12 months. If I plug every last penny into paying my portfolio off, I can be debt free with 2.4 million dollars of property in 10.7 years, assuming no capital growth.(that's not actually going to happen but it's nice to know it is actually possible!) My strategy is set and forget as a passive investor.

It's not for everyone of course, but it works for me.

I make no claims to being a "savvy investor" though. I really wish I could call myself a "savvy investor" as that would give me a nice warm and fuzzy feeling but it's just too much work I reckon. I'm just someone with a simple strategy that should see me retire at least 20 years before the new pension age. That'll do me.

Similar strategy to my own.

Like to understand more about the properties you purchased - type and location. Whilst there is a lot of inflated, poor choices out there there are some very good options as well. In this respect NRAS has copped a bad rapt as it is no different to other new property investment choices in this respect.

 

[euro73]

Unused funding for previous rounds to be returned to budget.

Yes this is correct, but you should qualify it a little more Like all things NRAS, detail is king. There are still 18,000 Round 4 allocations that have not been delivered, and the funding of those allocations remains in place, provided they are delivered on time or can demonstrated significant progress by their "due by" date. Many of the 18,000 allocations are not required to be delivered in 2014, but are in fact already approved for delayed delivery right into 2015 and 2016 ( the same delivery dates as Round 5 ) so there will in fact still be ample NRAS opportunities to purchase across another 2 years or so.

Finding the ones that value up though.... that's the secret

 

[redwing]

Property Observer has a number of NRAS articles looking at both sides of NRAS

My response to NRAS naysayers: Adrian Jenkins

The NRAS nightmare: It's a housing scheme, not one for investors

NRAS properties in SMSF put under ASIC's spotlight

It seems there's a love it or hate it relationship, with one BA stating he would rather stick a fork in his eye than buy NRAS

 

[Redwood]

Property Observer has a number of NRAS articles looking at both sides of NRAS

My response to NRAS naysayers: Adrian Jenkins

The NRAS nightmare: It's a housing scheme, not one for investors

NRAS properties in SMSF put under ASIC's spotlight

It seems there's a love it or hate it relationship, with one BA stating he would rather stick a fork in his eye than buy NRAS

Thanks Redwing....my theory is there is good NRAS and bad NRAS, and it really depends on the marketing agency commissions as to whether it is good or bad. For many SMSF investors that borrowed to invest, many valuations just did not come in which showed the inflated valuations and ridiculous comm's of the agent, I am fighting for a couple of clients now however, the property had been settled so our options are limited (well sort of) in regards to the person recommending the property. Yes, an unlicensed person reccomending property to a SMSF - thats standard

No issue with 'bye bye NRAS' and not unexpected.

Cheers, Ivan

 

[Guzz226]

Maybe the BA is miffed as it goes against his business model? Ie he doesn't get paid with this approach so is naturally biased against it?

Always back self interest inthe game of life as you know it is trying!

I always consider how people make money in the context of their opinions and attempt to make it a fact based discussion, not emotional.

Lots of NRAS is inflated with cashflow projections that are flawed, outdated and easily found out with basic due diligence.

The exact same thing can be said about non NRAS though.

Ultimately it is buyer beware and do your DD

 

[Redwood]

Ultimately it is buyer beware and do your DD

Correct, couldn't agree more.

Cheers, Ivan

 

[erwinsie]

It's not for everyone of course, but it works for me.
.

im interested to know what kind of investors are not suitable to have NRAS.

 

[OKFFW]

im interested to know what kind of investors are not suitable to have NRAS.

What I meant is that NRAS will not suit everyone's strategy, not that there are specific investors unsuited to having NRAS properties.

Eg: Buying NRAS properties is not the best use of capital if one is employing any of the following strategies;

reno to improve and refinance to access equity,
Large blocks with the intention of sub division,
Development projects

 

[D.T.]

im interested to know what kind of investors are not suitable to have NRAS.

Ones that use common sense?

 

[OKFFW]

Ones that use common sense?

Well it is remarkably common to dismiss something as garbage if you don't understand it or it is something you personally don't like regardless of its merits.

I'm not sure I'd call it good sense though.

 

[MTR]

Here is an interesting article/comments from S McK on this

http://www.propertyinvesting.com/is...0f7772db3b61369ed7fadef90b8d53026ec9abbb813a0

 

[MRivera]

Hi I bought an NRAS property in Ballarat, and the consortium (the mob that handles the incentive) "Ethan affordable housing" have appointed themselves as the property manager.
They do not forward the rent, after 8 weeks not receiving anything I have sent 18 emails, 3 letters and many phone calls, but they do not reply to my emails, and do not get back to me.
I cannot sack they because they are the self appointed NRAS approved manager.
I am in the process of suing them, they are registered as a trust and I could not find out who the trustee was.
In this forum someone said it is Ashley Fenn, some politician.

Conclusion: You will have no control of what others do with your NRAS property, they will throw you around like a rag doll and sh*** all over you because there is nothing you can do and they know it

 

[abbyfresh]

Even if they aren't the property manager, they still get a yearly commission for each property - known as an 'audit fee' or something to that effect so you can still claim it on Tax. So they are getting that and the property management commission? How much does your total property management fees work out for per year?

 

[Redwood]

Hi I bought an NRAS property in Ballarat, and the consortium (the mob that handles the incentive) "Ethan affordable housing" have appointed themselves as the property manager.
They do not forward the rent, after 8 weeks not receiving anything I have sent 18 emails, 3 letters and many phone calls, but they do not reply to my emails, and do not get back to me.
I cannot sack they because they are the self appointed NRAS approved manager.
I am in the process of suing them, they are registered as a trust and I could not find out who the trustee was.
In this forum someone said it is Ashley Fenn, some politician.

Conclusion: You will have no control of what others do with your NRAS property, they will throw you around like a rag doll and sh*** all over you because there is nothing you can do and they know it

That is an awful story, sounds like another one stop show. Even with the clients I have that purchase property with their SMSF I encourage them to look at their own PM to ensure they have an element of control over the transaction. I have never heard from this mob and hope you can get some progress in the next few weeks.

Cheers, Ivan

 

[MRivera]

Even if they aren't the property manager, they still get a yearly commission for each property - known as an 'audit fee' or something to that effect so you can still claim it on Tax. So they are getting that and the property management commission? How much does your total property management fees work out for per year?

The property manager was PRD Ballarat, but since Ethan appoints the "approved" property manager, they appointed themselves and took over.
They charge 11% commision, but they are actually keeping the rent because they do not forward it.

I am considering selling all together or removing the property from NRAS so I can sack them, there is only so much I can put up with in the name of greed (for the NRAS incentive).

 

[euro73]

Try the Department of Social Services NRAS helpline.
Phone: 1800 334 505 (9:00am ? 4:00pm Monday to Friday AEST)
Email: [email protected]

 

[barnet]

This scheme was as successfully as the government that implemented it.

I can't believe developers were able to charge a premium for property with NRAS attached.

I read through the documents on Gov web site and that is even mentioned in one of them. Can't remember exact wording but it said that "higher price can be charged because it becomes attractive to the buyers" something like that.

When Gov gives a hint sellers implemented that really well. Even better than those first home owner grants and boosts. They cashed in majority of the advantage up front.

I talked to few NRAS sellers in 2011 and 12. They were always over priced by 40-60k. So I gave up when I couldn't find any reasonably priced one.

However I just found one which is not inflated much. But now I am in a dilemma to go for it because the Gov web site does not clearly mention what they are going to do with this. It says "NRAS will continue to contribute over $1 billion to housing supply and affordability over the next 4 years until 30 June 2018"

Does this mean even existing NRAS will stop receiving the benefit after another 4 yrs? What about the ones that were sold for very high price by builders following the advice of it's own Gov web site which are not finished construction. Would those buyers will end up with the liability of maintaining a bad investment if they can't stack up on it's own as an investment without NRAS incentives.