sorry you are having this experience. it appears you are not alone.
http://www.themercury.com.au/article/2010/09/26/175111_tasmania-news.html
http://www.comlaw.gov.au/Details/C2008A00121
more details here NRAS.
good luck.
NRAS - is it worth it?
- Thread starter blahblah1961
- Start date
http://www.themercury.com.au/article/2010/09/26/175111_tasmania-news.html
http://www.comlaw.gov.au/Details/C2008A00121
more details here NRAS.
good luck.
I am currently in the process of doing a bit of research into potential NRAS properties and i can certainly understand the major benefits of NRAS and how beneficial a cashflow positive property can be.
I was hoping i could get some info from anyone as to what companies you have used to build/develop with and how your experience has been?
At this stage i am probably looking at using First Mac as the lender so will likely be restricted to the 6 or so developers they have approved which were mentioned earlier in the forum post.
Any help would be much appreciated!
I was hoping i could get some info from anyone as to what companies you have used to build/develop with and how your experience has been?
At this stage i am probably looking at using First Mac as the lender so will likely be restricted to the 6 or so developers they have approved which were mentioned earlier in the forum post.
Any help would be much appreciated!
How do you reconcile the fact that the NRAS realestate is just simple over priced?
I agree the scheme - once understood properly has substantial merit - however once taking in to account the premium attached to NRAS property this eats away at the benefit substantially.
No doubt the premium is attached due to the high sales commission required by agents to sell the property in the first place. I have attended a couple of "seminars" and frankly the agents lacked any level of sophistication and seemed to dismiss this question - relying on people who havent done their homework.
I suspect much of the finance issues relate back to this over pricing too.
So has anyone found any NRAS property that is not being sold with all the hype around the free 9K and just forget about the fact that its 30-50K over valued in the first place?
I like the scheme - just cant get past this problem.
I agree the scheme - once understood properly has substantial merit - however once taking in to account the premium attached to NRAS property this eats away at the benefit substantially.
No doubt the premium is attached due to the high sales commission required by agents to sell the property in the first place. I have attended a couple of "seminars" and frankly the agents lacked any level of sophistication and seemed to dismiss this question - relying on people who havent done their homework.
I suspect much of the finance issues relate back to this over pricing too.
So has anyone found any NRAS property that is not being sold with all the hype around the free 9K and just forget about the fact that its 30-50K over valued in the first place?
I like the scheme - just cant get past this problem.
When paying 30k to 50k more than a comparable property - this is fact in many cases, getting 20% less than market rent, paying higher management and audit fees, to get a 8k pa back from goverment for your efforts - numbers simply do not stack up. The only people to jump into this forum to argue against this are the marketers. Believe me I have researched this in great detail. What are all the happy buyers? Few and far between or don't they hang out in this forum?
Find me a NRAS property priced 40 to 50k less than similar comparable properties, then different story, it may just become a decent deal by the 3 rd year. If not, it is a pretty scheme that can be sold attractively to those less informed who don't always understand the full deal over 10years +.
My advice to anyone looking for a NRAS, don't jump into it until you have undertaken extensive research against what a new build with a local builder will cost you, or even buying a place a couple years old. Speak to your accountant as well and work out your REAL actual out of pocket expenses to hold property and not what they tell you.
Find me a NRAS property priced 40 to 50k less than similar comparable properties, then different story, it may just become a decent deal by the 3 rd year. If not, it is a pretty scheme that can be sold attractively to those less informed who don't always understand the full deal over 10years +.
My advice to anyone looking for a NRAS, don't jump into it until you have undertaken extensive research against what a new build with a local builder will cost you, or even buying a place a couple years old. Speak to your accountant as well and work out your REAL actual out of pocket expenses to hold property and not what they tell you.
Last edited:
As mentioned above, the key as I see it is doing your homework on the property price/value. The finance situation can be a little tricky but still maybe possible >80%.
Many of these properties are sold by marketing companies and they sure know how to over inflate the price/get paid.
Regards
Steve
Many of these properties are sold by marketing companies and they sure know how to over inflate the price/get paid.
Regards
Steve
I have sought and paid for legal advice and have sought advice from QCAT.
The advice so far has cost 9k and interest for two months of 8k. with no reasonable outcome in my view with the lawyers.
The QCAT advice is 50K+ and...... you had better get the best lawyers or the builder will eat you alive.
They knew when I said duplex, QCAT gave me the name of the builder.
They were also able to advise their strategy..... this appears to be standard practice for this builder in my view.
In the Laidley Valley development, a friend of mine's investment property had to have the roof taken off and the fire wall corrected, as the council would not accept the certifiers sign off on it after they inspected it.
Yes... same builder.
All I can say is that I have a letter from the Hon Tony Burke MP and he is sympathetic but you are on your own.
It is a government initiative that is not government supported is my experience.
Be ready to defend your NRAS investment or accept what ever you have been given.
The contract was not worth the paper it was written on in my view.
I did not get what I paid for.
I am not happy with the NRAS or the governments pathetic response.
They don't explain that you are on your own with a well funded builder that has strategies ready to take you on.
They know exectly what they can get away with in my view.
Not only is the price over inflated but they take 30-50k of value out of your contract.
It will take the next ten years to break even in my view.
You wont find this information in the governments investment brochure though... so be aware.
Be very aware!
As the builder explained to me.... it's only an investment property, you have a roof and a fire wall so get over it.
Cheers
The advice so far has cost 9k and interest for two months of 8k. with no reasonable outcome in my view with the lawyers.
The QCAT advice is 50K+ and...... you had better get the best lawyers or the builder will eat you alive.
They knew when I said duplex, QCAT gave me the name of the builder.
They were also able to advise their strategy..... this appears to be standard practice for this builder in my view.
In the Laidley Valley development, a friend of mine's investment property had to have the roof taken off and the fire wall corrected, as the council would not accept the certifiers sign off on it after they inspected it.
Yes... same builder.
All I can say is that I have a letter from the Hon Tony Burke MP and he is sympathetic but you are on your own.
It is a government initiative that is not government supported is my experience.
Be ready to defend your NRAS investment or accept what ever you have been given.
The contract was not worth the paper it was written on in my view.
I did not get what I paid for.
I am not happy with the NRAS or the governments pathetic response.
They don't explain that you are on your own with a well funded builder that has strategies ready to take you on.
They know exectly what they can get away with in my view.
Not only is the price over inflated but they take 30-50k of value out of your contract.
It will take the next ten years to break even in my view.
You wont find this information in the governments investment brochure though... so be aware.
Be very aware!
As the builder explained to me.... it's only an investment property, you have a roof and a fire wall so get over it.
Cheers
nras builder
Just stumbled across this forum. Interesting comments about nras builder. I'm a first time investor who thought the nras scheme looked good. These are my issues:
1. I chose a colour scheme with a light coloured roof because I thought that would be best in Queensland but the builder put a black one on.
2. The roofline was changed from the plans I was given.
3. The house took what I thought was an unbelievably long time to build, start date 15 March, handover inspection was set for 26 September but there were 18 uncompleted items according to the building inspection report I had done.
4. By the date of the 2nd inspection (which I was paying extra for) 3 items were still not completed.
5. 2 blocks along the street from my nras house is another one which is the same house - same floorplan but different roofline. My house was valued at $240 a week nras rent but the other one was valued at $255! They are both available for rent now so I see no reason for the difference. The explanation given by the valuer was that mine was valued in May and the other one in July when "there was a spike in local demand" even though they are the only 2 3 bed houses in the whole estate. QAHC say "nras has to be seen to be fair so they can't order another valuation." ??!!
Being a first timer I'm not sure where to go for help with any of these issues?
Just stumbled across this forum. Interesting comments about nras builder. I'm a first time investor who thought the nras scheme looked good. These are my issues:
1. I chose a colour scheme with a light coloured roof because I thought that would be best in Queensland but the builder put a black one on.
2. The roofline was changed from the plans I was given.
3. The house took what I thought was an unbelievably long time to build, start date 15 March, handover inspection was set for 26 September but there were 18 uncompleted items according to the building inspection report I had done.
4. By the date of the 2nd inspection (which I was paying extra for) 3 items were still not completed.
5. 2 blocks along the street from my nras house is another one which is the same house - same floorplan but different roofline. My house was valued at $240 a week nras rent but the other one was valued at $255! They are both available for rent now so I see no reason for the difference. The explanation given by the valuer was that mine was valued in May and the other one in July when "there was a spike in local demand" even though they are the only 2 3 bed houses in the whole estate. QAHC say "nras has to be seen to be fair so they can't order another valuation." ??!!
Being a first timer I'm not sure where to go for help with any of these issues?
First time mum and dad type investors should not be expected to be building inspectors in this process. The whole thing from top to tail should be certified, and audited at every level. If government backed with tax payers money in the equation, then everything needs to be above board -and if not it brings up many questions.
Any build, time or cost blowouts or issues to sort out - outside original deal should not be at the expense of the investor. This ain't turn key investing - but rather a much more riskier process than a straight independant build.
I suggest if you can't sort out these issues at your current level, you will need to go to the higher government, building industry & administrator levels. If they don't want to deal with you, then it is a quasi government back scheme that doesn't share full responsiblity and liabilty in accordance with what it is meant to be preaching.
Any build, time or cost blowouts or issues to sort out - outside original deal should not be at the expense of the investor. This ain't turn key investing - but rather a much more riskier process than a straight independant build.
I suggest if you can't sort out these issues at your current level, you will need to go to the higher government, building industry & administrator levels. If they don't want to deal with you, then it is a quasi government back scheme that doesn't share full responsiblity and liabilty in accordance with what it is meant to be preaching.
AS much as I dont like NRAS, the gov depts have ZERO to do with the construction process .......thats squarely an investor and allied adviser issue
By all means, get into it with the construction authorities, but the NRAS folk per se have no role to play ?
ta
rolf
thats why banks do valuations. If its 50K over what a valuation professional says its worth when a bank commissions them to undertake a valuation, dont go ahead. Plenty of NRAS properties are valuing at or very near to the contract price though, so "overpriced" NRAS property isnt a given. It's actually a very unfair distinction to make. Remember, in almost all cases, properties being sold with an NRAS entitlement are part of a wider development where most the properties are not approved for NRAS. Thats because only 30% concentration levels are allowed for NRAS, with some exceptions for unit developments with less than 50 in the development. It's one of the core criterion for NRAS. But where houses are concerned, 30% NRAS concentration is the maximum, and you'll find that the actual NRAS concentration is less than half of that in most cases. The majority of NRAS properties sit within developments where they make up 10-15% concentration. So, if the NRAS property is valuing poorly, so are all the other, identical, non NRAS properties within the development. In other words, the development may well be overpriced, but it has NOTHING to do with NRAS.
Hi Euro
General feeling we are getting from valuers is a close comparison to commission stuff.........: (
I know thats neither the intent, nor the on the ground reality, but thats the general gist that some valuers OPINIONS are.
ta
rolf
General feeling we are getting from valuers is a close comparison to commission stuff.........: (
I know thats neither the intent, nor the on the ground reality, but thats the general gist that some valuers OPINIONS are.
ta
rolf
Unfortunately when you buy from marketers who are being paid 30K or more to sell developers property ( they dont just sell NRAS) and most of it is in Queensland, where valuations are already coming down on non NRAS, new property, existing property, all property basically- you will see a lot of valuations coming in 30-40K under the contract price.
The cause? two things - valuers being aware of the marketing fee and comparing it to a standard REIQ commission of 3%, and then stripping out the difference. AND oversupply in the SE Qld corridor, seeing ALL properties values falling downwards. The Gold Coast and the corridor in to Ipswich in particular, is being hit hard.
If a 400K property was being sold by a brand name agent, they'd get a 3% comm- 12K. A marketer sells it for a 30K comm. The valuer will strip 18K out right away. Then they'll take another 2 or 3% off because QLD prices are falling.
Remember, a bank valuation is prepared on the basis of a 90 day emergency sale - ie the bank asks the valuer to tell them what they could get for it in the event of a repossession and if they HAVE TO sell it within 90 days. So in a flat or falling market like SE Qld, valuers go into a shell. The have PI cover to protect!
Those two factors are why NRAS ( but importantly, non NRAS also) properties are valuing so inconsistently in SE Qld. I suspect that even if marketers were getting REIQ comms, you'd still be seeing valuations in SE Qld coming in 10-15K under anyway.
My advice- look at areas away from SE Qld -valuations will be less of an issue. Plenty of Far North Qld NRAS stuff around Townsville thats valuing at or close to the contract price. Plenty of Victorian and WA, and NT NRAS property valuing well, also. And another 20+ thousand NRAS allocations have just been announced for the final round- Round 4. About 5 thousand more in NSW... I would expect they'll be a couple of years away from being sold though - at least.
Marketing fee of 30-35K minus REIQ standard commission of 3% usually equates to something around the 15-20K mark. Add another 10-15K (sometimes worse) because valuers see SE Qld as volatile... and there's your valuation shortfall.
In a nutshell, probably 60% of the valuation shortfall is due to marketers fees, and 40% is due to the soft market.
Marketers have been around for 20 years and were charging these fees when the market was buoyant, without any problem, because valuers were happy to value strongly when SE Qld was appreciating 10-15% a year during the last decade. Valuers only seem to be picky now that the market is soft - and I guess thats fair enough.
Marketers seem to be the only people in this chain that havent taken a haircut since the GFC. Brokers and real estate agents have to do more with less... if marketers would take 10-15K less, there would be far fewer issues all round.
Its funny - theres an NRAS consortium in VIC called Ethan Affordable Housing, with lots of properties in the low 300's. They have a 4% marketing fee cap on their stock- and most marketers refuse to sell it. It values really well. It is all in good regional locations like Ballarat, Bendigo, Geelong - marketers basically wont touch it because they cant get 30-35K out of the sale.
So as Ive said- Id be looking outside SEQld if I was interested in NRAS.
Speaking of NRAS property outside SEQld- Providence Housing is a Victorian based NRAS consortium who have just secured 1700 NRAS allocations for Off The Plan units in and around Melbourne.
Off The Plan may or may not be your thing , but several lenders have just approved their model, including Westpac, St George and Firstmac, so there a three good options available - and keep in mind that Firstmac also offers 18 month Off The Plan loan approvals - and they use the NRAS tax incentives for servicing.
If valuations in SE Qld are causing issues for NRAS investors, maybe its time to look at some other parts of Australia ? For anyone looking for something outside Qld, they may be worth a look, as may Ethan Affordable Housing ( also approved by Westpac, St G and Firstmac , plus NAB )
Off The Plan may or may not be your thing , but several lenders have just approved their model, including Westpac, St George and Firstmac, so there a three good options available - and keep in mind that Firstmac also offers 18 month Off The Plan loan approvals - and they use the NRAS tax incentives for servicing.
If valuations in SE Qld are causing issues for NRAS investors, maybe its time to look at some other parts of Australia ? For anyone looking for something outside Qld, they may be worth a look, as may Ethan Affordable Housing ( also approved by Westpac, St G and Firstmac , plus NAB )
You are correct about the over-inflated price. I am trying to sell mine ... and agents are simply walking away and laughing at me. They advise it may well take ten years to get your money back.
If you also take into account that I had my NRAS investment property built..... and 30-50K of value taken from my inestment as detailed below:
1**The builder*did not build*in accordance with the *contracted plans.*
2*The builder*did not build*in accordance with the *approved plans (held by council).
3* The builder built in accordance with the not approved plans without my knowledge.
4*No variations.
The builder did not get any variations for the following:
Example 1: *Black*colourbond roof and not a light coloured tiled roof (as per my contract).
Example2:**Separation wall*is a CSR 502 not an "interhome" separation wall (as per my contract).
Example3: *One electrical meter box not two (as per my contract plans).
Example4:* Pine frames and trusses instead of steel (as per my approved plans held by council).*
CERTIFICATION
The building certifiers did not*certify my NRAS investment property*in accordance with the contract plans.
The building certifiers did not certify my NRAS investment property in accordance with*
the approved plans (held by council).
The building certifiers certified my NRAS investment property in accordance with the not approved plans without my knowledge.
All*attempts by me (including lawyers - 7k plus 8k in intrest)to have these issues resolved have failed.
The Hon Tony Burke MP is "sympathetic" (contact me if you want a copy of the letter) but refuses to support his NRAS investors... you are on your own.
Don't forget the fees.... the head lease, the 25% below market rent, holding the land and loan for 12 months while you build, the progress payments, lawyers.... an the end result that is less than stated in your contract... plus 5 sets of plans... I got the last set of plans nearly a month after my property was rented. NRAS stinks in my view.
I wish I had never been told about the NRAS - it delivers far less than it promises is my experience.
Cheers
If you also take into account that I had my NRAS investment property built..... and 30-50K of value taken from my inestment as detailed below:
1**The builder*did not build*in accordance with the *contracted plans.*
2*The builder*did not build*in accordance with the *approved plans (held by council).
3* The builder built in accordance with the not approved plans without my knowledge.
4*No variations.
The builder did not get any variations for the following:
Example 1: *Black*colourbond roof and not a light coloured tiled roof (as per my contract).
Example2:**Separation wall*is a CSR 502 not an "interhome" separation wall (as per my contract).
Example3: *One electrical meter box not two (as per my contract plans).
Example4:* Pine frames and trusses instead of steel (as per my approved plans held by council).*
CERTIFICATION
The building certifiers did not*certify my NRAS investment property*in accordance with the contract plans.
The building certifiers did not certify my NRAS investment property in accordance with*
the approved plans (held by council).
The building certifiers certified my NRAS investment property in accordance with the not approved plans without my knowledge.
All*attempts by me (including lawyers - 7k plus 8k in intrest)to have these issues resolved have failed.
The Hon Tony Burke MP is "sympathetic" (contact me if you want a copy of the letter) but refuses to support his NRAS investors... you are on your own.
Don't forget the fees.... the head lease, the 25% below market rent, holding the land and loan for 12 months while you build, the progress payments, lawyers.... an the end result that is less than stated in your contract... plus 5 sets of plans... I got the last set of plans nearly a month after my property was rented. NRAS stinks in my view.
I wish I had never been told about the NRAS - it delivers far less than it promises is my experience.
Cheers
Rolf.....
Your correct in that they don't actually get involved in the construction.... clearly their are good and bad builders and you don't expect that an approved builder would take 30-50K from your contract without your knowledge as is my experience.
This is a government inituative but it is not government supported.... but what the government does claim is this:
"Rigorous selection criteria are applied by the Australian Government to the location, design and amenity of NRAS dwellings to ensure quality properties are built to the highest standards and comply with State, Territory and Local Government planning and building codes and requirements."
However ... my NRAS investment property has a fire wall that was installed by a carpenter as stated on the form 16 - not installed by a licenced installer and not inspected by the certifier.
The NRAS incentive is not the only consideration when the approved builder devalues the property has been my experience by 30-50K
Cheers
Your correct in that they don't actually get involved in the construction.... clearly their are good and bad builders and you don't expect that an approved builder would take 30-50K from your contract without your knowledge as is my experience.
This is a government inituative but it is not government supported.... but what the government does claim is this:
"Rigorous selection criteria are applied by the Australian Government to the location, design and amenity of NRAS dwellings to ensure quality properties are built to the highest standards and comply with State, Territory and Local Government planning and building codes and requirements."
However ... my NRAS investment property has a fire wall that was installed by a carpenter as stated on the form 16 - not installed by a licenced installer and not inspected by the certifier.
The NRAS incentive is not the only consideration when the approved builder devalues the property has been my experience by 30-50K
Cheers
As I keep saying, where are all the post purchase success stories coming from actual buyers? They are few and far between.
For this to be brilliant we need to read a host of raving investors that have bought a NRAS, backed by actual figures outlining why its has been brilliant.
Might need a few more years for such stories to come out.
For this to be brilliant we need to read a host of raving investors that have bought a NRAS, backed by actual figures outlining why its has been brilliant.
Might need a few more years for such stories to come out.
