Nras

I signed up to buy an NRAS property in Chinchilla QLD. All was looking good until it came time get finance. Contract collasped as none of the major banks or credit unions would touch it.
Have now signed a contract on a non NRAS property in Kingaroy.
Would be interested to hear from anyone that has been able to get finance on an NRAS property as I still think the concept is sound.
As I understand it, their is a clause in the contract that the banks dont like that would make it difficult for them to repossess in the event of default.
 
buying an already approved NRAS property is a different story to buying a property then being assigned an NRAS allocation.

cart before the horse.
 
I now agree with the lender situation. We have approached a few, most say 'not at the moment', two look likely to come onboard but yet to hear a 'yes' and what (if any) the special conditions are. I do expect they'll only do 80%, which may hurt us a little. Otherwise I think the scheme stands up well, just wish the fed govt would get behind it a lot more, stop any dodgy operators, and give the lenders some confidence otherwise it may never take off as designed, and may slide into unattractive housing commission target audience

re not getting the rebate - we've looked into that, and its all part of the contract between the lender, PM and yourself. The contract we're looking at says the rebate goes direct to us from the ATO, not via the PM in any way, so they're out of the loop. I guess each person needs to look into thier contract in detail WRT this
 
saab463 said:
Whattha?????
The property was NRAS approved.
Click to expand...

exactly. the property wasn't a bare property, it was an NRAS approved property.

different kettle of fish to a developer selling regular property then having 20 or so allocations up their sleeve to assign after finance approval.
 
Blue Card! said:
then having 20 or so allocations up their sleeve to assign after finance approval.
Click to expand...


Its that bit where the issue may lie.

1. By entering into such a transaction, and knowingly having a material change to the security, one could (?) be in breach of your mortgage loan contracts.

2. More to the point, once the property is in the NRAS allocation, and assuming that the property value increases, and say in 4 years time you want to take out 100 k to leapfrog to the next deal, I reckon you might have an issue if todays lender approach continues. Its that bit that may slow ur investing progress real quick. This is why I believe this product is best suited to a SMSF, or an investor whose investment horizon is within the next 7 to 10 years

3. From my discussion with the risk areas of various lenders, they see this asset the same as any forced pool rental or specific investor use only product. They are concerned that in the case of default the product has a limited resale market.

Its the same chicken and the egg problem we have with say small studios. They can be a good investment, but dont suit the majority of investors, because its hard to get decent LVRs on them.


ta
rolf
 
but it's not a material change to the security. you can give up your NRAS the second a "80% lease" lapses.

it's not stuck across the property for 10 years.

it's lease dependant, not property dependant. like i said, it's not quasi state housing.
 
Hiya

BC

If thats the case the gov and the promoters of the Scheme better get around to letting the lenders know that....................otherwise this puppy wont get off the ground long term

As I said, I believe there is a fear factor of the unknown still out there, and it will possibly improve, I dont expect the mortgage insurers to budge in the current environment though.


ta
rolf
 
Rolf Latham said:
Hiya

BC

If thats the case the gov and the promoters of the Scheme better get around to letting the lenders know that....................otherwise this puppy wont get off the ground long term

As I said, I believe there is a fear factor of the unknown still out there, and it will possibly improve, I dont expect the mortgage insurers to budge in the current environment though.


ta
rolf
Click to expand...

this was the point behind the Aussie Govt "not enforcing" the scheme - the second they do, it becomes quasi state housing that is property based, not lease by lease based.

it's incentive, not policy.
 
Mmm... I am just starting to look into an NRAS property myself. Seems that 10% + fees is enough to get going. Am I hearing that ppl have been knocked back in such circumstances???
 
great link Tuppence and highlights why you can't just go out there and apply for an allocation.

the developer of new stock gets a number of allocations per development, OR they get "x" number per year and divide it up as they see fit.

and buying off said developer blah blah blah...

this is the way it's been explained to me, and is certainly what i'm witnessing here sitting opposite the hallway looking through glass partitioning....

from the age link.
While the scheme is not directly available to small investors, there are 13 organisations such as West Australian funds manager Questus and Queensland Affordable Housing Consortium with NRAS licences that have been signing on mum-and-dad investors to buy new rental accommodation.
Click to expand...
 
okay - from the horses mouth.

Banks are not lending to NRAS schemes - in particular - CommBank are ACTIVELY RINGING developers and asking if "x" property is NRAS.

There are legal ways around this and they're being tested now. Your best bet to get into an NRAS property is to use someone who specifically markets NRAS - they will understand the ins and outs and apparently the Aussie Govt is trying to close this gap.*

As mentioned, offering to purchase an already approved NRAS property will see you with a finance decline, unless you have a larger deposit (60% LVR in most cases that accept this) or through SMSF with their associated cash buffers etc.

St George kicked it off by questioning their ability to evict a tenant under a foreclosure - there's no terms in NRAS contracts that specifically state what happens. Sort of no different to a 3 year mining lease in Karratha, honestly.

the simple fix - as stated from an "insider" - is to leave it off the contract for sale. how nervous that makes investors though, is another matter.

* but as for Ruddy - the only way i can see the gubment fixing this is to physically put up an extra 20% deposit worth of finance in the short term, otherwise they're just toothless tigers - all noise no action.

so there are ways to do it, just not through the contract for sale. i don't see it as dodgy because how you tenant your property is your business.
 
Hiya BC

Id think hard about leaving out such core information where the borrower knows this has a material effect on the app being approved..............it could be considered as close to the wind.

A 3 year GEHA or a 12 year DHA lease is a diff beast, since its usually entered as a encumberance on title, and the new buyer ends up with whats seen as an "asset", vs an unknown outcome with a lower than market rent, with a potentially difficlut tennant, and an unknown benefit for that risk.

U are right, the issues need to be resolved at a gov level.

ta
rolf
 
yeah i think we're splitting hairs here. i'm always the opportunist - if there's no legislation saying you CAN'T do it - then i do it until there is such that says you physically can't.

and i think that's pretty evident here :)
 
Some would say that hair is a telegraph pole as far as disclosure goes, but as I have always said, needs to come down to the borrower.

ta
rolf
 
Question for you if I may BC (and everyone else)... please correct me if I'm wrong but I'm still trying to figure out a few things.

I'm finding some of the developers (not saying you/your firm)

*have different setups on how they manage the property as well as terms and conditions (i.e. there isnt a uniform standard per se);
*then some have and dont have NRAS approval for "X" number of properties or you have to apply for it and the contracts are subject to nras approval, finance etc

I went to a seminar last week for NRAS - the developer was signing people up on blocks of land subject to nras approval, then they had a builder who built the property. Had a financial planner pushing it as well

These were for some properties around Loganlea qld - around 400k a pop.

Now the feel I got for it was that the sentiment would be if NRAS wasnt approved, you could still continue and buy it on a normal rental property basis. Which then for me begs the question would you spend 400k in loganlea if NRAS wasnt around.

But it seemed that there seems to be developers who use NRAS as a sales pitch to sell their house and then you have licenced NRAS developers?

Would that be right?
 
Hi we are new to this, but recently went through with building ( due for completion around April) an NRAS IP in Chinchilla. We had no propblems getting finance with our own bank using the equity in our home. We did show our bank manager and actually leave her a full copy of all the info on NRAS and how the scheme works. The land was already NRAS approved before we purchased, having started going through the process with an agent who messed us up quite a bit, we ended up going straight to the developer and everything was plain sailing on that part of things. Our problems are with the consortium QAHC who still haven't got a PM in place to date, plus we know from the builder ours is the first out of 17 to go through as they have all been getting knoked on the head over finance, and going elsewhere or renting private because of this. The tax incentive is being sorted that is no longer an issue and as for banks they are ok too as there are clauses in it for them but a lot of them just are not going there we were lucky first time around. At the moment though we are deciding whether to rent privately instead as some of our questions are just not being answered to our liking. Plus we will be indexed linked to Brisbane, not sure if this is a good thing or bad. As I say we are new to this game and still finding our feet. We feel the whole idea is really good but as someone else said is it really going to get off the ground. We are not so sure and are in fact going back to Chinchilla this week to talk to PM's based there about renting it out privately.
 
HI JPS

If u have provided full disclosure, then it will never be your problem !

Of late especially, we have seen some interesting things happen at branches that might not happen in the broker network.

How much equity did u have in ur home ? Perhaps the comboed LVR is very low ?

ta
rof
 

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