Nras

Thanks Euro, I have printed off your amazing piece on the weekend and it has swayed the other half to go into it in more depth.

We cant apply for any more loans until I get the new tax variation done for the new IP we just rented out last month, must put that onto the To Do list.

Can you tell from all the mumbo jumbo tax lingo whether this too good to be true "gift" from the govt (as the salesman describes) will be paid to those of us peasants whose incomes are now so low that we dont actually have to pay any tax?

Have you noticed that the properties in SEQld are in suburbs that flooded, so I also have a big job literally visiting and researching all locations. As much as we want to start looking interstate we cant do that much DD on the weekends. i have started looking on the net to see if they are comparable asking prices to similar properties in the same locations.

Thanks
 
Angel said:
Can you tell from all the mumbo jumbo tax lingo whether this too good to be true "gift" from the govt (as the salesman describes) will be paid to those of us peasants whose incomes are now so low that we dont actually have to pay any tax?
Click to expand...

Don't quote me on it, but I believe it is a tax credit, not a tax rebate, so you will get it back as a refund if it is more than the amount of tax you pay.
 
There are NRAS approved properties being built all over the country....including SE qld, but as far as Im aware there are very few (if any) properties damaged in SE qld.

The tax "mumbo jumbo" is quite straightforward... the incentive has two components- 75% of the total NRAS incentive is paid by the federal Govt and is a refundable tax offset. The other 25% is paid by the relevant state Govt where the property is located and is untaxed cash. You get the money whether you have a taxable income or not. Of course, seek professional advice to confirm this, or read this....

http://www.ato.gov.au/businesses/content.asp?doc=/content/00179876.htm

and this.... http://www.ato.gov.au/businesses/content.asp?doc=/content/00179876.htm&page=3&H3

and this.... http://www.ato.gov.au/businesses/content.asp?doc=/content/00179876.htm&page=5&H5

and this... http://www.ato.gov.au/businesses/content.asp?doc=/content/00179876.htm&page=13&H13

and this deals with the state component.... http://www.ato.gov.au/businesses/content.asp?doc=/content/00179876.htm&page=22&H22

Everything you ned to know is on the ATO website - ie the links above, or on the FAHCSIA website. They are the Fed Govt department running NRAS. Click here...

http://www.fahcsia.gov.au/sa/housing/progserv/affordability/nras/Pages/default.aspx

Hope this helps address your concerns.
 
Price drops? Do you mean, because there is a June 2012 deadline?

If so...I doubt it very much. NRAS approved properties are for the most part, being sold inside developments where non NRAS properties are also being sold. There are concentration limits within the scheme. ie- developments cannot have more than 30% of the total property stock, allocated an NRAS endorsement, and whats actually happened is that most developments have kept concentration levels below 15%.
The only exception to this rule is for very small/boutique unit developments, where up to 100% of the properties can be allocated an NRAS endorsement- but there are very few of these around.

So unless developers reduce the prices across the entire development, NO, you wont see reductions in prices simply because NRAS properties need to built by June 2012. If developers cant meet the deadlines to deliver the properties, they will just allow the unsold/unbuilt NRAS allocations to lapse, rather than reduce prices... and they'll seel them at normal prices without the NRAS allocations. Thats all. Well, thats the most likely outcome anyway.

Keep in mind- the Fed Govt may be driven by the goal of delivering 35,000 affordable properties, but developers arent driven by the same goal. NRAS simply represents another "tool" for selling properties - because of the tax advantages. It makes their properties more attractive to investors and helps them sell more stock.

They didnt jump into NRAS out of a sense of social responsibility :) They're in it for a buck, just like the property marketing companies who are out there pitching the benefits of NRAS, so that you'll buy from them, are in it for a buck. Thats all perfectly normal and acceptable. remember that if they really really really wanted to be socially responsible- they'd build more houses at cost or donate more properties to community housing groups :)
 
I understand that very few properties actually flooded, I just dont want the headaches associated. My comment was two fold.

Firstly, I asssume that the developers are going to sell them for the amount advertised and not a cent beneath that. I have also read elsewhere that in Ipswich, for example where i am considering a purchase, the entire region has been devalued by 20%. I dont know, it is something I need to investigate further as my brain has been focused on the Redcliffe peninsula for the past six months. Of course i want to purchase something that is 20% cheaper than it was in December. I also want the joy of CF+. We arent going to get both.

The other thing is that when looking at maps, so many of the properties offered are adjacent to creeks which would turn me off at the best of times, I was already property-conscious in 1974. I also know of plenty of years when the BCC stormwater drains have been blocked up by mattresses and other litter when our summer storms hit and they overflow. Not insurable. It's in the news every year. Hence my comment about having to go and looksie for myself at every place.
 
No, not the case Angel.

Queensland Affordable Housing Consortium operates a Head lease agreement
Brisbane Housing Group operates a Head lease agreement
Aspire Housing operates a Non Entity Joint Venture
Questus operates a Non Entity Joint Venture via a Managed Investment Scheme

There are a few others but they are tiny and dont have many NRAS allocations.
 
Questus are WA based, but own NRAS allocations in WA, NSW and Qld.

You'll find that several of the Approved Participants have allocations across multiple states.
 
I think I should start charging for NRAS advice hahahahah.

Seriously though. This is where NRAS is basically at, as of this week.
Round 4 applications for NRAS allocations have closed. They closed on December 14 of last year. Most those allocations havent been awarded yet, but its not far away, and it looks like the following Approved Particpants have secured the lions share of NRAS allocations

Questus
QAHC
Ethan Affordable Housing
Affordable Management Corporation
Aspire

There are someother models who also have some allocations- such as Briasbane Housing, Quantum, Yarran Group, National Housing Group- but the 5 Ive listed above have the majority of the allocations, and the allocations are attached to stock across Qld, WA, VIC mainly, with a sprinkling in NT, SA and NSW. They are probably the ones to focus on, for the most part.

Where to find NRAS properties. Google "NRAS properties", or "NRAS properties for sale" You'll find a few dozen sites where property marketing companies are selling properties with NRAS allocations. In most cases, the property marketing companies are selling NRAS stock from one or more of these 5 Approved Participants.... they are pretty much all definitely selling QAHC (under a head lease agreement), and most are also selling at least one other model. When you attend a seminar, or call these companies, ASK THEM which NRAS model they are dealing with? If its not one of the models Ive listed- chances are you cant get finance ( at least, not without significant effort, and its a slim chance even then) so tell them you want something from one of the 5 models listed.

Read other NRAS posts (there are several) and understand the models. Ive detailed them extensively in other posts. Understand that each model has different fees and charges, and different restrictions on entering or leaving the scheme.

Basically, the Head lease model carries alot more fees than all the other models and is the most cumbersome. But thats not to say its unsuitable. Decide for yourself whether its worth paying the extra fees or not. If the particular property you want sits under that model - pay. If you can find other NRAS property you like under a different model - dont pay extra when you dont need to. There's no right or wrong answer. One model isnt better than another. Just understand that each of the models has different costs, and factor it into your calculations.

How to get a loan for NRAS. All the models listed above can be financed with St George and Firstmac. Westpac also does a couple of them. Wide Bay and Bendigo Adelaide and NAB also do a little bit of NRAS lending, but the main players are STG and Firstmac. They are the only two lenders with NRAS policies that allow you to purchase NRAS properties under any of the 5 models.

In a nutshell - St George does 70% without LMI and up to 85% with LMI. Their servicing calculator DOES discount the NRAS rental but DOES NOT offset that reduction by accepting the NRAS incentive. Result. You can get up to 85% but borrowing capacity is limited. Thats no problem if you have loads of capacity, but keep it in mind, in case you want to buy another one, and another one- over the next couple of years.

In a nutshell- Firstmac does 80% without LMI and DOES use the NRAS incentive for servicing. Result - you need to contribute 5% moe to the deal, but borrowing capacity is significantly higher. If you want to buy multiple NRAS properties this would seem to be pretty handy??

Pick a lender that can help you grow your property portfolio. That will differ for every investor, depending on their goals and their needs. Im just laying out the two best options for you to consider. STG has the bigger brand. Firstmac has the better product and borrowing capacity. You decide which is more important to you.
 
Added to Euro73s comments there is now a 95% loan option for NRAS properties. LMI is payable above 80% but can be capitalised on the loan to a max of 97%. Given that most NRAS property scenarios end up with positive cashflow even if you borrow 100% of the purchase price (using two security properties) you've really got the banks, the tenant and the government paying for you to own an investment property. This has to bring a whole lot more property investors into the market. Check out recent Youtube content about NRAS property at http://www.youtube.com/watch?v=pwyj1gvrV6o
 
Paul Thewlis said:
Added to Euro73s comments there is now a 95% loan option for NRAS properties. LMI is payable above 80% but can be capitalised on the loan to a max of 97%. Given that most NRAS property scenarios end up with positive cashflow even if you borrow 100% of the purchase
Click to expand...

Yes Paul. If your gonna come here and link to your site then you'd wanna be giving back to SS..kind of like how Euro has before you arrived on the scene. On that note Euro73 I recommend you start a business...I'll be your first customer coz gosh darn it...I reakon you deserve some cake :D Like me I guarantee Pauls taken a lot from your musings.. Not enough people like you around Euro! Ha

IMHO Paul...until you reach Rixters, Rolfs, PT Bear, and BlueCards level(too name a few)...you have no right to bait your posts with URLs to your business...only my opinion.
 
Reeco- Kind words. Im blushing :) I am more than happy to share my knowledge for free...thats what these forums are meant to be about, no? Take it easy on Paul- its the weekend, and he may not have been checking the forum. Im sure he'll be happy to tell us all who is doing NRAS deals at 95 plus Cap LMI, first thing Monday. Its the kind of information we'd all like to know about.
 
Agreed...However i have a sneeky suspicion its in house finance with a slice of vested interest...Happy to be proven wrong. I do tire of helmet hair so i need to rest the tin hat every now and then :)

Ive checked Pauls website and they like to throw around the term 100% finance in direct regards to NRAS...There definition of 100% finance(according to there Youtube Webinar) is 80% Lender 20% Equity... As in money from your existing portfolio if you have one.

Its sort of saying the sky is blue:confused: ....Other then cash savings where else are folks gonna get the finance to fund the purchase??

My understanding is that its a marketing gimmick to justify the use of the term "100% finance" . VERY bait like in its presentation.

REA have such a stigma attached to them youd think they would try better approaches. Again. My tin hat opinion only. Jokes aside Euro73 you should start something. I can safely say "we" trust you...well i do anyway which is coming from the most sceptical person out there(as you can tell :) ..
 
Hi Euro73,

The loan is available from Onyx Finance Pty Ltd. We hold Australian Credit Licence number 390790. Onyx has been a mortgage manager since 2002 and has worked predominantly with property investors since then. Like most non-bank loans in Australia if you go far back enough one of the majors is involved in the funding. But you can’t get this loan from the bank branch.

Maximum lending criteria apply to NRAS properties under a non-entity joint venture agreement. Reduced LVRS apply for NRAS properties with a Head Lease Agreement.

I understand Reeco’s views about you. Looking back over your posts I see there has been a lot of well researched information provided. I’d be really interested to catch up. Are you working in an NRAS related job or has NRAS become a bit of a hobby. Stranger things have happened!

Regards
Paul
 
Hi Reeco,
Re the 100% finance comment, the reality is that most of our clients are 100% financing their investment property purchases – including NRAS purchase. But you’d be surprised how many people don’t understand the concept. NRAS will bring new people into property investment that weren’t doing it before because of the properties are mostly cashflow positive and they need to understand the basics of property investment.

From a financial analysis point of view it’s more correct to talk about 100% financing. If you work the numbers on 80% financing then the properties look more cashflow positive than they really are. You need to allow for the finance costs on the additional borrowings. If you are not financing the total cost then you also need to look include the opportunity cost of using your savings so applying the 100% finance approach still gives you a reasonable starting point in your analysis.

I may be relatively new to Somersoft but I can assure you that Onyx is not new to NRAS. It has been an expensive exercise for us working on NRAS. We have spent over 8 months talking NRAS with credit policy people and we are very excited to have a loan to offer that uses standard credit policy for NRAS properties.

We’ve also put a lot of time and money into preparing educational material in reports, webinars, YouTube content, and just talking to lots and lots of people who want to know about NRAS. Sure at the end of the day we sell property, provide finance, legal and financial advice but we’ve educated a lot of people who haven’t used our services without charging for it.

Regards
Paul
 
Reeco - My money is with you on the in house finance possibility. Probably a senior lender takes 80% of the action with the balance provided in the same manner as the old Adelaide Bank EFM product.

Another interesting point is that it seems that you have to purchase one of their NRAS properties.......to qualify.

I might be wrong but developer kickbacks & marketing underwrite arrangements come to mind but I'm sure they would be disclosed if present!!!

Might be wrong but ...............
 

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