Nras

[onlyfor]

Lease

I recently bought a NRAS Unit.

The Market Rent (MR) is $1300.00, prior to applying the NRAS provisions that only 74.9% of the rent is payable.

Once the 74.9% is applied, the monthly rent is $973.70.

Applying the NR and VA (Vacancy Average of 3.9%) to the variables per Clause 2(1)(a-d) and converting to a monthly rate (by multiplying by 52 weeks and dividing by 12 months), resulting in the monthly deduction of $222.95.

By the end, the monthly rent I receive is $750.75.

The deduction of $222.95 was totally unexpected. This is not clearly explained in NRAS information websites.

NRAS properties is not financially beneficially as it appears.

 

[brendio]

I recently bought a NRAS Unit.

The Market Rent (MR) is $1300.00, prior to applying the NRAS provisions that only 74.9% of the rent is payable.

Once the 74.9% is applied, the monthly rent is $973.70.

Applying the NR and VA (Vacancy Average of 3.9%) to the variables per Clause 2(1)(a-d) and converting to a monthly rate (by multiplying by 52 weeks and dividing by 12 months), resulting in the monthly deduction of $222.95.

By the end, the monthly rent I receive is $750.75.

The deduction of $222.95 was totally unexpected. This is not clearly explained in NRAS information websites.

NRAS properties is not financially beneficially as it appears.

What is NR and VA? What document does Clause 2(1)(a-d) refer to? Presumably this is explained in the agreement you signed with the NRAS approved applicant. With NRAS more than anything, thorough DD is required to make sure the developer is not left holding all the trumps, but I believe that the NRAS scheme leaves enough fat in the deal so that both the developer and buyer can be left happy. Don't expect the fine print to be explained on their websites. You need to ask probing questions and read (or get a solicitor to read) any agreements you sign. It should all be there. The deductions you describe should not be unexpected. They sound a bit high, but it is possibly made higher by lost rent as a result of the vacancy (3.9% is 2 weeks for the year). You would get that with a privately held unit too if you couldn't rent it out.

 

[vishpatel]

I recently bought a NRAS Unit.

The Market Rent (MR) is $1300.00, prior to applying the NRAS provisions that only 74.9% of the rent is payable.

Once the 74.9% is applied, the monthly rent is $973.70.

Applying the NR and VA (Vacancy Average of 3.9%) to the variables per Clause 2(1)(a-d) and converting to a monthly rate (by multiplying by 52 weeks and dividing by 12 months), resulting in the monthly deduction of $222.95.

By the end, the monthly rent I receive is $750.75.

The deduction of $222.95 was totally unexpected. This is not clearly explained in NRAS information websites.

NRAS properties is not financially beneficially as it appears.

NRAS properties always says, you need to give 20% discount in a rent. In your case you are loosing $222.95 monthly and yearly it will be $2,675.40. You need in invest this amount until you will lodge your tax return and you get incentive of around $9,000.00. So, at the end you are getting more than what you are investing.

 

[Spectre]

Banks will have valuations done Felixter, so if there are any overpriced deals they wont get far with the lender side of things ( when lenders start doing NRAS of course)...

Re that point
My solicitor was acting for clients buying NRAS. Vals were never disclosed as they cross secured their unencumbered PPR... vals done for mortgage security only...

So the lender would be beyond happy with the LVR/Security aspect

 

[BPB]

NRAS properties always says, you need to give 20% discount in a rent. In your case you are loosing $222.95 monthly and yearly it will be $2,675.40. You need in invest this amount until you will lodge your tax return and you get incentive of around $9,000.00. So, at the end you are getting more than what you are investing.

If the Rents are reduced by 25% why would you have a vacancy of 3.9%. Potential tenants will climb over Barb wire to save $320 per month rent. Once they are in why would they leave.

 

[BPB]

I recently bought a NRAS Unit.

The Market Rent (MR) is $1300.00, prior to applying the NRAS provisions that only 74.9% of the rent is payable.

Once the 74.9% is applied, the monthly rent is $973.70.

Applying the NR and VA (Vacancy Average of 3.9%) to the variables per Clause 2(1)(a-d) and converting to a monthly rate (by multiplying by 52 weeks and dividing by 12 months), resulting in the monthly deduction of $222.95.

By the end, the monthly rent I receive is $750.75.

The deduction of $222.95 was totally unexpected. This is not clearly explained in NRAS information websites.

NRAS properties is not financially beneficially as it appears.

Your rent is reduced $80 per week but you have forgotten to add the subsidy of $175 per week tax free. You are in front $95 per week tax free with tenants lined up to rent your property. Whats wrong with that.

 

[cuscal]

My NRAS approved property is almost built and I am in the process of signing up to a consortium and then get a tenant in.

I agree with some comments here, the returns that they claim for NRAS is affected by all the fees and charges involved with signing up to signing up to a consortium, etc.

But compared to a normal process of renting the property yourself, NRAS gives more return.

Regards

 

[tvc889]

I think it is always good to compare the normal investment property with the NRAS one for long term. There could be many things to be considered. I think www.investmentpropertycalculator.com.au does offer an NRAS calculator. Anyone has tried that? I have tried the normal one and found it is useful.

My NRAS approved property is almost built and I am in the process of signing up to a consortium and then get a tenant in.

I agree with some comments here, the returns that they claim for NRAS is affected by all the fees and charges involved with signing up to signing up to a consortium, etc.

But compared to a normal process of renting the property yourself, NRAS gives more return.

Regards

 

[buzzlightyear]

I recently bought a NRAS Unit.

The Market Rent (MR) is $1300.00, prior to applying the NRAS provisions that only 74.9% of the rent is payable.

Once the 74.9% is applied, the monthly rent is $973.70.

Applying the NR and VA (Vacancy Average of 3.9%) to the variables per Clause 2(1)(a-d) and converting to a monthly rate (by multiplying by 52 weeks and dividing by 12 months), resulting in the monthly deduction of $222.95.

By the end, the monthly rent I receive is $750.75.

The deduction of $222.95 was totally unexpected. This is not clearly explained in NRAS information websites.

NRAS properties is not financially beneficially as it appears.

I thought the NRAS properties were only designed for super funds or large scale investors not individuals?

Did you get title to the unit or did you buy into a JV which owned a number of these units?

 

[BPB]

I thought the NRAS properties were only designed for super funds or large scale investors not individuals?

Did you get title to the unit or did you buy into a JV which owned a number of these units?

Definitley for individuals....in fact it is the Mums and Dad that have taken up NRAS as an investment not the institutions and thats for many reasons. Despite some knockers it is a very good invesment. The rent is reduced to the investor by 20-25% but offset by the subsidy of $9,140 tax free. Google NRAS and get good advice - there are different models out there but very worthwhile.

 

[tvc889]

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

Small-Scale or Private Investors

As the NRAS aims to encourage large-scale investment in affordable housing, it is not directly available to small-scale, private, individual investors in the rental property market unless they participate as part of a non entity or other joint venture arrangement. These investors could also become involved by investing in entities that participate directly in the Scheme, for example, through a superannuation fund or property trust.

Definitley for individuals....in fact it is the Mums and Dad that have taken up NRAS as an investment not the institutions and thats for many reasons. Despite some knockers it is a very good invesment. The rent is reduced to the investor by 20-25% but offset by the subsidy of $9,140 tax free. Google NRAS and get good advice - there are different models out there but very worthwhile.

 

[paramount]

i have a 3 bed home in hobart tassie
$280k purchase price
rent is $240 plus nras
management fee is 10% of discounted rent and annual fee of 5% of nras no other fees

 

[tvc889]

Is the 5% of NRAS tax deductible? My accountant does not know the answer.

i have a 3 bed home in hobart tassie
$280k purchase price
rent is $240 plus nras
management fee is 10% of discounted rent and annual fee of 5% of nras no other fees

 

[paramount]

yes the 5% is deductable its effectively a property management fee

 

[Paul Thewlis]

NRAS Tenants

Did you know that according to the most recent data from the Australian Bureau of Statistics that the average income of private rental tenants is around $74,000. Looking at the income criteria for NRAS tenants households can earn up to around $125,000 before they loose NRAS eligibility.
So NRAS tenants are really going to be your average private housing tenant.

Also, if as a landlord you have a new property renting at 20% below the market rate I think you will have tenants queuing. So NRAS landlords will have the pick of the best tenants not the worse.

 

[BPB]

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

Small-Scale or Private Investors

As the NRAS aims to encourage large-scale investment in affordable housing, it is not directly available to small-scale, private, individual investors in the rental property market unless they participate as part of a non entity or other joint venture arrangement. These investors could also become involved by investing in entities that participate directly in the Scheme, for example, through a superannuation fund or property trust.

Have sold hundreds to individual investors. I repeat the institutions have not taken up NRAS. (Non Entity Joint Venture used with Consortium)

 

[euro73]

Have sold hundreds to individual investors. I repeat the institutions have not taken up NRAS. (Non Entity Joint Venture used with Consortium)

How have you "sold" hundreds to individual investors? How were the deals financed?
I ask because as it stands, there are several different NRAS approved participants in the market who hold the NRAS incentives, and only some of the models are approved by lenders. For example;

Queensland Affordable Housing Consortium use a Head Lease Agreement.
Approved by St George, Rams and Westpac. 70% LVR w/out LMI,or 85% with.
Firstmac will do 80% without LMI.
Servicing - all use 65% of market rental income but ST G, Rams and Westpac wont use the $9140 NRAS incentive for servicing. Firstmac uses 100% of it as tax free income.

Questus use a Managed Investment Scheme.
Approved by St George, Rams and Westpac. 70% LVR w/out LMI,or 85% with.
Firstmac will do 80% without LMI.
Servicing - all use 65% of market rental income but ST G, Rams and Westpac wont use the $9140 NRAS incentive for servicing. Firstmac uses 100% of it as tax free income.

All the following use a Non Entity Joint Venture

Ethan Affordable Housing -Bendigo Adelaide Bank and Firstmac will lend 80% against Ethan NRAS securities. Both use 65% rental plus 100% NRAS incentive.

Urban Affordable Housing Association Firstmac will lend 80% against UAHA NRAS securities. 65% rental plus 100% NRAS incentive

Some other NEJV models such as Aspire, Affordable Management Corporation, Brisbane Housing, Accelerated Wealth Systems are also approved by St G, Westpac, Rams and Firstmac- same servicing and LVR criteria as above.

Because these lenders only announced official NRAS policies in the last couple of months, readers on here may not be aware of the availability of NRAS finance...

So I wondered how hundreds had been "sold" before these lenders made finance available???

 

[mini2]

Just got some doco's from UAHA, looks tempting based on the figures provided. Now, have anyone from here actually bought one of these?

 

[euro73]

UAHA are one of the newer NRAS Approved Particpants, and they have mainly been awarded NRAS allocations for Off The Plan developments at this stage, so you may not find many forum readers who have either bought or settled on a UAHA NRAS deal, but there have been many properties bought, built and now settled under the QAHC , Questus or Ethan Affordable Housing NRAS models, so forum readers may be able to tell you about those experiences. I know the UAHA model, and its a Non Entity Joint Venture, making it less cumbersome than some others. I believe firstmac has already the UAHA model too, so at least you know you can get finance at 80% LVR.

 

[goooo]

Nearly bought a NRAS at peregian springs, but found out at the last minute that it is $20k+ over priced. I think most of the NRAS properties are either located at country areas or priced high. Cash flow is good, but not the CG.