Nras

[RemoteControl]

Hello all,

Anyone here that is investing in the government NRAS scheme? Seems pretty good with claims of positive cash flow from day dot. Properties are in Darwin NT, and Darley/Maddingley in the west. Not knowing the Melbourne market, are they reasonable priced and in good CG areas?

Speaking to one of their reps, they will be releasing properties in WA and Brisbane.

cheers

 

[tcocaro]

Remote,

I am considering running my development through the scheme. If i keep the units then its worth it however if I choose to sell after NRAS I am a little concerned that buyers wont be interested given the complexity involved.

On paper investors should flock for such an arrangement, its 10000x times better than DHA housing for instance however thats simple as ABC which is why its popular, NRAS involves tax etc and may put off many buyers as they throw it in the too hard basket.

I will be interested to see how many people go for such a scheme from both buyer perspective and developer.

Hello all,

Anyone here that is investing in the government NRAS scheme? Seems pretty good with claims of positive cash flow from day dot. Properties are in Darwin NT, and Darley/Maddingley in the west. Not knowing the Melbourne market, are they reasonable priced and in good CG areas?

Speaking to one of their reps, they will be releasing properties in WA and Brisbane.

cheers

 

[RemoteControl]

Well Onyx are saying the government will give the buyer just under $10000 dollars back plus the normal tax benefits from property and not to mention the rent!

"Seems to good to be true" using a well worn cliche!!

 

[jezza]

Well Onyx are saying the government will give the buyer just under $10000 dollars back plus the normal tax benefits from property and not to mention the rent!

"Seems to good to be true" using a well worn cliche!!

Please mention the Rent, you have to rent it 20% below market value, I ran figures on this and worked out on like for like from a standard buy house and Rent and NRAS by end of year 5 your worse off. Then when you go to sell it you can only sell it to a investor. Also banks are coming around to them at the moment but majority do stear away or require a less LVR. Also find out what the PM fees are

This subject has been discussed a few times, if your on the highest tax bracket and not keen on doing any research they would suit you fine.

Jezza

 

[Marni Lawrence]

If you have a property where market rental would be $400 / week, you would rent it for $320. The $80 / week rent reduction would be $4,160 per year so if you compare this to the annual inventive of $9,140 you would still be coming out way ahead with an NRAS property. If you have multiple properties your benefits would increase.
Its my understanding that if you want to sell the property you need to sell it to an investor who will participate in the NRAS scheme or subsitute the property with a similiar dwelling for the remainder of the lease. To my knowledge you can exit the scheme without penalty at any time, however if sold prior to the first of May you will not be entitled to any NRAS benefit for the previous year.
I'm not sure about other states but there are a lot of NRAS approved properties available in Queensland.

 

[pdawg]

If you have a property where market rental would be $400 / week, you would rent it for $320. The $80 / week rent reduction would be $4,160 per year so if you compare this to the annual inventive of $9,140 you would still be coming out way ahead with an NRAS property. If you have multiple properties your benefits would increase.
Its my understanding that if you want to sell the property you need to sell it to an investor who will participate in the NRAS scheme or subsitute the property with a similiar dwelling for the remainder of the lease. To my knowledge you can exit the scheme without penalty at any time, however if sold prior to the first of May you will not be entitled to any NRAS benefit for the previous year.
I'm not sure about other states but there are a lot of NRAS approved properties available in Queensland.

This is interesting.

So if you exit the scheme and decide to sell afterwards, do you still need to sell the property to an NRAS investor or are all ties to the scheme broken once you've exited?

I'm in a position where I have a house I plan to renovate and build another house at the backyard. Do you know if I'd be able to apply for the scheme for both dwellings or just the newly built one?

 

[Marni Lawrence]

Although I am not an expert on the disposal of properties in the NRAS scheme, the above post shows what I have been able to find out about selling an existing NRAS property. It appears that it is not as restrictive as some people have thought. Once you in the scheme you would probably not want to get out as you would be giving up the tax incentives 

In regards to a renovated property I don’t believe this would be eligible. I have sourced the following info in regards to what is an acceptable property:

Dwellings must either:

o not have been lived in as a residence; or
o not have been lived in as a residence since having been made fit for occupancy where otherwise the dwelling was recognised as being uninhabitable; or
o if it has been converted to create additional residences, then a part of the dwelling or building that is capable of being lived in as a separate residence must not have been lived in as a separate residence

I am not sure how you would go with applying to build a “one-off” property as NRAS. The application process state that you need to be building a minimum of 20 dwellings with priority going to developers who are doing 100 +

 

[BPB]

Jezza - You cant be worse off with NRAS compared to a normal investment.
All the benefits you get on a normal property are available with an NRAS property PLUS $9,140 less Rent at 20-25% with a net $78 week better off.

How did you work your figures?

 

[BPB]

Has to be New properties only with a minimym of 20 properties to be lodged for approval.

 

[BPB]

Well Onyx are saying the government will give the buyer just under $10000 dollars back plus the normal tax benefits from property and not to mention the rent!

"Seems to good to be true" using a well worn cliche!!

The extra $10k must be from fee rebates.

 

[BPB]

Remote,

I am considering running my development through the scheme. If i keep the units then its worth it however if I choose to sell after NRAS I am a little concerned that buyers wont be interested given the complexity involved.

On paper investors should flock for such an arrangement, its 10000x times better than DHA housing for instance however thats simple as ABC which is why its popular, NRAS involves tax etc and may put off many buyers as they throw it in the too hard basket.

I will be interested to see how many people go for such a scheme from both buyer perspective and developer.

Heaps of sales in Queensland and thousands more approvals coming through. Particlularly duplexes with 2 rents, 2 subsidies and heaps of depreciation. Cash Flow Positive $120 - $160 per week (Post Tax)

 

[tcocaro]

You can be worse of. Basically the scheme only lends itself to lower priced properties. By definition given the $9,140 is a fixed amount but the 20% discount is a percentage of rent means the higher rent you could get and by default (more expensive property) the more you loose compared to the fixed amount you get per year.

In short so long as 20% of rent lost is considerably less than the amount gained per year the scheme works. However there are still too many hurdles for "investors" of such units namely finance restrictions for this to be viable for a developer. If I am keeping some stock I would consider it. (I know some lenders are coming round but that just doesnt cut it).

I may look into it further however I dont think its a "value add" proposition (from a developer standpoint) given most investors (end buyers) will simply put it in the "too hard basket"...

Hence why I beleive the uptake of such a scheme has been muted.

Jezza - You cant be worse off with NRAS compared to a normal investment.
All the benefits you get on a normal property are available with an NRAS property PLUS $9,140 less Rent at 20-25% with a net $78 week better off.

How did you work your figures?

 

[jezza]

Jezza - You cant be worse off with NRAS compared to a normal investment.
All the benefits you get on a normal property are available with an NRAS property PLUS $9,140 less Rent at 20-25% with a net $78 week better off.

How did you work your figures?

BPB

At no point did I say you would be better/worse off.

Yes if you took 2 places identical at the end of year 1 your rent would be better off, completely agree once you add in the incentive from the Govt, but I look at the overall picture not just week to week rents.

My spreadsheet and it is very easily to put together includes all costs ( not just rent and and in your case incentives). With a non NRAS property I can use equity on one of my properties for all fee and the deposit of lets say 20% and then I have the opportunity to negotiate finance with every bank & institution. Once that property goes up in value I can then revalue the property and use that equity.

Now with a NRAS property very few banks are lending against them, on my research the highest LVR I could get was 70% and most were around the 60-65% range. Then once the property goes up in value no bank would guarantee the standard rules for withdrawing equity.

So yes, as I mention at the start you may be better off at the end the year but you have injected way more funds into the transaction to offset this benefit and reducing the ability to use that equity to purchase more property.

Then when you go to sell it, it can only be sold to another investor while a non NRAS property is open to everyone.

Each to there own if week by week cash-flow is your game then go right ahead, in fact don't stop there, have you seen student accommodation they also offer great returns too.

Jezza

 

[BPB]

BPB

At no point did I say you would be better/worse off.

Yes if you took 2 places identical at the end of year 1 your rent would be better off, completely agree once you add in the incentive from the Govt, but I look at the overall picture not just week to week rents.

My spreadsheet and it is very easily to put together includes all costs ( not just rent and and in your case incentives). With a non NRAS property I can use equity on one of my properties for all fee and the deposit of lets say 20% and then I have the opportunity to negotiate finance with every bank & institution. Once that property goes up in value I can then revalue the property and use that equity.

Now with a NRAS property very few banks are lending against them, on my research the highest LVR I could get was 70% and most were around the 60-65% range. Then once the property goes up in value no bank would guarantee the standard rules for withdrawing equity.

So yes, as I mention at the start you may be better off at the end the year but you have injected way more funds into the transaction to offset this benefit and reducing the ability to use that equity to purchase more property.

Then when you go to sell it, it can only be sold to another investor while a non NRAS property is open to everyone.

Each to there own if week by week cash-flow is your game then go right ahead, in fact don't stop there, have you seen student accommodation they also offer great returns too.

Jezza

Jezza

1. As the $9,140 is fixed the it stands to reason the cheaper the property the higher the return and vica versa. But if you compare the standard property vs NRAS, one with rent and no incentive and the other with rent and incentive - you are better off with the NRAS Property.You have to add the incentive or its not a fair comparison.

2. You dont have to sell it to an investor only - it can be sold to an owner occupier. (Rule change)

3. You can revalue that property like any normal property and get equity out for further purchases. Standard Loan agreement for equity withdrawal.

4.Can get 75% LVR Westpac Group and NAB suppose to announce policy today.

5. Student accomodation has great returns but Im not sure the Banks are keen to lend right now on that style of property.

Thanks Jezza

 

[tiffany]

nras in tassie

if the nras works better with cheaper prices then wouldnt tassie be a good place becuase cheaper prices?

is there nras there?

 

[tvc889]

I also want to know if there are any TAS NRAS properties for sale?

 

[paramount]

nras in tassie

start from $240k and returns $350 per week

$445k returns $750 per week ( including NRAS)

 

[burty85]

What LVR are the banks lending at for NRAS, I had a quick chat to the CBA and was told it was case by case basis and at 80% or less....

Any one found a better lender??

 

[Paul Thewlis]

Well Onyx are saying the government will give the buyer just under $10000 dollars back plus the normal tax benefits from property and not to mention the rent!

"Seems to good to be true" using a well worn cliche!!

Hi all,

As MD at Onyx, I just wanted to clarify the basis on which we calculated that an NRAS property investor will receive over $100,000 in government incentives. Currently, the Federal and State incentives combined are worth $9,140/annum. The incentives are indexed at the CPI rate for rent, which has averaged 3.9% over the last 10 years. The most recent CPI increase for rent was 5.4%. The current incentive indexed at 3.9% gives a total 10 year incentive of $109,228.

It is worth noting that the ATO has clarified that the federal government tax offset is refundable, meaning if your tax obligation falls below zero due to the NRAS tax offset then you will actually receive money back from the tax office. These incentives are then combined with the rental income and the normal tax benefits you associate with negative gearing etc.

For a fuller outline of the benefits and costs of NRAS investments, please see our NRAS report.

Paul

 

[Paul Thewlis]

nras finance

NRAS finance response to burty85. It is important to note that all NRAS properties are not the same. The government provides NRAS incentives to various applicants who then make the approved properties available to individual investors. Each applicant has their own arrangements. Some put caveats on the properties and have 10 year lock-in contracts which lenders don't like because it restricts the lenders ability to repossess the property if things go bad. That's why you have received the "case-by-case" response. The touble is many brokers and bank employees don't actually know much about NRAS so it is possible that you could get a negative response due to lack of knowledge on their account. You might like to educate them by getting them to read the NRAS report by Ruby Janssen