What do you guys think about this property?

M

MohanWei

Hello all,

At the moment I am researching on below of the property from DHA (Defence Housing) located in Munno Parro, SA. DHA gives us rental guarantee for entire lease term irrespective of occupancy during this period with 16.5% management fee (maintenance and repairs included).

Property #1
Listed price: 310K
House Configuration: 3 bed/2 bath/double garage on 360m2 land
Lease term: 6+3 years
Rent: 295/week

Property #2
Listed price: 325K
House Configuration: 3 bed/2 bath/double garage on 375m2 land
Lease term: 9+3 years
Rent: 295/week

My question is, when I search in this area, similar configuration houses are listed in the range 270-290K.
1. Is this good investment proposition?
2. Is there a good CP in the future in this area? (Myself never been to SA before but planning to visit soon)
3. Do I need to look and seek any further information from DHA? (I have standard lease agreement with me already, which I will send it to solicitor to get more info)
4. Can we negotiate asking price from DHA?

Feedback/guidance is really appreciated. thanks in advance.

Regards
Mohan
 
Last edited:
Go for a drive to "Munno",i agree the numbers dont seem to stack up.A lot happening out that way,but i would have a good long look at going further with it.
 
As a private investor you should be able to find returns in that vicinity.

And then they are charging you 16.5% - and obviously the price is inflated????
 
If you are saying that they are offering you properties for between $310-$325 that are worth $270-$290 then clearly it is not a good investment, even with the added incentive of a guaranteed tenant and lease.

Pros and cons with Defence Housing, you need to weigh up whether it suits your investment strategy.
 
I also checked out the DHA properties after seeing some of their ads. I was hoping for some cheaper bargains. The rental guarantee is a pro, although the rental increases over the years will be governed by the DHA largely, and may not be in line with the market. In my opinion, not as many bargains with DHA, nor are there any positive geared deals, if that's what you were looking for. A 16% management fee is very high!
 
If you are looking at guaranteed rental why not look at something in the NRAS scheme? With the 20% discounted rent and hundreds of people on the waiting lists you'll be very unlikely to get a vacancy.

We are purchasing this one http://www.realestate.com.au/property-villa-wa-armadale-408094375 and have the tenant lined up to move in as soon as we settle. Management fees on this one are 8% plus costs (about $250 per year) and a set fee of $795 pa for compliance checks.

With tenants you can choose them yourself from the applicants that pass the quite stringent application process. I was able to choose my sister but there were plenty of other quality applicants.

After NRAS incentive it will be cash positive (figures will depend on your own financial and tax situation but for us it is around +$50 per week).

Euro73 has been very helpful and I'd recommend a search on his NRAS posts.

Carolyn
 
What is the best way to find NRAS approved houses that are for sale? And is there somewhere where you can find existing rented NRAS houses for sale, eg not new houses? Or is the deprecation of a new house needed to make them positively geared?
 
jackbak said:
Not if you take into account the fact that they pay for repairs and maintenance and they will repaint and carpet the property when the lease is over.
Click to expand...

+1 Depends on what your after, maximum return and / or regular guaranteed income. Most DHA leases can be for up to 15 years (or remaining term)

Also don't forget that these DHA properties are leased to Military Personal and they are obliged to look after and maintain the properties & yards etc.

Any damage and/or lack of up keep by the tenants is also frowned upon by there employer (ADF)and may also effect being able to obtain another DHA property when posted
 
Marjac said:
+1 Depends on what your after, maximum return and / or regular guaranteed income. Most DHA leases can be for up to 15 years (or remaining term)

Also don't forget that these DHA properties are leased to Military Personal and they are obliged to look after and maintain the properties & yards etc.

Any damage and/or lack of up keep by the tenants is also frowned upon by there employer (ADF)and may also effect being able to obtain another DHA property when posted
Click to expand...

Agree with this and jackback's comments. Horses for courses. It also depends what your thoughts are on Munno Para's CG projections for the duration of the lease and the lease clauses (e.g. how rental increases are determined plus few others).
Research and go to Munno Para to see if this is the place you would like to invest, irrespective whether DHA or not. Then plug the numbers into Excel and see how the different alternatives perform in a long run.
Re your point 4: ask them :)
Have fun!
 
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