10 years of nras

Hi All

With NRAS now completing its first 10 years any owners with their 10 years of incentive finishing this year willing to share their experience over the journey.

Did it live up to expectations capital growth wise?

How is the place looking?Need any major maintenance?

Plans for what to do now ,hold or sell?

Would you change property managers after the incentive finishes?

Is market rent easily achievable?

How has the experience been over the journey.

Regards

Geedee64

 

Not something i would touch myself. I don';t like all the rules you have to abide by.

 

I'm not sure if anyone on here got in on Round 1.
Mine are from Round 4 so I won't be finished until 2025

 

What has your experience been?

I was very sceptiable about the CG....

 

Only 3 years in.
Looking for people who are in there last years story

 

Is this the poker face thread? How 'bout some comments on your experience so far?

 

I never got into NRAS. From what I have read, I have missed out on a lot of great opportunities.

Ah well!!!

 

Settled NRAS approved stock didnt really start happening until 2009, and only 319 dwellings were entered into NRAS that year. In 2010 a total of 1729 had been activated, and by 2011, 3811 had been activated. The majority of those dwellings were built by Universities and retained for their own use... so you want find much evidence of resi investors owning that NRAS approved stock.

It wasnt until 2013 and 2014 that decent volumes of resi investor NRAS approved stock started to settle and commence their 10 year eligibility . There were @ 14,162 delivered by mid 2013. It rose to 21,488 dwellings by mid 2014. 30,484 by mid 2015. 33,398 by mid 2015. finished at a little below 37,000 dwellings by mid 2016

So I think its probably between 5 and 7 years too early to have any meaningful data to answer your post , although I can tell you that I sold a lot of NRAS in Sydney and a little bit in Melbourne during those years and my clients have certainly already seen some fantastic capital growth in those areas... Brunswick. Ringwood. Footscray. Castle Hill ( 2 different projects) . Elanora Heights. Bungarribbee. Gregory Hills. Canterbury. Harris Park. Merrylands. Macquarie Park. Rosehill. Wentworthville. Enfield. Fairy Meadow.

I also sold some stock in QLD that I expect will do well over the 10 years. Annerley. Windsor. Nundah. Mt Gravatt. Zillmere. Sherwood. Taringa. Wynnum.

Regional NSW locations have also started doing quite well... Orange. Bathurst. Dubbo. Port Macquarie. Moss Vale. St Georges Basin.

Few bits n bobs in Perth /WA which I expect will do quite well over the next 10 years. Gosnells. Dunsborough ( dual occ, dual NRAS) East Vic Park.

But to the premise of your question - or at least the part about "How is the place looking?Need any major maintenance?" NRAS is a tax policy. The property itself does not have NRAS built into its bricks or its mortar or its roof or its kitchen. Receiving NRAS approval for a dwelling didnt somehow authorise the builders to build to a lower standard or a lower specification.



PS - still some a small number of good NRAS opportunities available.... just quietly.

 

All the properties I looked at were overpriced

 

The majority of NRAS was sold through marketers who charge way too much comm... that didn't make NRAS a problem.It made the distribution model the problem... the same problem that existed well before NRAS and exists today, post NRAS. ie Marketers doing no due diligence on stock, simply taking what the handful of wholesalers provide to them and flogging it off ...they did no valuation work at all.

NRAS deployed correctly was extremely attractive though. I did it correctly. I stayed away from the wholesalers stock. I found developers and did deals.. and every project I sold was valued multiple times by multiple lenders before the deals were done. I didnt touch it if it didnt stack up. if the vals were short I negotiated hard with developers . If they didnt come to the party, I moved the incentives to another development- simple as that. The result was one valuation shortfall in more than 350 sales. And that was for 10 or 11K on a dual occ NRAS that produced two rental incomes and 2 NRAS credits... thats a 0.03% miss rate, , or a 99.97% hit rate. I'd say thats better than fairly good going Not sure there's any other NRAS seller in the land remotely near that ... I doubt anyone else did better than 50%. Not only that , but I sold a lot of stock that has grown a lot. Many of my clients have since extracted equity from their NRAS properties...

Some quick examples of properties sold and settled in the last 2 years.

Castle Hill. Purchased for 620K. Worth 800-850K now
Elanora Heights. Purchased for 590-600K Worth 750-800K now
Bungarribee. Purchased for 560-690K. Worth 700-750K now
Port Macquarie. Purchased for 250-260K. Worth 330-350K now
Fairy Meadow. Purchased for 450-470K. Worth 600-620K now
St Georges Basin. Purchased for 315K. Worth 385K + now

If you looked in the right places, you'd have found what you were looking for

I have some WA stock coming very soon.... 3 vals from 3 different firms- all bang on the money

 

The same property with NRAS was always more expensive than one without. The developer / seller were not going to give it away.

Question was always how much more expensive.

 

I did lots of deals that were below market value, and I did every deal where the NRAS stock was exactly the same price as the non NRAS stock in the same development.

I didnt have the same range of stock as others , because I didnt work with wholesalers.
I put my own deals together and organised the NRAS to be allocated to the stock myself. This allowed me to control prices ( remove two tiered pricing issues) and achieve valuation outcomes....

My clients have been exceptionally happy with their outcomes, which is all I really care about.

There are still a few new NRAS approved dwellings available and there's a little bit of resale stuff around, so its not too late for those still interested. You wont get a full 10 years but in the case of the new ones, you will still get a good 8-8.5 years. Nothing to sneeze at

 

@euro73 My comments on NRAS are not about your personal business I have not idea of the detail on that. In any case I pretty much disregard statements from the salesman on how good the deal is.

In general, developers and sellers added a premium for offering a NRAS property - it was a question of how much of a premium. So what like rental guarantees.

 

Sure. My comments were that my stock didnt, and that I executed NRAS sales differently to others. Yes there was plenty of NRAS loaded up with premiums. No doubt about it. And not 10 or 20K...which is a considered by most experienced bankers and brokers to be a typical margin of error ( say 3-5%) on new stock due to valuer conservatism. In many cases it was 60,70,80K,although I have also seen worse. That's just the white shoe brigade for you... they've been at it for 3 decades and are still at it. Bank valuations identify that pretty quickly though, so buyers should have been well aware of such issues unless they were crossing and werent told about the valuation by their lender or broker. Valuers are notoriously conservative on new stock of any kind, especially when preparing a valuation for a lender, so if you can get new stock with NRAS to value up with valuers everywhere, that tells a pretty good story. Point is, amongst all of the cowboy stuff there were good NRAS deals to be had. Still are.

 

Plenty of successful NRAS stories i think. From my experience, you have to find the right people to deal with. @euro73 numbers are great, there were plenty of great deals if you looked hard enough/dealt with the right people.

NRAS and its relative complexity and incentives, created lots of sharks that would just flog stock. They were the loudest group too, so it would give it a bad name.

In saying that, it certainly has its limitations so generally work best when trying to achieve cash flow specifically. In a decade of expanding asset prices, those that focussed on growth assets would likely have done far better than focussing on cash flow. In this decade where asset prices are unlikely to rise as fast as the last, its probably a more powerful way of generating a return on investment (limited growth environments mean cash flow is the way to generate returns).

 

I dunno... I bought and own a bunch of NRAS that have grown 30-40 % since purchase( less than 3 years ago) .... and I got the 8,9,10K CF+ outcome as well... and will have it for many years to come.

I'm talking Castle Hill, Elanora Heights, Bungarribee amongst others ...

You did pretty well, as well

#winnerwinner

This idea that CF (whether NRAS or anything else) equates to low quality outcomes is a myth. Same as the myth that equity = borrowing power.... myths that appeared true in an expansionary credit environment, but are now being shown for what they are - myths. #disrupted

It may well have served investors well to focus on growth for the past 25-30 years, but it would serve every reader well to ignore these myths in a post APRA world where borrowing power is the end game, meaning equity from growth increasingly equates to diddly squat but equity from cash flow /debt reduction is increasingly becoming king.

 

Strange some of the NRAS properties you see (i.e. this one)

15A Descent Street

New dual key one bedroom, one bathroom NRAS unit with picturesque views available 18/06/18!

15A is a sectioned off secure villa at the front of the residence.

Please note that this property has shared utilities (electricity, gas and water) with the adjoining property, which are calculated at 33% of total usage.

Conditions apply, please refer to following link to see if you are eligible for an NRAS property:

 

Mine was a 2012 off the plan purchase in Morayfield, Qld through Park Trent. Nothing but issues, over inflated values from the developer which resulted in a drop of 50k in value just prior to settlement. Value has not recovered in 8 years and I'll be lucky to sell for 270k, 65k less than purchase price. Broker struggled to find a lender happy to take on an NRAS property. Worried about rental potential once it's no longer part of the scheme.

 

Doesn't anyone, apart from Euro, have any experience?
I know a person who bought one in Munno Para (SA). He wasn't happy few years ago.

 

I'm the only one who 'liked' your post in 2018 because I unequivocally believed in the sentiment of your post. Fast forward to 2021.

Case closed.