WA 1st IP - DARCH - Advice needed

Hello,

I am planning to buy our first IP and came across this property in Darch.

5 Chernoff Loop Darch WA 6065 - House for Sale #123624326 - realestate.com.au

Positives:

NRAS approved and the agent said that the NRAS ownership can be transferred to the buyers,
Long term tenants and around 11K tax incentives.

Can you please provide your thoughts suggestions.

Thanks heaps

 

Keep in mind that NRAS properties in WA have to be managed through 1 of very few places, you get very little if any choice in the matter. You need to weigh their high fees into your sums.

Would you have bought in that area otherwise? Once the NRAS incentives run out it'll return to being a normal house in Darch. Whats the plan then?

 

Also have a chat with your broker regarding buying NRAS - some lenders don't like them and will have a list of other conditions to be met before the loan can be approved.

The LVR can also be lower in some cases so be careful if you were planning on just rocking into any old bank for an approval.

 

This. Would you have bought something similar but for the NRAS? If the answer is no, probably best to move on with following your actual strategy.

 

@D.T. Thanks for the response mate. I have been living in Landsdale (next suburb to darch) and have been following the suburb closely so even if I take NRAS out of equation. I believe Darch is a good suburb to invest as it's close to two industrial suburbs Malaga & Wangara and relatively close to beaches as well.

 

@Jess Peletier Thanks for suggestion. I will have a discussion with my broker

 

Yep. I was looking at that same house earlier today. For 2016-2017 NRAS will pay you $11,048.40, index annually. I don't know if this still runs for 10 years or expires in 2022 but that would be somewhere around $66,290.40 - $110,484.00 tax free over the life of the program. Seems tempting?

My question is, what happens when NRAS ends? Does this property stack up as a non-NRAS property? Is it well located? Will it rent well? What will be it's value? What will it rent for?

As @Jess Peletier mentioned, some lenders don't like NRAS, so it won't necessarily boost your borrowing capacity. That is worth checking out before jumping in.

I can't evaluate if this is a good deal or a bad deal. Are there better options?

 

@thatbum . Thanks for reply. I would bought something similar anyways in these suburbs.
I am planning to buy a 3x2 relatively new house which can get rented quickly and easily. Also the offer price is well below the market rates. I inquired with the agents and the owners are leaving WA and moving overseas hence the price is below market.
In your opinion do you think NRAS actually makes difference or not

 

@Perthguy Thanks for reply. It does end in 2022.

The current properties in Darch are rented around 390-400 for similar 3x2 house.

I have been following this property from last couple of months had it has been reduced from 420K to 390K

It is well located just less than 2km from school, shopping centre and close to highways as well

 

Could be worth investigating further. Depreciation should be quite good considering it is a relatively new build. NRAS credits + depreciation should make this attractive until 2022. After that, 390-400 pw seems a reasonable rent. Hopefully by 2022, rents will have increased somewhat in Perth. They are very low now.

 

@Perthguy Low rents and high vacancy rates are the things holding me back from jumping into the market.