30k in cash- want to get started

Amazing.

 

Yes. The numbers do look good!

I'm looking at sourcing a "second-hand" NRAS allocation for our brand-new one-bedder in Perth, in an effort to improve the bottom line in this tough WA market.

We're just waiting to hear if the NRAS substitution (from the original NRAS dwelling to mine) is a goer.

There's pros and cons to NRAS. Hopefully it pays off!

 

Correct!

 

@euro73 is this below the type of NRAS property ?
Affordable housing shortage leaves workers sleeping rough in Sydney

 

Its one example. Here are some others which I have sold.

Bungarribbee NSW



Orange NSW


Elanora Heights NSW



Harris Park NSW



Sherwood , QLD


Alderley, QLD


Brunswick, VIC



Canterbury, NSW



Gregory Hills NSW - dual occupancy



Athol Park, SA

 

Settling in 1 week. Port Macquarie. 1 bedders. Market rent $280 per week. NRAS rent $224 per week . My investors paid 260K for these. Will be @ 11k CF+ tax free , year 1 .

 

Questus or Quantum ?

 

I'm looking at similar situation shortly once my PPOR build is complete - so far my thinking is to debt recycling into LIC, thinking reasonable focus on higher yield to assist with debt reduction.

 

Quantum never got back to my email, but Questus did and I discussed it with them. After these discussions and a fair bit of online research, here's what I wrote about NRAS on my other thread about our development here ... My "Armchair Developer" Experience (cont. from Somersoft)

"We looked into NRAS (once again, thanks @Westminster for the suggestion) and there is an allocation there that can be "substituted" from an old NRAS dwelling to our dwelling (for a purchase price of approx. $8000 for seven years of $11K in tax-free gov incentives each year), but there are too many ifs, buts, and maybes that seem to go with the NRAS scheme that my gut feeling is that it would be a major punt with a lot of risk to it. For example, even after we apply for the substitution, it would be anywhere from 1-6 months until we find out from the gov if we are successful, and during this time we would have to let the property at at least 20% less than the market rent, with no guarantees of the substitution and hence the incentives.

Also, with NRAS the tenant pool is reduced, as only those with incomes of less than $48K/yr are eligible to apply for the lease, and so it could be even more difficult in the current market to find a tenant.

Furthermore, with NRAS if the property is vacant for more than 91 days a year (it's been 82 so far with our current PM!), the gov incentives are forfeited.

As well, with NRAS applicants are asked to go through a lengthy and stringent application process, and so, once again, in the current market where there is so much to choose from, this could be a turn-off even to those who ARE eligible to apply for tenancy.

Anyway, there's a lot to consider."

Cheers,
Crido

 

When you posted this in your other thread it was the first time I've seen this mentioned. This could be a massive deal breaker for a lot of people.
I haven't persoanlly looked into NRAS for myself a lot, but what I know of it the stock you're getting isn't usually that rare, being new development stock.
So if you find yourself fighting for a tenant like @Crido and vacant for 92 days of the year say goodbye to your incentives.
Now I've never had a vacancy for that long - but also haven't bought this type of stock that has a limited market.

 

The information isnt quite correct- If a property is vacant for greater than 91 days ( 13 weeks) the NRAS is not forfeited. It is reduced at a pro rata rate of $30.27 per day. If a property is vacant 182 days (26 weeks) the NRAS is forfeited.

 

This is the income test for single applicants. The income tests for couples, couples + 1 child etc are higher....

 

All they are required to do that is "extra" is to provide evidence to demonstrate what they earned in the 12 months up to their date of application for tenancy ... other than that, standard residential tenancy laws apply.


When times are tough, consider a scenario where two investors who own very similar properties in the same street or same suburb are offering them for rent. Whose shoes would you rather be in; The NRAS investor , who can drop rent by 20% and still enjoy massive cash flow surpluses, or the non NRAS investor?


You should ask around for opinions on the forum from those with NRAS properties - they will tell you their properties are rarely ( if ever) vacant .

 

Thanks Crido for providing a balanced view of NRAS.

What are the other negatives for NRAS? all i hear is the positive.

 

It also appears as if most of the NRAS properties are high density properties with little land content. So is it safe to say, that NRAS properties will struggle to have the same growth as a brand new free standing property, due to the expected oversupply of apartments hitting the market?

 

That makes a bit more sense - is the prorata from 91days+ or once you go over 91days it counts each vacant day?

 

every day in excess of 91 days vacancy results in a pro rata reduction ( $11,048 / 365 days) up until 182 days vacancy , at which time the full year incentive is forfeited

 

I manage NRAS properties in this complex. I hear very little out of them so its quite a win win situation to be in. A bit more involved with NRAS properties than normal ones, ie the compliance side of things but its not too bad.

 

@D.T. What are your management fees for nras properties, are they higher than fees for regular IPs?

 

For most agencies yes. I do it at the same rate as normal properties despite being only one of few authorised for nras properties.