Hi all, I am seeking any information with regards to leasing my house through DHA. I am in the Defence Force myself, and am currently building my house in Collingwood Park, QLD. I am expecting that I will be moved next year and am trying to work out if it is worth attempting to get DHA to lease my house for 6-9 years. From my basic research, normal PM fees are approx. 7-9% in QLD however you then have to take into account vacancies, advertising and any repairs. DHA fees are 16.5%, but there will be no vacancies, minor repairs are all taken care of and at the end of the lease the house is repainted and carpets replaced. This is as far as I have gone with research. Has anyone here leased to DHA, and for normal PM, what do you find your average costs compare to after vacancies, advertising, repairs and any other costs you may incur? Cheers for any help.
I haven't had any involvement in DHA properties. But I think it would be prudent to assess whether you'd still purchase the property if it didn't have the DHA contract in place.
I haven't had any dealing with DHA personally, however I also haven't heard any negative comments about them also. It shouldn't be too hard to do the numbers and come up with the best deal Considering PM fees are 7-8% plus gst, letting fee equal to one weeks rent plus gst, allow for a vacancy rate of 2-4 weeks per year, therefore you would be looking PM costs on a $400 property with some minor repairs $2500-$3000 per year, over 9 years you would be looking at a minimum cost of $22,500 DHA costs approximately $31,000 over 9 years, plus new paint and carpet. Obviously PM fees & services vary from agency to agency and I would expect a better class of tenant over the long term. Do DHA have built in CPI rent increases over the life of the contract?
Friends of mine have 2 DHA investment houses. They love the 'buy and forget' factor as they dont worry about tenants or maintenance for 9-12 years. I guess you sacrifice rental return for convenience. They have never had issues. I could be wrong but if you need to sell i think you need to do so with the lease in place which could be a major issue.
Consider the usual factors for an investment including whether you see capital growth over the term of the lease. As your posting will take you away for several years it may be a worthwhile consideration. What happens if you return early? The decision drivers & costs are different as you already own the property vs buying from DHA.
I remember the Barefoot Investor saying not to do it. Maybe see if you can find his comment via Google
According to their website the "property will undergo an annual rent review and the rental income won't fall below the starting figure." I am speculative with this however as I don't think I would get a say in the rent they actually pay me. It would be based on their review research. Just read the barefoot investors reasons for not doing DHA. It was based on paying a 10-15% premium when buying the property, which I won't incur as I have the property already. But there is the whopping 16.5% PM fees that he mentions too. I will have to contact DHA WRT what happens if I am posted back to this location, would I be entitled to my house or would I have to live in another service residence ( would be weird living in my house paying DHA as a service residence). It seems to me that DHA fees may end up being a little higher depending on how much vacancy the property has if I didn't go through DHA. But the it seems more convenient. Is this convenience worth the premium?? Lots to consider. Thank you all for your input. All help is appreciated
@josh76 - Also consider whether you will still require landlord insurance - chances of DHA defaulting or damaging the property/setting up a Meth lab to do a runner are very low. So by the time you offset the additional cost of management against full occupancy, maintenace, decreased risk and tenant type - are you worse off?
Considering you may get deployed overseas for 6months or longer in a worse case scenerio, then this hands off approach may actually appeal to you much better then going through a real estate.
G'day mate, I had an existing property in Townsville that I rented privately, after 2 problem tenants I decided to contact DHA to see if my property met their criteria, it did except for some extras that Defence required: 2nd clothes line in garage, garden in backyard, coat hook for slouch hat, certain size pantry etc. DHA installed all extra's at their expense. I leased it to them at market standard rent, which has never dropped below that starting amount even though rents in Townsville dropped. 1 yr into the lease the hot water system died, DHA contacted me to get permission to replace at their expense, this coupled with the fact that they paid my rent without fail a month in advance even over a 5 week period when it wasn't tenanted was awesome, they also paid for a lawn and garden maintenance at this time to keep it presentable, their 15% fee is more than justified. They manage property with military precision and I've had 1 phone call off them in 4 yrs. Hope this helps
That sounds like a very positive experience so far. Did you find that their 'market rent' value was fair? In the sense of do you think you could have gotten a bit better if you went through a real estate PM? I'm surprised they paid for your hot water system? Reading their information on the DHA website I thought repairs in that nature were at the owners expense. Thanks for sharing your positive experience. Can I ask how long your lease is with them? Thank you this helps heaps
Hi Mate The rent was exactly the same as I was receiving from my previous private tenant, yes I was actually surprised that they paid for the hot water system too at the time, however they explained that the lease cover repair and replacement of most things as long as it isn't structural. The experience has been so positive compared to the initial private rental situation. My lease is for 6 yrs with the option of a further 3 if I so desire at the end of the 6.When the property is handed back they re,carpet,repaint and generally return the house as it was 9 yrs ago , I was Army at the time and right in the middle of pre deployment training and needed a fire and forget option, Im really glad I did it. Don't think Ill do it again as my strategy will be cash flow in the future. Hope this helps bud.
Hi Josh, just check what happens if your posted to a location where you own a property. I think that it may mean you become inelageable for RA or other defence accomodation. I've been out for ten years but I recall there being a clause like that somewhere in the paperwork.
Thank you for that. Crossed my mind but I will definitely ask about this. Will make it an easy decision if this is the case cheers
@mr500 Thank you for your comment. I called them and they confirmed that PACMAN says that as I own a house in location, Defence doesn't see my lease to DHA therefore waving my rights to subsidised housing. Decision made. Cheers everyone for your input
I found DHA is stingy with annual rental increase and do not commensurate with market rate. It is not ideal for property owner.
