Defence housing

Any one would like to share the experience? either bought the currently leased property or similar..

 

I looked into it when i first began investing.

It's good in that they look after it, lease it very long term and they restore it to new again at their completion.

The downside is that
- The properties are usually over priced compared with equivalent normal properties in the same area
- You have to use their inhouse PM who is expensive
- There's no scope to add value

If your investing strategy is set and forget, "i never want to hear about this again" thats fine. You sacrifice a little bit of return in return for a hands off experience.

 

thanks @D.T. I thought the same but I guess I am looking for an easy way .
Anybody had an experience of renting them an already developed property?…I know they have defence housing properties around the area I am looking at… not-so-demanding areas though

 

Also looked into it in the Ipswich area, around March this year. This was a property 7 years into a 13 year lease. Condition was good and depreciation would have been respectable.

Tried to low-ball the vendor who just wouldn't budge. Price I was willing to pay was below their original purchase price. They had tried and failed a number of times to sell.

Decided that property was not ideally located to warrant pursuing further. It was in an isolated part of the suburb so location to amenities such as shops and schools was poor.

I ended up buying a recently-renovated 50 year old property that is cashflow positive and in a good location for gentrification and capital growth.

 

You will limit the market if you have to sell the property.

 

I do know someone who bought and held. Sold post DHA vacating & make good.

They had purchased in Darwin when prices were reasonable (even for these).

Sold with a decent capital gain however you do need to pick the right market.

 

ive heard financing could be trickier with certain banks too. If a bank ever had to resell it and recoup losses, they can only sell it to a certain market compared to a normal home.

 

http://somersoft.com/forums/showthread.php?t=107410&highlight=Defence+housing

Good thread about it from somersoft. A friend of mine built his own place in Wodonga and followed the requirements set out by DHA before offering it for rent to them, he seems happy with how it's going.

 

That was the case when I was seeking finance to buy the DHA property in around March this year. CBA would only do 90% LVR or lower at the time. I believe at that stage they were willing to do 95% lends for regular investment properties.

 

I see. Thanks. I am looking at building at own place (outskirt, regional) and rent it out to DHA - its a backup plan if it does not rent out well, but I guess I got to follow the set requirements.. haven't really decided yet...

 

If you have a new property in an area that DHA are interested in, you can contact them as an individual and offer your property to them. Cheaper than buying one.

 

I was interested in a few properties they were selling in Darwin. Rough calculations showed the rent they pay and the commission they charge usually leaves a property at just about neutral, if not negative with today's interest rates.Not something for me atm, but good luck

 

I think its seperate but I just want to check. Is renting to DHA different to renting to someone in the defence force? I consider the latter like any other individual wanting to rent and have no dealings with DHA. Is this correct?

If rented to DHA, they have the power to rent out to their tennants?

My property is not a defence housing property.

 

DHA deals are quite poor when compared with non-DHA. Very gold plated. And not all tenants are defence !! Its marketed as easy and that seems true but you pay for it.

I looked at a Darwin property recently and its was almost $900K to buy in. Darwin ?

 

3 years ago.. sure!

Buying that right now would be suicide....

I've been seeing some of the 700k DHA homes going for 550k....

 

DHA don't "rent" properties from owners.... they enter into mid-long term property management contracts. High management fee ~16.5% but zero vacancy & end lease/contract repairs (ie. Paint, recarpet) that vary based on term. They only place Defence personnel in the property & manage/pay most minor maintenance issues directly as part of the management overhead. Usually only major issues/maintenance involve owner. DHA is the tenant's (the Defence member's) landord.

Renting to Defence member directly will usually require a break lease clause in case they get moved/relocated by Defence after lease signature. Very different to contract with DHA.

 

Thanks you for that.

In this scenario, this is no different to renting to someone outside the defence force right? They are still required to give notice otherwise the break lease penalties kick in?

This I don't get. I thought these housing are benefits to our defence guys, allowing them to rent cheaper than market rates. If they are able to tenant civilians, what's the point?

 

Actually, renting to Defence people is slightly better than regular tenants in one regard: if they behave poorly, or don't pay, you can approach Defence and they'll deal with it for you. The only negative is they often put break lease clauses in there, but most of the time they only enact them in December or January, and while they're leaving there's often someone arriving.

Indeed. The rumours are the government wants DHA to be more like a business, so they can eventually sell them off. They like renting to civilians because they can charge market rates, not the discounted Defence rate.