Sometimes we all find a gem hiding on the ww web and this one doesn't have pictures. This article compares NRAS v DHA. I found it informative. Comparing NRAS (National Rental Affordability Scheme) to DHA (Defence Housing Australia) | Empower Housing Group
I wouldn't say gem because most points are wrong or misleading or pure NRAS biassed. Let's see if I can argue for DHA. 1. Lease terms – “NRAS is a 10-year term vs. DHA's 3 or 6-year terms. However, DHA can vary their terms as they wish during their term.” Full of crap. DHA leases are generally 12+3 (option) years. No DHA can’t vary their term in the first 12 years. They have the right to extend to another 3 years. In fact, some investors find the long-term lease unattractive. 2. Property management – “NRAS homes are managed by either a Gov't NRAS property management firm or a Consortium property management firm vs. DHA who manage the homes.” So what? Investor is renting to DHA. It is DHA’s business how they manage the tenant. Some ask what if the tenant trashes the place. Well… most if not all are military officers. At the end of the lease term, DHA re-paints and replaces the carpet anyway. 3. Property management fees – “NRAS property managers typically charge from 8.8 to 11% vs. DHA that charge 16.5% for single residences and up to 14% for apartments.” Point 1: I think NRAS PM fees are on the market rate not the discounted rate. If that is the case then the PM fees become effectively 11% to 13.8%. Point 2: DHA’s fees include most repairs. No vacancy. No letting fee. Practically no calls. Fees don’t cover the same in both so it is not fair to compare. 4. Tenants - "NRAS tenants can be anyone you approve of providing their incomes don't exceed defined limits vs. DHA tenants that can only be Defence members and their families." Again, so what? Your agreement is with DHA. They still pay you the market rent even if it is vacant. 5. Property types – “…NRAS with dual and multiple incomes ie. Dual Occupancy.” That is true. NRAS’s dual occupancy can be good as long as the asset itself is good. 6. Property locations – “NRAS properties are located in 'defined growth areas' as determined by the State and Territory Governments vs. DHA that are located close to Defence Bases and Defence Establishments.” I thought most NRAS locations are in ‘whoop whoop’ too. Maybe it used to be. DHA can be in whoop whoop areas too but there are areas where there is multi-economy. West Wodonga or Townsville come to my mind. 7. Tenant rents – “NRAS uses market rents less 20% vs. DHA that provides a guaranteed rent. NRAS properties are typically never vacant and first to rent as a result of the rental discounting. “ What is the point here? Regardless of vacant or not, DHA pays you the rent! 8. Property negative gearing – “NRAS reduces the rents by 20% and as a result, negative gearing is maximised vs. DHA that provides negative gearing but lower in value due to full rent being charged.” What a bunch of crap. @MTR would be very disappointed! Why don’t you rent your place for free so you can maximise your negative gearing? Negative gearing from depreciation schedule is good if you have higher income but not when you are actually losing money. 9. Taxation offsets/ Government payments – “NRAS provides 1 or more State or Territory Gov't non-assessable tax-free cash payments…. “ True.. that is the gift for renting out at discounted rate.
The opportunity to purchase NRAS is almost done... You'll find very few well priced opportunities anywhere now. By June 2016 you'll find only "used" NRAS. So this debate is fairly irrelevant now. But for what it's worth, well placed NRAS without severely inflated prices are superior to DHA in every way....good luck finding any online
Devank & Terry both raise very good points. I had expected some feedback like this. One of the best parts of the PC forum is the ability for bias to be levelled through alternative opinions.
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