NRAS

Haha mate I’m yet to meet a developer who didn’t gough! If it were not the case we wouldn’t have so much undervalued apartments....but that’s ok because they offer a rental guarantee to offset your 25% extra cost apartment... *sigh*

 

Correct...something like 98% of NRAS never stacked up...people will only realize this when NRAS benefits run out and find out mostly their property values never stacked up.

 

You can fool some people all the time...but some you can'.t....

I ain't buying...same thing when people try to build things in regional areas with a Sydney mindset. Nutin' against regional areas..as I invested in Geelong...but you need to build the right product.

Otherwise...only the developers and sales agents are getting rich. Same reason why I see people jump into CF properties in Logan ...I shake my head..no money in it...sure there maybe short terms CF...but people don't think what happens if rents come off..then what???

 

The reality is, with servicing restricted, and with NG on the chopping block, this presents great opportunities if deployed well. I get that you don't like the idea of NRAS, and it's all well and good for you to position your arguments as you do, but you live at home, do not have a PPOR mortgage , have had 20 years of pre APRA borrowing to take advantage of, and have had 20 years of neg gearing to take advantage of.

I write for those who have a PPOR mortgage, have a partner and dependent kids, haven't had 20 years of pre APRA policies to compound off the back off, probably wont have neg gearing, and who are looking at what the next 20 years requires of them to get ahead.

Lets say I deliver dual occ/dual NRAS in regionals like Orange or Bathurst for example... are you seriously trying to convince anyone that most investors - particularly those with a mortgage, kids, and limited borrowing capacity, aren't going to get tremendous value out of a property that can generate 9.5 - 12K CF+ while also running P&I ??????

The properties would quite literally pay themselves off within the proposed 15 year NRAS time frame. They would effectively be a guaranteed annuity income within 15 years.

They retail for @ 600K . They rent for $680 per week at the moment. Reduce that by 20% and its 28.3K per annum. If you borrowed the 605K ( stamps are only 5K on the land) at 4.3% P&I your total repayments are 35.9K . Add 6K for running costs and you are looking at 41.9K expenses v 28.3K income. So you'd be operating at a 13.6K loss, before tax. The interest component of the repayments is 26K and the principle isnt deductible so when we combine the 26K of interest and the 6K of holding costs we end up with only 32K of costs for tax purposes. Because our rent is @ 28K we end up with only @ 4K being deductible. Add 15K for depreciation - which you'll still get as its a new build - and you have a @ 19K deductible loss.

At 32.5% you'd see a @$6175 refund, plus 17K NRAS credits
At 37% you'd see @$7030 refund, plus 17K NRAS credits .
At 45% you'd see@ $8550 refund, plus 17K in NRAS cerdits

So at 32.5% you'd generate a total refund of over 23K against an operating loss of 13.6K , meaning the property would be @9.4K CF+ even after running it P&I

At 37% you'd generate a total refund of @ 24K against an operating loss of 13.6K , meaning the property would be @ 10.4K CF+ even after running it P&I

At 45% you'd generate a total refund of @ 25.5K against an operating loss of 13.6K , meaning the property would be @12 K CF+ even after running it P&I

The numbers will only get better as rents increase over time, and the NRAS credits increase over time. But for the purposes of this example, lets assume there is zero rental inflation and zero NRAS inflation acros 15 years. Highly improbable, but lets go with that anyway. The examples below are therefore at the extreme end of the worst case scenario....

If I'm on 32.5% Marginal Tax Rate and I redeploy $9400 per annum ( $783.33 per month) towards a 605K mortgage , I pay it off in 20 years and 5 months



If I'm on 37% Marginal Tax Rate and I redeploy $10,400 per annum ( $866.67 per month) towards a 605K mortgage , I pay it off in 19 years and 9 months




If I'm on 45% Marginal Tax Rate and I redeploy $12,000 per annum ( $1000 per month) towards a 605K mortgage , I pay it off in 18 years and 10 months




Or, I can just set the loan P&I and let it pay itself off over 30 years, and use the annual surpluses to accelerate the repayments on my PPOR. Either way... it's all fantastic stuff in a lending environment that punishes debt and rewards debt reduction.

Forest. Trees. I can see clearly

 

Is Brevity and art?

It can still be done.....you just need a different strategy. And and you need to focus on selling and taking profit.

Dual occs in places like Orange and Bathhurst are really stupid...because the market for that is limited. Lets say I have helped a few people with kids on dual incomes of 200-300k.....and they are up to 4-5 properties and 400k in equity and pretty much self servicing.

I guess the people who go with you ideas have to learn the hard way.

By the way finance is not an issue if you have the right brokers and strategies.... Too many vested interests on this site who seem to be more interested in feathering their nests than real solid deals.

 

That's got nothing to do with it . Too much land is freehold or restricted in how it can be used . The government couldn't raise the funding from the massive growth in land and lease values. Instead they are doing the opposite. The greens and socialists wont allow the little public land we have to be used for housing they prefer parks. They expect capitalist to supply it at a loss. I don't think it would be acceptable to enough Australians for land to be confiscated and any attempt would be bogged down with endless court cases.

 

Yawn ... once again I offer facts , supported by numbers , and you answer with sashenomics - otherwise known as fiction , made up as you go and not supported by any evidence , numbers or facts You would think having the last 5 years of your nonsense dismantled would have taught you to jog on...

 

Matt, Singapore is very unique and may not replicate successfully elsewhere.

My understanding is:

Government build HDB flats (housing development board) and it’s not for lower socioeconomic people. The government actually plans builds and sells. 99% leaseholds. Not freehold.

Affordability is helped by allowing buyers to use their CPF fund or super equivalent. So buyers would have built up substantial deposit after working some years. Meanwhile live with parents or rent.

They only build up. Houses with lawn are private residences that are mostly freehold.

Government controls the pricings.

Recently there were a lot of debtates regarding the poor value the old flats have.

 

Agree...time for some Bomey M to liven it up...

 

Kinda what I meant by my last sentence, just didn't take the time to explain I guess so my bad.

Agreed. I do find it a fascinating study as a totally different model, not a perfect one just an alternative.

 

Far out I used to listen these guys back in the 90's! Cool.

 

Yep.....their other hits included Rasputin ...Rivers of Babylon ...and Ma Baker....

 

Now rivers of babylon is in my playing inside my head on repeat.

 

...and the picture of you bopping to this music.....

 

guilty