NRAS

Discussion in 'NRAS & NDIS SDA' started by Cactus, 20th Jan, 2016.

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  1. LibGS

    LibGS Well-Known Member

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    I just settled on my 5th NRAS. 4 of them have been through @euro73, the other one, I bought through a real estate agent and it was nearly a disaster, but euro got me out of the ****.

    For me, the mathematical certainty of 5 CF+ properties is great. I don't want to stress about picking the right property in the right area, doing a gorilla reno to get more rent, etc, etc. Having said that, if I had been a bit more daring with my selections, I could also be enjoying some good CG. Hindsight is wonderful.

    So with good cashflow and some modest inflation level CG, in 10 years, I'll be doing very well.
     
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  2. mcarthur

    mcarthur Well-Known Member

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    I wish I'd known about NRAS earlier:cool:, and had money ready :rolleyes:, before the scarcity hit. I've been a believer in @euro73 's message, but either wasn't ready in my portfolio or when it was ready then the money or property for me wasn't ready.
    I'm now headed down a CF+ for the next one, and keen to explore the DOcc or other means for debt reduction.
     
  3. LibGS

    LibGS Well-Known Member

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    2nd hand NRAS is definitely an option. One of my 5, I bought 2nd hand with 9 years of NRAS to go. And there are some which are currently being built that won't settle until next year.
     
  4. mcarthur

    mcarthur Well-Known Member

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    Good points! I hadn't thought of secondhand...
    Of the stock being built, the ones I've talked with @euro73 about aren't right for me.

    @LibGS , where did you source the secondhand one, if you can say?
     
  5. LibGS

    LibGS Well-Known Member

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    Through euro. I'm happy to tell the story.

    He sent me an email that a colleague in Melbourne was trying to sell a 2nd hand NRAS. $427k, 2 br in West Footscray, basically the same price they bought it for. $427k was a bit out of our price range. A few months later, euro mailed me said the vendors were very keen to sell and had dropped the price significantly. I eventually bought it for $385k. Archicentre inspected it and told me it was flawless. Bargain. I'll get some nice CG over the next 20 years. During the NRAS period it will be around 6k CF+ annually.

    The original owners must've been very inexperienced investors, as they hadn't even done a depreciation schedule.
     
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  6. hash_investor

    hash_investor Well-Known Member

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    should have educated them
     
  7. LibGS

    LibGS Well-Known Member

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    Actually, euro is really good in this respect almost to the point of being nagging, when it comes to reminders to get things like depreciation schedules and pre handover inspections done.
     
  8. Westminster

    Westminster Tigress at Tiger Developments Business Member

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    Note if you do have any newly built stock it is possible to buy some second hand NRAS allocations. They are generally from NRAS stock that has been sold and the new owner doesn't want to do NRAS or they are going to PPOR.
    Expect to pay around $1000-1500 per year left in the scheme
    The downside is that the govt in all it's lovely beaurocratic sh1tfest will take up to 6mths to approve the change of dwelling so you will need to rent it out at 20% less rent during that time and assume it will be approved - which from all accounts it should be
     
  9. Angel

    Angel Well-Known Member

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    I read last year that the govt had stuffed up and not processed the rebates. Owners were nearly a year behind in receiving them. Is that true? When Euro first mentioned them, I was very seriously looking at the scheme but chickened out, expecting that the govt would cancel the whole scheme and I would be left with the kind of property that I didn't really want (interstate in oversupplied suburbs)) or I couldn't afford (inner Sydney or Melbourne).
     
  10. Westminster

    Westminster Tigress at Tiger Developments Business Member

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    Not stuffed up per se and it was 2yrs ago but yes owners received their rebates up to 12mths late after all the NRAS consortiums had to re-supply a heap of information to comply. Everyone eventually got theirs but it caused a lot of stress to people.
     
  11. euro73

    euro73 Well-Known Member Business Member

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    This years payments have all been finalised already. So all appears to be back on track.
     
  12. euro73

    euro73 Well-Known Member Business Member

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    Have just successfully transferred some 2nd hand incentives to some brand new stock in Taringa QLD. Took 10 weeks to get the approval . @ 6 years eligibility left on the incentives
     
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  13. Dbaker1202

    Dbaker1202 Member

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    @euro73 are you willing to name the consortiums that reduce the rent by 25.1%? i have a feeling one of them is NAHC in QLD? is the other Affordable housing consulting in SA?
    Also has anyone ever had any dealings with PASA  PASA they advertise secondhand NRAS stock for sale. Any good/bad points??
    Im a couple of days off getting pre approval for finance (I have informed my broker of my intentions to purchase NRAS). Once i have my approval im looking at purchasing a secondhand NRAS property, any opinions on consortiums/Managing agents to avoid would be handy. My reason for NRAS first up is for the cashflow to aid in paying down my PPoR Debt. im still youngish at 31 with a good job and plenty of time for further investments. ie im not planning on retiring anytime soon, I'm in for the long haul investing but would like to have my house paid off quickly as im sure everyone does.
     
  14. Plutus

    Plutus Well-Known Member

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    Why I'm not interested as them as an investor:

    • Ridiculously hard to find NRAS properties that are in desirable locations, decent buildings and haven't been marked up in price
    • The first 3 floors of my building are NRAS and they are 99% of the problem tenants. It didn't make the news for some reason, but last weekend there was a stabbing. They are only reason we haven't bought in our building & will likely move soon. We're noticing an increasing trend toward the NRAS units that used to be occupied by older people being occupied by young people with blatant drug and alcohol issues. Given how much new stock is being built in our area (Woolloongabba / Kangaroo Point), I suspect anyone who has bought in the building will likely have lost money.
     
  15. euro73

    euro73 Well-Known Member Business Member

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    Correct. In order to protect their "charity" status..... ironic, as they charge the highest NRAS management and compliance fees at the same time as asking investors to take the largest discount to rent - which the regulations require to be 20%, not 25.1%.

    Yes I know them but as they are my competition, its not right for me to comment directly.


    Sure. I have posted numerous times on this already .
     
  16. euro73

    euro73 Well-Known Member Business Member

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    This is incorrect. As I have commented to you before - you looked in all the wrong places. I have consistently put together excellent NRAS deals for my clients over the past 3-4 years. Not once. Not twice. Over and over again.

    Two recent examples;

    Castle Hill. 2 bed apartments. Paid 620K off the plan. Valued at settlement 760K +

    Bungarribee. 3 bed townhouses. Paid 560-590K off the plan. Valued at settlement 650K+

    But there have been plenty of others - Elanora Heights, Enfield, Gregory Hills , Alderley, Annerley, Windsor, Mt Gravatt, Zillmere, Sherwood, Port Macquarie, Orange, Dubbo, Goulburn, Wynnum, Fairy Meadow, Athol Park, Brunswick....

    Excellent cash flow. Valuations on the button. Solid growth. Some better than others ( so far at least ) but all extremely good deals none the less....

    Taringa and Merrylands now... again, vals on the money.
     
  17. neK

    neK Well-Known Member

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    I've looked at it a few times and I just couldn't justify the cost - but that's not because it's NRAS.
    Had a few chats with @euro73 and while the numbers from a cashflow perspective stacked up, its the value of the units themselves that didn't (bank valuation would be fine, but it's my own valuation that doesn't stack up).

    For example, there were NRAS units selling Canterbury @ $700k roughly. Location was nice and quite, but close enough to the station (15 min walk). Other OTP units were selling at a similar price. But I could pick up older style redbrick units for around $420k. Granted they would be smaller and rent for less, but it was also about $300k cheaper.

    The other issue for NRAS is that the areas I was interested in, the numbers didn't stack up well. That being, even after the discounted rent, the income level requirement to qualify as a tenant meant there wasn't much money left over for their day to day living.

    For example
    2016-2017 Limits
    1st Adult = $48,527
    2nd Adult = $18,546
    1 Child = $16,096
    Total Household income = 83,169.

    Rental for the unit would been around $500 per week after discount.

    Assuming one working parent, one non working parent, the net income from the person would have been $1,210 per week.
    Takeaway $500 in rent, would have left them $710 per week ($36,920 per annum).... required to feed 3 people.
    Keep in mind that the age pension is $34,382 per annum (for a couple combined)

    So when adding up all those variables, NRAS never quite stacked up for me. In a way, it seemed like trading off capital gains for a positive geared investment (but this is also the reason why I wouldn't buy OTP).

    In comparison, I could have bought a unit for $420k, renovated it for $50k, rent it out for $420 per week (without the NRAS tenancy requirements), low strata and be neutral (or slightly negatively geared). In return I would be expect there to be greater capital gains in the long term, because after 10 years, a property 10 year old property is not too different than a 55 year old property (other than 72sqm vs 100sqm).

    That said, NRAS does work better in areas where rent is lower.
     
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  18. Plutus

    Plutus Well-Known Member

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    Mate you're spruiking your product/business, hardly an impartial source. Also bank valuations /= actual value. I can't really comment on those (i'd be interested to hear the Wynnum deal you put together) because I don't know the market, but in my market, Brisbane, all the NRAS I've seen have been crap buys due to building location or due to being massively overpriced.

    This is the kind of crap I'm talking about:
    $465,000 for a 53m2 1/1/1 city fringe apartment.
    2508/35 Campbell Street Bowen Hills Qld 4006 - Apartment for Sale #118003195 - realestate.com.au

    Here's a bigger place with a 2nd bedroom for $65,000 less in Bowen Hills
    16/16 Wren Street Bowen Hills Qld 4006 - Unit for Sale #123514498 - realestate.com.au

    Here's a nicer (+ no NRAS tenants), new build for $65,000 less
    5 Cintra Road Bowen Hills Qld 4006 - Unit for Sale #123262366 - realestate.com.au

    Here's an older, but bigger & nicer 1 bed in the same street for $110,000 less:
    4604/141 Campbell Street Bowen Hills Qld 4006 - Apartment for Sale #122756406 - realestate.com.au

    NRas seems like a great idea on paper and great for cashflow, but the people who are really making the money seem to be people like you or real estate agents, I have very little faith that any of them are going to be good long term buys.
     
  19. euro73

    euro73 Well-Known Member Business Member

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    Well of course I discuss business - this is a commercial forum paid for by business members, of which I am one. Its fine to be cynical or dubious, but I would prefer you judge my bona fides by results. The word "spruiker" implies I operate a business that doesn't put results first. That is incorrect.

    To your examples - it's really easy to find examples like those in Bowen Hills and elsewhere, sold with grossly inflated prices. Too easy in fact. But it has nothing to do with NRAS. It is a problem caused by greedy, antiquated project marketing businesses whose only interest is maximising commissions . Whether it's apartments or house land packages being sold at inflated prices, that price gouging was happening well before NRAS, and will happen well after NRAS. Open any property magazine and you will find examples of what Im talking about. But we should be very clear - NRAS itself is not the reason for it. NRAS just gave these guys an extra trick to add to their sales pony. That doesnt make NRAS the problem. It makes investment property snake oilers the problem.

    So we are actually in complete agreement that far too many of the NRAS properties brought to market (especially in Qld, where the white shoe brigade is most prolific) used it to dress mutton up as lamb. If you read back through my posts in 2013 and 14 and 15 and 16, I have talked a lot about this very problem. But that doesn't change the fact that it has always been the case that if employed correctly, NRAS can be very powerful. The trick has always been , finding people who put it together correctly so that you could secure the cash flow benefits without paying "overs" for the property. Difficult? To the average Joe on the street, promised riches by the white shoe brigade? Sure. But not very difficult if you were a reader of these forums.
     
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  20. Plutus

    Plutus Well-Known Member

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    From a theoretical point of view yeah I completely agree with that. In reality my personal observations of NRAS have probably been poisoned by the QLD market and my views on it are very much in line with Nek's,

    I've found a few properties that have good numbers thanks to being NRAS, but I wouldn't touch them if they weren't NRAS.