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  • Profile photo of delucadn14563delucadn14563
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    @delucadn14563
    Join Date: 2003
    Post Count: 2

    Is this discussion about Westpac buying DHA properties or individuals buying properties? Furthermore, if property investing was a one size fits all, then why is this discussion occuring.

    I would like to reiterate my personal experiences with two DHA deals, in that both occasions I did the numbers and both occasions did come out -ve geared, however i am not bleeding or being crushed by impossible loan repayments. Instead I found 2 deals that worked out , with maximum 80% LVR, and got my portfolio off the ground.

    Why did I choose DHA, because I am not an Investment master, nor do I have the time to run around for the ideal property to appear and then find a worthy realestate agent and then for maintenance payments not to mention vacanies. The fact that all I had to do was buy the property then sit in faith that every month, my balance of the rent was depositied into my account had me sold.

    As far as properties prices go, I had independant valuations on both occasions which confirmed the price as market. If properties are grossly overpriced, how are banks approving loans with std LVRs?

    I found DHA staff very easy to work with and communicate well. I am sorry to hear others have had much hardship with their DHA contact. I put the high mgmt fee down to opportunity cost.

    Profile photo of delucadn14563delucadn14563
    Member
    @delucadn14563
    Join Date: 2003
    Post Count: 2

    We have purchased 2 properties from DHA in the last 6 years, one in Syd and one inTownsville, North Queensland. Both were on leaseback arrangements.

    I agree that the Mgmt fees are rather high, however, what you need to take into consideration is the guaranteed tenancy for that term as well as maintenance performed over that period. We did find the (Non Negotiable) properties slightly higher than similiar private market, however this was not enough to discourage us away and we have enjoyed generous growth on both the properties in the relatively short term that we have had them.

    Having said this, DHA is not the answer for everyone and it is by no means a no-brainer. We conducted all the usual due diligence and property/suburb researches before laying down a deposit as well as Financial Position calculations.

    Overall we have been very happy with the DHA system, and I continue to search the DHA site for new opportunities.

    Originally posted by SteveMcKnight:

    Hi,

    As the article says (click link), Westpac has just bought $100m worth of Defence Force housing.

    This would be a good time to discuss the merits of this type of investing, and also whether Westpac has made a good move in buying this portfolio.

    Oultine

    The Defence Force buys houses as homes for its personnel. From time to time, it then sells the property on a long-term leaseback basis.

    Their website is: http://www.dha.gov.au

    There are two main isses with DHA properties:

    1. The price is inflated given the guaranteed tenants; and
    2. The rentals fees appear high.

    DHA charges a monthly management fee of 16.5% (incl. GST) of the gross rental income for houses, or 12-14% (incl. GST) for apartments, units, and most townhouses if a body corporate is responsible for exterior maintenance. This monthly fee covers the cost of managing the property and most day-to-day maintenance (including repair or replacement of fixed appliances should they fail).

    On the flip side,

    1. There are no vacancies
    2. The tenant is the government, so you know they will pay

    Background

    Some months ago, the DHA put up an extensive portfolio of their houses for sale. While investors can buy houses (see http://invest.dha.gov.au/dha/), this portfolio was seen as attracive as there were so many properties available at the one time.

    The offer was put out to tender, and it seems that Westpac was the successful bidder at $100m.

    Westpac

    It seems that Westpac is planning to run Australia’s first Real Estate Investment Trust. This is essentially like a company float where investors can buy and sell units in the trust like they would shares in other public companies.

    Anyway, let’s open it up for discussion. What do you think of this type of investment? Have you owned a DHA property? If so, what has been your experience?

    Let the conversation begin.

    Steve McKnight

    **********
    Remember that success comes from doing things differently.
    **********

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