Hello,
Does anyone have any experiences with Defense Housing investment properties? and most importantly, is it as good as it’s made out to be. It is said that there are no gaps between tenants, all maintenance is taken care of and maintenance fee is taken out of the monthly income and the impression is ‘sit back and enjoy the ride’ for nine years, with a repaint and re-carpet at the end. A family friend claimed he was very satisfied with returns being better than term deposits.
I am wanting to start investing in property as a first timer and cannot afford to make a wrong choice and lose money.
All feedback welcome. Thank you[aacool]
Mutleysmum
I had looked into these investments a few years ago and this is what I found.
1) Their properties are at least 15% more that a comparable property in the area.
2) Their management fees are quite substantial compared to local REA’s.
3) If rents for the area go down (general oversupply etc). They can REDUCE their rents to match.
4) After 9 years of tenancy you’ll be needing more than a recarpet and paint I bet.Most new investors go for these because they’re a bit of a no brainer but after a while the landlord soon figures he could do a lot better for his buck himself out on the market.
Hello,
I also was interested in these last year so I started to look into them and experienced similar to qwerty.
You can e-mail [email protected] and they will e-mail you houses they have around the country or you can go to their website and join up if you want to check them out.
This will at least give you an idea of what they have. I still get them sent to me just to keep an eye out although I am yet to find one with a good return. They appear to go more for newer homes these days and the returns are not good. To give you an idea the following were sent to me recently: Baulkham Hills, Sydney Price: 520,000 Rent: $430, North Strathfield, Sydney Price: 675,000 Rent: $500, Albany Creek, Brisbane Price: $449,000 Rent: $360.
Although I do have a friend of the family who has one and they are very happy! I prefer to find my own as I find you can negotiate a better deal.
Hope this helps
Cheers
Fluffy
I recall hearing their management fees are around 16%.
All in all they probably yield less than 3%. There is no real way to add any value and your growth prospects are limited by this.
But guys (here I go contradicting myself again).
Putting in a 20% deposit (other equity etc) would result in a –ve geared situation. If the property is reasonably well positioned you would hope its value would double in the 9 year period wouldn’t you?
Considering the –ve geared component, depreciation etc would you show a reasonable profit after 9 years? I bet you would.
Maybe a good opportunity for those of us who want to be really hands off with their investments
I agree with qwerty
DHA take around 15% + GST
One property sold in my area for $250K . Rent was $250.00 per week – 16.5% = $208.75per week.
Annual Yield 4.34%
Extra commission probably goes towards painting and carpeting.
Cheers
Beancounter
Hello Mutleys Mum,
I currently have a Defence Housing Investment property, I purchased it just over 12 months ago. At first the returns didnt seem to great but the property was located in a very nice area (Cairns, Forest Gardens) the house was in good shape and the tenants looked after the property and had been there for approx 4-5 years. I purchased the property off a private investor not defence force housing. The DHA take 15%. In the time I’ve had it I have not seen or heard from them, I visited the property recently and it is in great shape. The DHA direct debits the money into my account each month on the day due or a few days early, no hassles. They review the rent each year and last year we got an increase.They have an independant valuer assess the property.We received an increase in rent of $15 per week.As long as you do due dilgence there is no reason as to why you cant get capital growth.[biggrin]Martin
are you still happy with defence housing- i am considering purchasing one in Cairns
Liz2005
Hi Liz,
I dont have the Defence House any more I decided to sell as the market was continuing to go up. I think I made approx $75000 profit on it in just over a year. As mentioned before I purchased the property off a real estate agent not through Defence Housing. Defence Housing value the property in regards to rents yearly and just before I sold it they increased the rent another $15 per week.$30 per week total increase for a property I had for just over a year is good.I guess you need to do the figures as to whether its a good investment or not or whether there is a big upside for capital growth.If you like post the figures and where the property is located. Good Luck anyway. Martin[biggrin]There are 3 types of people:1. People who make things happen.
2. People who watch what happens.
3. People who wondered what happened.The few issues I have with DHA properties is this:
1. If you want to sell again during the time of the lease, it will be to an investor as it MUST be leased back to them. Hence, what you get for the property will be solely on the rental return – whatever that may be.
2. You have no options in order to try to improve the value of the building or to increase the rent with renovations, etc.
However, they seem to be hassle free investments. In your current circumstance, where you feel that you don’t want any problems, then this may be perfect for you. No vacancies would be a real plus in your view. There would be worse investments out there.
Munjy
Hi guys,
I recently purchased a DHA property in Sydney for $475,000 in the suburb of Castle Hill..in around June or so.
To me, it seems like a fairly sensible investment if you are happy to wait 3-4 years..and currently the prices have almost bottomed out IMO so I think it could be a good time to buy.
The main attraction is that it is hassle-free and tenants are guaranteed…also the rents are guaranteed at a minimum level..so the rent can only go up..
So yeah, I think if you find a well-priced property, go for it!
I recently looked into investing in one of their properties in SA. They look too good to be true on the surface – investment is hands off as they manage everything for you, however when you do the numbers the properties end up heavily negatively geared. It depends on what you are after, positively geared vs capital appreciation.
Property prices are still very high in general in comparison to rental return. New properties generate more depreciation than older properties. The question has to be asked if property is the way to go at the moment.
Leo
I had a look at a number of these DHA properties in Queensland and NSW last year. The reason I looked was that I received some brochures in the mail informing me of the investments. On the surface they looked very interesting with “guaranteed” 9% returns and potential capital growth.
My plan being geared towards CF+ IP’s these looked worth investigating. Unfortunately, on doing the sums the 9% was gross return, and the net return was between 4% and 5%, making them CF-.
If looking for CF+ then currently these don’t qualify.
pr
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