Hi all,
i stumbled accross this property which is leased/managed by Defence Housing Authority (DHA). They pay ok rent even if the property is empty (potential tenants are their employees obviously) but charge ca 15% management fees (incl. “some” repairs though). Has any of you came across someting similar?
Cheers
Hi dan_76,
Yep, I’ve got a DHA place in Waikiki WA. It was my first IP, and I wanted to reduce risk.
It’s been great; there are no repair costs (except a tree fell down and had to get removed), and no worries about vacancy, tennant damage, etc.
I highly recommend them if you want a hands-off investment that you don’t have to worry about for 6 or 9 years.
Cheers,
MickI have lived in a DHA property. I have also looked into investing, but decided against. When I was looking, the prices of DHA properties seemed high compared to comparable houses in the area. I am guessing they are slightly inflated on account of the other advantages of being “hassle free”, they are also relatively new and should allow you to claim some depreciation on the building as a tax deduction.
If you are looking for a lease back type deal, you could also look display homes in new housing estates. Last time I looked they offered higher returns. They also inflate the prices, but you should be able to claim nice depreciation deductions.
Yeah spot on guys.
Firstly the “hassle free” part of the deal is really attractive especially for an investor deciding to hold the property forever. What I was not sure about was if I as a rightful owner of the property have any say there at all eg. wanting to sell the property eventualy or want it to become “regular” rental property with “normal” REA manager. I guess, as an owner I would lack the freedom of decision there. Pls correct me if I am wrong.
And yeah the price was somehow inflated. I am not sure if that should be the case cause with this kind of limitation (DHA in place) they limit the group of potential buyers (ie its got to be investor) and such somehow smaller target market should be actually reflected in the asking price. ie price should be actually bit lower than normal or not?
Anyway I will think if I put my offer thru on this one. I will make sure my offer is on the regular market level though.
Cheers
DHA housing is usually more expensive, mainly because it is seen as a more secure investment than say a vacant rental property.
The problem DHA is that when you sign you have to keep the lease running for the period that they have specified, so if you want to sell you probably won’t be able to sell to owner occupiers, which is a lerge % of the market.
Also DHA controls the rent, so if you believe your DHA house is below market rents by $20- all you can do is appeal to the DHA, they may agree with you or they may not (in which case you cannot increase the rent).
In my honest opinon if you find a good property manager your investment is just as good as DHA property (since they take care of nearly all issues).
Rgds.
Lucifer_auWe have a few DHA lease properties and they are very much easy management. The lease is for whatever duration is stated in the original agreement and cannot be changed by the owner. If you want to sell there are certain stipulations. You cannot hold auctions or put up for sale signs, and it is often difficult to arrange inspections as you often have to go through a third party as well as the tenant. This makes them much more suitable as a long term investment. The rent they pay is also subject to market value and can go up or down. The up side is they always pay not matter if the property is vacant, and they cover all the maintainence in the management fee.
DHA have the right to change the length of the lease by one year, but other than that it is pretty well locked in.I have DHA investment property and will never consider it again. Current “market” valuation of rent by valuer contracted by DHA come $35 less per week than unit in the same complex rented on open rental market. I contacted a valuer for second valuation and was told this is happening each year.It will cost me $300 to get second valuation to object DHA’s valuation. Valuer told me I would not get real market value anyway because final rent will be set somewhere between DHA’s valuation and second valuation provided by my valuer. Add 15% management fee and I can’t do anything until lease expire… I am locked in. I can sell it and pay CGT…but this suppose to be my long term “worry free” investment.
Cheers,
not too happy PenguinchickDan,
Do a search for DHA on this website to get more answers.
Ian
Hi Dan
Yes I got onto this one quite a while back. I really liked the hassle free side of the deal, however I thought the prices were inflated, and you are locked in. So after a lot of thinking about the deals offered by DHA I decided I could do better else where. Also if the tenants do not look after the property I am sure DHA would only do only what they considered necessary maintenance & repairs – possibly not to the standard I would prefer.
So if you do go ahead – good luck and do your research of the deal before you put your little signature on the dotted line.Jules[biggrin]
JULES1
Email MeThanks to you all for the effort. After lenghty consideration I decided against buying this DHA managed property. Main reason being the return on this property, which, even though being slightly higher than comparables next door, did not entirely reflected risks/drawbacks of having DHA involved. Well in my opinion anyway.[blush2]
And so I bought a “comparable next door” without DHA in place. [cap]
Cheers
Dan
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