All Topics / Help Needed! / Defence Housing – new attraction

Viewing 20 posts - 1 through 20 (of 26 total)
  • Profile photo of ajayayyarajayayyar
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    @ajayayyar
    Join Date: 2005
    Post Count: 176

    Hey ppl,

    I’ve posted here before regarding my thoughts on defence housing investment and it appears that ALL defence properties now guarantee that rent will NOT go down for the life of the lease. If anything, it will only go UP. So i guess this is another attractive feature of defence housing…

    There are many townhouses for sale by DHA. Initially, I was goin got invest in a North Parramatta property for $510,000, however now there are many other DHA properties I have found that are below $500,000, such as in Castle Hill, Kellyville, and Carlingford. Most of them are either 1-2 years old or brand new.

    Any thoughts on DHA now as a good investment, and a good price/area to invest?

    Thanks in advance.

    Regards,

    Ajay

    Profile photo of SalubriousSalubrious
    Member
    @salubrious
    Join Date: 2004
    Post Count: 252

    Get an independent valuation and conduct some extensive due diligence into the demographics. Not all is what it may seem. I have many clients that are not to impressed with their purchase and many that are.

    We are all made from Stars.

    Profile photo of TerrywTerryw
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    @terryw
    Join Date: 2001
    Post Count: 16,213

    Ajay

    I have heard their management fees are high, and the leases are long so this can be a bit of a turn off to some people.

    What sort of rents would you get on a $500,000 proeprty? Is it market rent or aa bit higher?

    Terryw
    Discover Home Loans
    Mortgage Broker
    North Sydney
    [email protected]

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://structuring.com.au/
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Aust wide) http://propertytaxbook.com.au/

    Profile photo of ajayayyarajayayyar
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    @ajayayyar
    Join Date: 2005
    Post Count: 176

    Hi Terry,

    I’m not sure if the rents are market price.. but they are approx. $380 p/w.

    I am thinking of keepingit for 3-4 yrs…and making capital gain.. thinking of investing in a townhouse somewhere in Castle Hill or Kellyville area…

    Let me know your thoughts.

    Regards

    Ajay

    Profile photo of ANUBISANUBIS
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    @anubis
    Join Date: 2003
    Post Count: 559

    Management Fee is usually 16.5% of rent non-negotiable for the life of the lease to DHA. They do pay for some minor repairs and spruce the place up when they leave though. Not sure I’d be jumping through hoops to sign up for 4% return (before mgmt fees, costs, taxes etc) though – especially with no guarantee of any increase in value.

    If the lease is still in place with DHA when you want to sell you may find it difficult to sell – niche investment like serviced apartments. You can get a 4% return by buying a standard property that would be cheaper, and in any suburb you like within your budget.

    If you planned on keeping it for 10-15 years I’d say go for it, but 3-4 years doesn’t seem like long enough to gain any advantage.

    Profile photo of ajayayyarajayayyar
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    @ajayayyar
    Join Date: 2005
    Post Count: 176

    Hey ppl,

    Looks like we are moving in on a 4-bedroom townhouse in castle hill for $475,000… not confirmed yet but looking v.promising…

    Defence housing, of course…. my 1st investment i’m v.excited about it

    cheers

    ajay

    Profile photo of SalubriousSalubrious
    Member
    @salubrious
    Join Date: 2004
    Post Count: 252

    Dont expect any capital gains of more than 1 to 2% for at least 5 years.

    We are all made from Stars.

    Profile photo of ajayayyarajayayyar
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    @ajayayyar
    Join Date: 2005
    Post Count: 176

    1-2%? Just wondering on what basic you quote this figure..

    thanks

    regards,

    ajay

    Profile photo of DerekDerek
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    @derek
    Join Date: 2004
    Post Count: 3,544
    Originally posted by ajayayyar:

    I am thinking of keepingit for 3-4 yrs…and making capital gain.. thinking of investing in a townhouse somewhere in Castle Hill or Kellyville area…

    Hi Ajay,

    Like Anubis – I don’t believe your property and timeframe match each other.

    Property is generally considered a long term investment and as such buying with a view of making significant gains at the moment is likely to lead to frustration and a goal unrealised.

    Without knowing the final details of the property nor your income this property is likely to cost you a great deal of money on a weekly basis.

    The numbers I get are quite significant using what you have provided so far and an annual income of $50K (average income in Aus)

    Even increasing income to $80K the after tax refund figures are duanting.

    At income of $120K the after tax refund figures are still a little scarey.

    Derek
    [email protected]
    0409 882 958
    Property investment advice and researched property in quality locations available.

    Profile photo of ajayayyarajayayyar
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    @ajayayyar
    Join Date: 2005
    Post Count: 176

    Hi & thanks for your comments,

    When I say 3-4 years, I mean that it would be nice to make a capital gain within that time.. of course if there’s no gain, I will hold onto the investment for a long time… but there’s always the option of selling.. as far as the income side of things goes.. I am going into this property 1/2, 1/2 with another family member…so its not as daunting as expected.. my investment is somewhere around $240k…

    Thanks

    Regards,

    Ajay

    Profile photo of penguinchickpenguinchick
    Member
    @penguinchick
    Join Date: 2005
    Post Count: 38

    Hi Ajay,
    I have DHA leased townhouse in Brisbane and I would not consider another DHA property again. I have it for 8 years and hope to get out soon (lease is for 9 years + 3 years option). It is worry free investment but return is too low. What I am fed up with is rent review process.This year I am getting $270 per week rent minus 15% management fee.Rent is reviewed each year and if I object I have to pay for another valuation to object, which cost between $300-500. Than there is negotiation going between my valuation and their valuation. There is also condition that their rent can by $10 per week less than market value. As I see my situation I could rent this townhouse for between $280 -$300 per week with 5 to 7% management fee on open market but I am locked in the lease or sell and pay big CGT. I would like to keep the townhouse but I don’t like the lease.
    Good luck!
    Daniela

    Profile photo of DerekDerek
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    @derek
    Join Date: 2004
    Post Count: 3,544
    Originally posted by ajayayyar:

    I am going into this property 1/2, 1/2 with another family member…

    Hi Ajay,

    Is 50/50 the best ownership arrangement?

    Just asking questions and providing information that may help you get it right at the beginning.

    Cheers

    Derek
    [email protected]
    0409 882 958
    Property investment advice and researched property in quality locations available.

    Profile photo of ajayayyarajayayyar
    Participant
    @ajayayyar
    Join Date: 2005
    Post Count: 176

    Hi Derek,

    The reason behind going 1/2 1/2 on this investment is because it is my first investment and I am 21. I’ve only been working for about 1 year and 1/2 full-time so I can’t go on a $475k house on my own. I am investing with someone who I trust so there’s no issues there.

    Thanks.

    Regards,

    Ajay

    Profile photo of TerrywTerryw
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    @terryw
    Join Date: 2001
    Post Count: 16,213

    Hi Ajay

    I would be wary too. Anubis has raised a good point. What if you want to sell in 3 years. Your market would be limited to investors only – as you would still have a long lease in place. This could make it harder to sell, meaning you may get a lower price.

    If you are only getting market rent, then why pay a 15% management fee. Just because they lay new carpet and paint the place after 9 years would not justify it in my opinion.

    Terryw
    Discover Home Loans
    Mortgage Broker
    North Sydney
    [email protected]

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://structuring.com.au/
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Aust wide) http://propertytaxbook.com.au/

    Profile photo of ANUBISANUBIS
    Participant
    @anubis
    Join Date: 2003
    Post Count: 559

    15% is $55 a week out of your “rent”. Suddenly you’ve invested 475k and getting $315 a week in rent before you pay insurance, rates & land tax.

    I have to ask if the stamp duty refund is what has you convinced on this deal?

    A 5% deposit leaves you paying around $1400 per f/n on net revenue likely to be $500 per f/n. Can you afford to chip in $900 per f/n ad infinitum between you?

    Profile photo of guzziguzzi
    Member
    @guzzi
    Join Date: 2005
    Post Count: 17

    Hello
    To my way of thinking the numbers dont stack up.
    Maybe you should look to a rural area, where the outlay is less & the return better.
    Some areas have a better CG than the metro areas anyhow. You must do the homework, homework, homework.

    w

    Profile photo of ajayayyarajayayyar
    Participant
    @ajayayyar
    Join Date: 2005
    Post Count: 176

    hey people – thanks for your comments

    this is the property i’m going in for: http://invest.dha.gov.au/dha/details.app?property_id=1826&finder_uid=64123f2737a2125bd3f2737a217414

    That should provide the details of rent, etc. that people were quoting before..

    I am paying approx $90 from my pocket per week for this property. If the house price doesn’t go up within a few years time, I am happy to keep it longer – it doesn’t bother me. In my way of thinking, there will eventually be capital return on the property. Since it is my first investment, I went for defence housing to minimize risk and guarantee tenants. Maybe my next property will be non-defence… we’ll see what happents.

    Thank you.

    Regards,

    Ajay

    Profile photo of ajayayyarajayayyar
    Participant
    @ajayayyar
    Join Date: 2005
    Post Count: 176

    That website should provide the details of rent, etc. that people were quoting before..

    I am paying approx $90 from my pocket per week for this property. If the house price doesn’t go up within a few years time, I am happy to keep it longer – it doesn’t bother me. In my way of thinking, there will eventually be capital return on the property. Since it is my first investment, I went for defence housing to minimize risk and guarantee tenants. Maybe my next property will be non-defence… we’ll see what happents.

    Thank you.

    Regards,

    Ajay

    Profile photo of ajayayyarajayayyar
    Participant
    @ajayayyar
    Join Date: 2005
    Post Count: 176

    by the way, it comes to nowhere near $900 per fortnight.. it is more around the $200 mark..per fortnight..

    Profile photo of ANUBISANUBIS
    Participant
    @anubis
    Join Date: 2003
    Post Count: 559

    Ok – good luck with your purchase Ajay

Viewing 20 posts - 1 through 20 (of 26 total)

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