All Topics / Help Needed! / NRAS What’s in it for the small investor?

Viewing 6 posts - 1 through 6 (of 6 total)
  • Profile photo of CazziePCazzieP
    Participant
    @cazziep
    Join Date: 2009
    Post Count: 24

    I've been searching for property around the 300k mark in Perth. There are properties out there but rents on the low end don't excite me. Anyway, I cam across an ad touting the NRS as a great investment.

    "$80,000 In Government Incentives Available Here !! Introducing National Rental Affordability Scheme, or NRAS -as seen on TV and all major print media"

    $80, 00 seems too good to be true, right? So a quick look at the NRAS website turns up this:

    "Small-Scale or Private Investors

    As the NRAS aims to encourage large-scale investment in affordable housing, it is not directly available to small-scale, private, individual investors in the rental property market unless they participate as part of a non entity or other joint venture arrangement. These investors could also become involved by investing in entities that participate directly in the Scheme, for example, through a superannuation fund or property trust.

    There is no requirement under the Scheme for the incentives to be passed on to the owners of the properties. The arrangements between dwelling owners and approved participants are a matter for those parties and will not be facilitated or prescribed by the Australian Government."

    Rent on the properties must be kept at $20% below market value for 10 years.

    Plus these units are yet to be built.

    What do you think? Give it a wide berth or take a closer look?

    Cheers
    Carolyn

    Profile photo of jacqui_03jacqui_03
    Member
    @jacqui_03
    Join Date: 2010
    Post Count: 142

    So can u not purchase in individual names with this scheme? Does it have to be through a non personal entity such as a trust? Clovermoore are u able to advise what bank u got finance through and if u had any issues?

    Profile photo of Greg ReidGreg Reid
    Member
    @greg-reid
    Join Date: 2008
    Post Count: 91

    Carolyn,
    I too have been looking at the financial aspects of NRAS housing to see whether they make sense for my clients. It is still early days for NRAS but the basis of investing in property is primarily location. If the properties are being built in areas where there is some or good capital growth and rent demand is high, it should be considered. Because the government intended these to be only available for big developers, they seem to be often built in outlying areas where there is land aplenty.

    The 80% or for some promoters, 75% of market rent will mean a considerable shortfall you need to fund each week/month.
    Using a defined property manager (at least for the first 10 years) where they seem to be charging 10% fees needs to be factored in.
    Make sure they are legally bound to pass the federal and state government tax incentives to you and that your purchasing entity can utilise them. I am unsure a trust can pass these down to beneficiaries if you purchased using a trust as the purchasor.
    It is unclear whether you can use an ITV form to factor in the federal government tax incentives. You cannot for the state component and presumably only receive these after you complete your tax return.

    New properties suit higher income earners able to better utilise depreciation benefits and for some, lower stamp duty on off the plan properties. The finance are construction loans, normal 5 payments on stage completions.

    I expect the marketing companies selling these for the developers get paid by the developers, so be aware of comparable prices that you are not paying more than you should be. Look at land price per m2 and build cost per m2 and compare. Like anything else, sales people make money selling and the good ones give the impression they are helping you and it is a sure-fire way to invest.

    Perhaps it is if you can fund the shortfall. The tax rebate/incentive is irrespective of the value of the property, so it may make more sense looking at properties at the lower end of the scale.
    Good luck
    Greg

    Profile photo of CazziePCazzieP
    Participant
    @cazziep
    Join Date: 2009
    Post Count: 24

    Thank you Greg

    We are now in the top tax bracket so looking for future capital growth, with the best tax breaks while we hold it. I've not seen another NRAS opportunity advertised in Perth and I'm wondering where one does find them.

    Profile photo of Greg ReidGreg Reid
    Member
    @greg-reid
    Join Date: 2008
    Post Count: 91

    I'd Google NRAS WA.
    I would also contact some of the approved tenancy managers in WA – see below link
     http://www.fahcsia.gov.au/sa/housing/progserv/affordability/nras/tenancy_managers/Pages/tm_wa.aspx

    Good luck
    Greg

    Profile photo of morrissue70morrissue70
    Member
    @morrissue70
    Join Date: 2010
    Post Count: 17

    NRAS is an excellent way to pos gear if you find the right property.

Viewing 6 posts - 1 through 6 (of 6 total)

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