Hi everyone, looking for advice or at least confirmation we are doing the right thing….advice would be greatly appreciated!
40 YO male on 200k with 200k in Super. We are now creating our SMSF and wanting to set and forget an IP with DHA to pass the sleep test having confidence these guys look after everything at a premium price (16% property mgmt fees). There are many options here from 350k up to 1.2M. Do we plunge into 1 IP or look at multiple??
Ive read a bit on these forums and there appears to be two trains of thought, capital growth is key or strong rental return for the term of the investment. Within the limited options in properties under DHA, good rental returns but average growth, we are now starting to second guess ourselves if we're making the right decisions. We also have two other IPs that are looking after themselves ok so this DHA opportunity is really doing our head in? Has anyone got any advice ?
Thanks in advance!!!!!
Hi Stenno
Depending on the location of the property an 80% lvr maybe possible even though it is a DHA home but remember lenders lend against purchase price of valuation whichever is the lower.
Just done a couple of SMSF loans for forum clients buying DHA and the valuations came back lower than the purchase price so be ready for that.
Also remember that whilst it might be a SMSF loan you still need to show sufficient serviceability so without knowing the full nuts and bolts of the deal i cannot tell you what i would do in your situation.
Personally i like to spread my risk and would probably serviceability allowing look at doing 2 smaller deals and still keep a cash buffer to diversify and cover any potential expenses.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Richard, do you know why DHA property is below valuation?
I thought that the location is on the prime position
I think that’s because of the premium the Ministry put on top of the market price.
The premium is because of the ‘sleeping soundly’ effect DHA provides.
So the price of ‘sleeping soundly’ is
1. the 16.5% management fee (compared with the 5% market rate),
2. the higher purchase price and
3. the long term contract. Meaning should you want to sell before the 12 years period, your market would be limited to investors who want DHA as well.Ta,
CattsCattleya
Here to learn the ropes of property investing & share knowledge, not trying to sell anything at all.
Catts has in 1.
It is aimed at the investor who wants a hassle free investment and doesn't mind paying for it.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Stenno,
Sorry, didn’t mean to discourage you. I am also looking around for stress free IPs and DHA does look attractive.
Though given the factors I mentioned above, I am having second thoughts.On top of that, DHA is very powerful. Hence the peace of mind… but only when what DHA does goes our (investor) way. If somehow DHA’s interests diverge from ours, it will be very difficult for us to complain or on-sell. For example, given government cuts etc, DHA might decide to lower rents it is paying investors. We can complain, but would it be heard? Probably not.
So its strength is severely qualified, investors do not have bargaining power.
Would be interested in your decision. I need to make mine as well, but currently I am still looking around so not deciding yet.
Cheers,
CattsCattleya
Here to learn the ropes of property investing & share knowledge, not trying to sell anything at all.
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