NRAS A NO GO ZONE ACCORDING TO CLIENT 'S EXPERIENCES ................... I am Often Asked if I would buy an NRAS property. I can honestly say , I would rather stick a fork in my eye rather than buy an NRAS property.
As a professional investor I would never Consider a property Simply Because you receive some extra tax benefits.
For Those of you saying "what is an NRAS property ? " Let me quickly explain. It's the National Rental Affordability Scheme. If the name alone does not make you run, then the word "scheme " surely should.
Let me go into " the scheme " a little further. You, the investor , buy a house and land package NRAS That has been approved.
Mistake number one : you have possibly just been ripped off on price by your " adviser" Often as the developer pays kickbacks to advisers , mortgage brokers , accountants and property companies for selling These types of houses . They can be as big as $ 50,000 per house . This kickback falsely Increases the median house price of the area as well .
Did you notice there is no negotiation on price ?
Mistake number two : the property is let out to people who can not afford market rent . Essentially you have people on pensions , welfare and / or very low -income earners living in your brand new property . We have tens of Thousands of people with good paying jobs, wanting to get ahead in life That can not afford to buy a new home to live in, yet These properties are let to people who can not afford the basics in life . I am sure there are some genuinely nice people who need to be supported by our government and I do not have a problem WITH THIS, but why are they rewarded with a new house or unit?
Why would not the government make it more attractive for home buyers and investors to buy new properties , leaving the more established properties For Those Needing the assistance?
I am 38 years old and my home was originally built in the 50s With The extension built in 1982 .
So to make this " scheme " attractive , the government Allows you claim more deductions on the property than You Could normally . Approximately $ 10,000 per annum more .
The break up is made up of the Following:
• $ 7.486 per annum offset tax - after spending Countless hours on the phone to the ATO it is now unclear Whether this is a gross or a net number, either way , it does not change my mind on NRAS .
• $ 2.495 per annum cash rebate .
The property must be approved to be an NRAS property and let out to a government -approved tenant for a 10 year period. The rent charged is Calculated at 20 % below market rent and adjusted with CPI .
Some thoughts eats flying into my mind straight away:
• Rents in Australia have Generally Increased a lot faster than CPI of 3 %, the rents on my own properties are currently Increasing Between 6% to 12 % per annum.
• What Happens If They do not pay the rent ? How do you get them out ? Tenancy laws are tough enough to get bad tenants out let alone government- backed tenants. I'm sure the tenancy tribunal would Favour the landlord here over making a low- income earner homeless . Not.
• What are the capital gains prospects of an area drowned in NRAS properties ? Potential buyers would run for the hills rather than live in This area . Have you ever heard of anyone selling an NRAS property for a profit ? I'm in the game and I have not .
• If you decide to sell before the 10 years is up , then you are limited to selling to investors only , limiting your potential buyers to acerca 30 % of the market .
• Of all the NRAS advisers I have spoken to , the majority of them own one NRAS property. If They are such a good investment , then why do not they each own 10 plus ?
Now if that Does not make you change your mind, how about this good news story .
In a medium density development in Sydney where almost 60 % ( around 40 units ) of the development was sold to owner occupiers and investors for a pretty penny , the developer then Became cash strapped and had to sell a property fast so company came in and struck to deal with The developer. The remainder of the units were approved for NRAS and sold 20 % cheaper than the Earlier sales and investors snapped them up with NRAS approved tenants moving in .
As a Consequence , the sales price of Those units are now down another 25 % in value. Great deal ? I think not .
Nice to know the so called "property company " who recommended These units as an investment were looking After their clients best interests.
Now before you jump down my throat , I have heard of the programs Also That allow police officers and other government workers to live in. Their properties but honestly , what police officer would want to live in. These Neighbourhoods ?
Now do not let me deter you from exploring this as an option , I just like to make sure That as investors , you have my honest opinion .
BEST REGARDS
LINDA AND CARLOS DeBello
REAL ESTATE LJ Gilland
WWW.LJGREALESTATE.COM.AU
YOUR ONE STOP PROPERTY SHOP !
As a professional investor I would never Consider a property Simply Because you receive some extra tax benefits.
For Those of you saying "what is an NRAS property ? " Let me quickly explain. It's the National Rental Affordability Scheme. If the name alone does not make you run, then the word "scheme " surely should.
Let me go into " the scheme " a little further. You, the investor , buy a house and land package NRAS That has been approved.
Mistake number one : you have possibly just been ripped off on price by your " adviser" Often as the developer pays kickbacks to advisers , mortgage brokers , accountants and property companies for selling These types of houses . They can be as big as $ 50,000 per house . This kickback falsely Increases the median house price of the area as well .
Did you notice there is no negotiation on price ?
Mistake number two : the property is let out to people who can not afford market rent . Essentially you have people on pensions , welfare and / or very low -income earners living in your brand new property . We have tens of Thousands of people with good paying jobs, wanting to get ahead in life That can not afford to buy a new home to live in, yet These properties are let to people who can not afford the basics in life . I am sure there are some genuinely nice people who need to be supported by our government and I do not have a problem WITH THIS, but why are they rewarded with a new house or unit?
Why would not the government make it more attractive for home buyers and investors to buy new properties , leaving the more established properties For Those Needing the assistance?
I am 38 years old and my home was originally built in the 50s With The extension built in 1982 .
So to make this " scheme " attractive , the government Allows you claim more deductions on the property than You Could normally . Approximately $ 10,000 per annum more .
The break up is made up of the Following:
• $ 7.486 per annum offset tax - after spending Countless hours on the phone to the ATO it is now unclear Whether this is a gross or a net number, either way , it does not change my mind on NRAS .
• $ 2.495 per annum cash rebate .
The property must be approved to be an NRAS property and let out to a government -approved tenant for a 10 year period. The rent charged is Calculated at 20 % below market rent and adjusted with CPI .
Some thoughts eats flying into my mind straight away:
• Rents in Australia have Generally Increased a lot faster than CPI of 3 %, the rents on my own properties are currently Increasing Between 6% to 12 % per annum.
• What Happens If They do not pay the rent ? How do you get them out ? Tenancy laws are tough enough to get bad tenants out let alone government- backed tenants. I'm sure the tenancy tribunal would Favour the landlord here over making a low- income earner homeless . Not.
• What are the capital gains prospects of an area drowned in NRAS properties ? Potential buyers would run for the hills rather than live in This area . Have you ever heard of anyone selling an NRAS property for a profit ? I'm in the game and I have not .
• If you decide to sell before the 10 years is up , then you are limited to selling to investors only , limiting your potential buyers to acerca 30 % of the market .
• Of all the NRAS advisers I have spoken to , the majority of them own one NRAS property. If They are such a good investment , then why do not they each own 10 plus ?
Now if that Does not make you change your mind, how about this good news story .
In a medium density development in Sydney where almost 60 % ( around 40 units ) of the development was sold to owner occupiers and investors for a pretty penny , the developer then Became cash strapped and had to sell a property fast so company came in and struck to deal with The developer. The remainder of the units were approved for NRAS and sold 20 % cheaper than the Earlier sales and investors snapped them up with NRAS approved tenants moving in .
As a Consequence , the sales price of Those units are now down another 25 % in value. Great deal ? I think not .
Nice to know the so called "property company " who recommended These units as an investment were looking After their clients best interests.
Now before you jump down my throat , I have heard of the programs Also That allow police officers and other government workers to live in. Their properties but honestly , what police officer would want to live in. These Neighbourhoods ?
Now do not let me deter you from exploring this as an option , I just like to make sure That as investors , you have my honest opinion .
BEST REGARDS
LINDA AND CARLOS DeBello
REAL ESTATE LJ Gilland
WWW.LJGREALESTATE.COM.AU
YOUR ONE STOP PROPERTY SHOP !
No comments:
Post a Comment