Hi All!
I am a constant reader of the forum however this is my first time posting so see how it goes…
I just wanted to get peoples feedback of Defence Housing Australia Investment Properties and any positive and negative experiences that they have had with them.
Just looking at my next IP and thought that could maybe be an option.
Any advice appreciated
Thanks,
Nathan
What is the potential for capital gains? How long are they tied up with the defence force?
I have looked at DHA investments, however in my view they offered very low yields and not great prospects for capital gains (although my crystal ball may not have been working well at that time). They appear to be very 'safe' investments and so perfect for people who are risk adverse. However, due to their nature, there seemed to be very limited scope for purchasing under market value or value adding via extensions, major renovations or develpments.
Interested to know what other people think though.
Cheers,
LukeHi
I purchased one in Darwin 9 yrs ago, it was already a DHA when I brought it. The lease had a further 4yrs to run, no problems.
The management fees are high, however you have no advertising, re-let fees etc. When lease was finished they repainted/ carpeted etc. In those days the returns were a lot better.
I do not see any difference with a DHA verses the house next door as far as capital gains, renos, well they are basically new homes so why would you want too.
You need to work out the figures etc and if it does what you want and you want a set and forget, go for itBarry
It is all about timing and location. Areas like Darwin (and probably Townsville) have experienced alot of growth in prices, so those who have invested 5+ years ago would be smiling. Supposedly a set & forget investment with no vacancies & a tenant who looks after all aspects of asset management – pretty much needs to be analysed as a commercial investment as the lease exceeds 3 years.
If you are time poor or a novice they may suit but it is up to your own due diligence as to whether or not they will work for you.
As for having little scope for further development – well, they are generally new and designed to suit one particular client in mind however are very similar to every other house/unit in the area – 10-15 years down the track you might consider adding a pergola/carport/pool or whatever to improve your returns.
Pricing/rent – well that comes down to your own research. Do your own comparison with a similar property (and see how it goes, allow for management fees,letting fees, advertising, vacancies (at least 2 weeks/year) maintenance, refurbishment and your own time – it could surprise you).
Thank you all for your feedback! Definitely helpful.
It just confuses me that there is such a mixed response about them. Some people swear by them and others against them. It would be interesting to know if the people who are dead against them and complain about no capital gains and no rent increases are ones that didn't do their research on the area? Would a normal property have performed the same in that area? Or was it purely on the fact that it was a DHA property.
As for capital gains alot of people say their isn't much potential but I struggle to see how it would be different if you bought the same house just not on DHA or any other new new house? Unless they are talking about quick gains from reno's etc. And obviously if you sell within the contract period you will be limited to investor buyers.
I guess at the end of the day I am just trying to decide if it is the best option for my situation.
Thanks all your advice is appreciated!
nguli wrote:I struggle to see how it would be different if you bought the same house just not on DHA or any other new new house? !It could come down to the future demand. If the property is being tenanted as a DHA property than it may not be as attractive a purchase for the next buyer – which could impact on the end value.
At the same time though, I’m sure the demand for DHA properties will always be there.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
Jamie M wrote:nguli wrote:I struggle to see how it would be different if you bought the same house just not on DHA or any other new new house? !It could come down to the future demand. If the property is being tenanted as a DHA property than it may not be as attractive a purchase for the next buyer – which could impact on the end value. At the same time though, I'm sure the demand for DHA properties will always be there. Cheers Jamie
Do you mean when the property is still on a DHA lease? I am talking about when the property is 'free' after the DHA lease expires, I can't see why it would have had any less CG than the house next door that was never DHA.?
Nathan
Yep, I was talking about while it was controlled by DHA. If it weren’t, than I’m with you – I don’t know why it would be considered to be of lesser value compared to a similar property.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
One issue is to watch out for is a premium on the price, I've seen some ordinary results for DHA investors as they simply paid too much for the property, applies to all property but perhaps a little more so to an area where the marketing is so powerful.
DHA house in Brisbane.
Bought in 2003 for 341k
Sold in 2010 for 458kAssuming the investment tracked the gains from a Brisbane housing index over the same time frame the sale price should have been around 610k. So the original investor would have been significantly better served by throwing a dart at a map when buying.
Thanks everyone for the info! Definately gave me a better idea. Don't think I am gonna look any further into it as I dont think it is right for my situation.
Thanks again!
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