hey all,
someone recently mentioned defense housing to me, i have looked into it before and there starting price for houses was a bit out of my price range, but i was just looking for an opinion on them, maybe it could b something i do in the future.see you all at the conference
Personal opinion, but Something I would stay away from.
Whilst its ‘guaranteed rent’ They decide on the price of the rent, they organise the repairs and send you a bill, they decide if a rent increase is warranted. Maybe this is just me being a control freak, but they are just a few of the decisions I would like to make as the landlord.I’m sure there are benefits involved (im happy to be corrected) but for me the lack of control over my investment was a big turn off buying for DHA
Hi,
Like most investments it comes down to risk/reward. If you deposit $1000 in a savings account you will have $1001 in a years time. Someone on gumtree may offer to pay you 20% interest so potentially in a years time you will have $1200, but also possible to have nothing.
Defense force housing is the easy and safe option of property investing. Since it comes with guaranteed income they charge a higher price on the purchase which gives you a lower return on investment. Low risk/low reward.
Regards
Gibbo
From my understanding on it you also need to use their property managers and the fees for that are a bit steep… (i think about 16% for freestanding house and about 12-13% for units/townhouses)
They definitely charge higher fees than typical property management, as the above post said it is around 16% of the fees. I do not understand why they would charge so much, it is not like they really have to ‘look’ for a tenant, they have plenty of people in the defense forces who need housing, so they do not have to look hard to find one. And as for maintaining the property, I do not believe 16% is really justified.
To be honest it does not make sense to me, the DHA is run by the government, the government pays your rent, and then you pay a fee back to the DHA property management, which is run by the government? It seems a little bizarre to me, and it seems like they could just pay you less rent and then say they have no property management fees.
Anyway, as people have said before me, there is next to no risk with this investment, but the return is not that high. From memory looking at it a few years ago, the typical gross yields were around 6.00% mark, but they did vary, believe in Darwin they had some decent yields? At the end of the day they are nothing special, nice guaranteed return but would most likely be negative geared (unless you had a very large deposit) so you would hope there would be good capital gains to make a tidy profit.
Also note there is no flexibility with the property, with the lease periods up to 12 years you are essentially locked in for this period of time.
+1 to what others had said.
We looked into it, too but by the time they take out the 16% it left a very low yield. Having said that, you get the property back in good condition because they repaint after their lease (I think it might be after 3 years) and recarpet for a longer one (5years, maybe longer??) This, and a guarenteed rent would make it attractive to some set and forget investors.
RustyHi,
My personal opinion regarding the investment in defense housing relates to the risk appetite, as a risk taker I wont wait for smooth growth on the cost of other lucrative opportunities foregone, but on the other hand it is suitable for those with surplus savings and risk averse attitude.
You mention your limited availability of funds is compelling to advise you to go for other lucrative with less risky options, as property maintenance costs are high with defense housings.
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