Good day my friends
I need few comments and advice please on investment property for DHA (Defence Housing Australia)
If you porches a property for them before 13/04/06 in Ipswich you don’t have to pay stamp duty liability, that’s ok, very good.
What you thing about 9 year Lease plus 3 years options.
16/% PM fees
All around is a good investment or not, and if not can you tell me why.
Regards
SteveSteve,
I’ve been in the Army for a few yrs (and then a few more…) and at various times I’ve considered buying with DHA myself.
There are certainly benefits of doing this – guaranteed rental income, (generally) good quality tenant, in depth property inspections on tenant departure, etc etc.
However, the downside for me is that they charge a phenominal PM fee, and there is little or no flexibility (read “CONTROL”) for you. In my books, if I’m going to own an investment, I want control over it. I want to be able to change PMs if I’m not happy with the service they are providing me. And what happens in 9yrs time?
As far as a recommendation – I would say go for it as long as you know what you’re getting into. I don’t think they will try and do anything dodgy, but I think their terms may be quite draconian.
Please keep us informed of how you go, and if my observations are incorrect (I’m happy to be wrong if I can learn from it!).
Also – if you believe what you read, Ipswich may be a really good place to buy a house with DHA in the next few yrs! Possibility of some kind of “super base” at Amberley would have to be good for your investment I’d think!
All the best,
Adam
Don’t let life get in the way of living.
l’d give it a miss. Doesn’t sound like much of a deal really compared to what you can get publicly with full control.
Cheers.We live and invest in the Ipswich area, which I strongly believe has good capital growth due to business/govt development. We’ve bought 3 houses in Ipswich over the past 6 months all with around 7.5% returns compared to around 4.5% for DHA.
I think you can do better buying direct.Amanda
“It is better to be inconspicuously wealthy, than to be ostentatiously poor…”I have been keeping an eye on DHA opportunities for the past 6-8 months or so. In theory they seem attractive with guranteed rent for xxxx peroid, etc,etc. But I agree with Adam, they have a ridiculous PM fee. I think a close parallel would be “time share properties” where you get caught up with owning the property but have little control on anything else – “Pay up or lose it”!! Additionally, even with a guranteed rent they are negatively geared investments in most cases. This means you are relying on future capital growth for any gain.
So, to sum up – Unless these DHA properties are in a location where you expect good capital appreciation, they are not worth investing in. That’s my opinion!Cheers
PyramidI have a DHA property in WA. All in all I’m quite happy with the result(capital gain) so far. The followings are the points you have to consider if you want to proceed with DHA.
1. your main strategy is buy & hold, and focusing on growth/capital gain.
2. negative-gearing suits your situation.
3. hassle-free property management.Though the agent comission of a conventional property management is around 7.7 – 9%, if you take all the annual maintenance and repair costs, you’ll end up around 16.5% or higher. that’s my expererience with my other properties.
Cheers,
Thanks all for your coments
Regards
SteveIf a house with a DHA lease is being sold by another investor, it would make sense that you should be able to pick it up for under its intrinsic value, because owner occupiers are out of the market. I haven’t tried this, but if you were to purchase one with say 3 years left on the lease it should be possible to purchase it under value and then sell at market value once the lease expires. I’d be interested to hear if anyone has tried this tactic.
Regards
Alistair PerryThanks APerry
Steve
Hi Steve,
What is it that attracts you to DHA?
If it is the security of tenancy then be aware that as the buyers are leaving the market the vacancy rates are dropping in many places including Ipswich. As such a good PM will be a valuable ally in securing tenants in an ongoing basis.
Sure the worries about no tenant are real – but in the longer term picture these pale into insignificance and there are steps you can take to minimise any impact from these times.
Derek
[email protected]
http://www.pis.theinvestorsclub.com.au
0409 882 958We live at Walloon and have also looked at the Defence Housing we worked out at the time that the return was not good enough. For such a long term lease the return would have to be good Do you have any other figures
Merrianne
I have looked at DHA for a while, my friend raves about them so I always follow whats happening with DHA. Please correct me if I’m wrong but the prices they sell for (particularly in WA) seem to be at the very steep end of the price curve. I think that is because there is guaranteed tenancy and the level of demand (In WA they are all generally sold within 15 mins of being released).
I think they are very attractive because there is a certain low risk feeling attached to the deal but I think there are better returns elsewhere.
cheers
If its not toooo late – I have a DHA property – in case for 10 years. ONE PIECE OF ADVICE I CAN GIVE YOU IS KEEP CLEAR OF DHA. After 10 years I am still waiting from my first rental increase. Yes you are right – the rent they pay is the same as what they paid 10 years ago. So if you are willing to get today's rent at the end of the lease term (12-15 years on), then by all means go ahead. All the clauses in their agreement arent worth the paper they are written on.
I bought a property in Sydney (Normanhurst) from them only because they are a Commonwealth body. I was sadly mistaken and find they are probably worse off than the fly by night operators who dump expensive properties promising high rentals and then its all down hill.
Moral of the story is – if you love being taken for a ride – then join the DHA bandwagon.
cheers
i know very late into this topic but in case of future readers like myself.
I have 2 DHA investments in Mitchelton Qld – right next to the Enoggera army barracks. and they are great.
– good capital growth on the town houses as they are in a strong capital growth area
– yes PM fees are 15% but most agencies are around 9-10% total fees (including rent collection etc)
– All maintanance is covered by DHA e.g. hot water service, dishwasher etc
– at the expiry of the lease if over 9 years, they repaint inside and outside and re-carpet.
– Rent – my leases and i assume all leases have a market review clause at december 31 each year. last december (07) rent on my properties went from $275 to $320 as the are valued by an independant valuer based on the local rental market.only negative i can see with them is re-sale time as only investors can purchase them, not owner occupiers.
Hi, I too realise this is late but I will still give you my experience. I purchased property with 3 years left on DHA lease, believing I would be able to sell for a capital gain after the 3 years. The management of the property by DHA is so poor, combined with a very high management fee that I would NEVER recommend them. They are hopeless in ever getting back to me regarding my property, have deducted amounts from my rent for "vandalism" without a police report or invoices and charged me for pest inspections I did not request, or need. In my experience DHA could not manage themselves out of a paper bag (and then charge high management fees for the privilege). MY OPINION – DO NOT INVEST WITH DHA.
Yes I agree with you Motchy. DHA is hopeless… lots of advertisements nowadays to attract investors with free seminar etc.
Another SEMI-spruiker..Investor BEWARE!!!!I have friends that rent from DHA and they are VERY grateful to those that do invest. I see that defence families have a hard enough time without having the burden of providing their family with housing everytime they are relocated. If private investors don't get on the band wagon, then Government will have to increase stock or the system may be jeapodised. Already I hear that in some areas there are not enough homes and families are being forced to privately rent. This can cause huge problems, not the least being spousal resentment.
I understand that some of you may have had negative experiences, but looking at the bigger picture, it is actually a good investment in social conscience.
JLHei JL
what do u mean by social conscience?????
How about investor that strugglinggggggggggggg to pay off the mortgage and facing repossession!!!!
Awaiting kindness from government… you must be kidding…Dear JL
The Australian Defence Force subsidise rents for pretty much all active defence force personnel. ADF personnel are free to organise their own accommodation and still receive the subsidy, I have had two ADF tenants and they have been excellent. The ONLY people who are grateful when you purchase a DHA property as an investment are the people running Defence Housing ( a "for profit business") DHA has taken a pro-active stance and actively promote DHA housing as a great investment. If you do the figures it is normally better for you to purchase an investment property, after doing all your research and due diligence, and renting it out either as self managed or with a rental agent/cy.
It has nothing to do with "Social Conscience" nor "Spousal Resentment". In fact if that's the way you think regarding your investments then DHA would love to hear from you.Do not necessarily expect a good return on your investment
For me personally, and many ADF personnel, I'd rather buy a DHA property that was at the END of it's rental use as they are well maintained and a premium rent usually can still be had, and YOU the person taking the RISKS associated with this type of investment then reap all the rewards, as opposed to DHA gaining the benefit and you carrying the RISK
Finacial education, there is a reason it was never taught in school!
Knowledge is power, when you act on it!god_of_money,
In no way am I suggesting that you purchase one of these to put yourself at risk of repossession. What I am merely saying is that if you are wealthy enough to sustain this kind of investment – which I personnally am not – then maybe putting something more into the system than just providing affordable housing (as we do as landlords), is good for Australia's overall standard of living. And on that, everything carries risk, and if you are at risk of repossession, the risk may have been too high. The key here is to resolve it, learn from it and move on.
I think you'll find that defence will have spending cut backs in most areas if not all, in the next few years. This will have an impact on those in the defence force, and to help them retain a decent quality of living with reasonable rents, more and more private investors will be required. You have to remember that defence employees are paid minimally, but retain some good conditions, including access to housing at reduced rents, to make the deal attractive to those that look at joining, and to keep the skills of those already trained. I guess this is why over the past few years we have seen more and more DHA ads, seminars etc, as DHA try to obtain more private investors for their housing stock. From my understanding of DHA, you can actually purchase your own property and if it meets their standards, you can apply for it to be managed by them. This would do away with what some have called inflated purchase prices.
Please let me know if I am wrong as I'm always up for a healthy discussion.
JL
This is my opinion only, so please do your own research.
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