NRAS Investments

I registered just to reply to this one.

You might want to check the minimum income requirements to be eligible to rent these places. The last time I checked, a single person can rent them out if he/she earns over $41K. Surely people earning that much aren't all desperate ratbags are they?

The properties are located wherever the builder chooses to build. NRAS properties are not confined to crappy woop woop land. I have also heard that they wont approve properties for NRAS if they are clumped up in a group so as to avoid ghetto effect.

This are just what I have heard so far so please correct me if i'm wrong with any of this as I am willing to learn the facts
Could this be a flop or a good investment?  I dont know, but I can tell you right now that with any proposition, I try to approach it with an open mind and LOTS and LOTS of questions  ….rather than just shooting off my own opinions and ASSumptions …especially without the backing of experience

Regards
Dennis

I am curious about too.  I have seen some NRAS properties in some new estates. It might be a good idea to ask the builder how much some lots in that estate cost, and see if that is any different to the NRAS property right next to it.

Hi Wuzziemoo,

Just wondering how your NRAS property has worked out so far – tenant quality, property managers etc. Do you feel the purchase price was reasonable in hindsight?

Reading this & other posts there seems to be a lot of misinformation & confusion about NRAS so any direct experience you can share would be most helpful.

Cheers

Gary

Thanks Kane, glad to hear it is working out well so far.

Was it Paramount that you are with in Tas? I’ve seen their website & they seem to have a few still on the go.

Wondering who the ones are that you say you wouldn’t touch – happy for a PM if you’d rather not post publicly.

Gary

Hi Again Kane,

I’m leaning towards going ahead with an NRAS purchase as well. You mentioned issues with banks. My mortgage broker has already suggested it’ll be hard to find a lender for NRAS. Could you advise what the main issues were from the lenders & how you resolved them? Was it one of the main banks you went with in the end?

Thanks

Gary

Thanks Kane. My broker is suggesting NAB anyway so sounds like it will be ok.

Cheers, Gary

The tax advantage is not small.  It is currently $8600 per year, indexed to inflation. It is this payment that usually makes these properties, cash flow positive.  Where else can you get a cash flow positive property in a great location close to 2 major cities?  I've recently signed up for a NRAS property in Loganlea.  The builder said that they would only be approved if the property was close to transport, schools, shopping and hospitals . Well this property is about 1.5 kilometres from a major hospital and train station, it is a 2 minutes drive to a university and TAFE, across the road from a large shopping centre, and walking distance to primary and secondary schools.  It is also very close to the motorway which can get you to the Gold Coast in 40 minutes and to Brisbane CBD in about 25 minues. 

A lot of people don't realise that a family can earn up to $91,000 and still qualify as a tenant in one of these properties so you are not necessary housing low income earners and unemployed.  The government is very conscious of ghettos so will only allow, in most cases, a maximum of 30% NRAS in each new development. 

I've signed up for a second property in Chinchilla where again I'll be cash flow positive.  I'm still investigating all the pros and cons of NRAS but am at the moment convinced that they are a great investment

Hi Goosehead,

I had the same concern as I found that ruling as well. However, there is more information on the general ATO website. The key issue is that the individual dwelling owner needs to enter into the lease directly with the tenants, not the property manager (i.e. the community housing agency). The agency can act as the property manager though. See this page on the website:

http://www.ato.gov.au/businesses/content.asp?doc=/content/00225605.htm&page=23&H23

Hopefully someone currently in the scheme can further reassure us.

Cheers

Gary

NRAS no need to worry about the new tax ruling 2009/147 as that is being sorted out as the whole idea of this scheme was to get investors involved to boost housing. This is a letter that I recently recieved:-
 
Mr Mike Myers Chief Executive OfficerQueensland Affordable Housing Consortium Ltd. Dear Mike,I am writing on behalf of the Department of Families, Housing, Community Services and Indigenous Affairs to confirm that the Government’s intention is that investors receive their full entitlement to the NRAS Incentive.The Hon Tanya Plibersek MP, Minister for Housing wrote to QAHC on the 24 December 2009 to address the consortium’s concerns related to whether investors are entitled to receive the full value of the NRAS incentive and to address any perceived ambiguity created as a result of the Australian Taxation Office’s ATOID 2009/146, in particular its reference to NEJV and participation in NRAS.  The Minister and Treasurer committed to a workable solution through an initial administrative solution and longer term to a legislative fix.  As advised in the letter of 13 January 2010 the Department has worked with the ATO to finalise an administrative solution to resolving the tax issues for non-entity joint ventures who may be affected in the 2009/10 financial year.  Regulatory and legislative amendments will be introduced in 2010 to effect a permanent fix for future years. An administrative solution has been agreed and is in the process of being implemented and will address the issue where, under current arrangements, certain entities participating as members of joint ventures involving head leasing and sub leasing arrangements may potentially have their NRAS Incentive taxed. The ATO has advised the Department that, depending on the legal form of the certificate, Incentives may be received tax free by the lead agency/approved participant; but they cannot be passed on to other members of the joint venture such as the investor/owner of the dwelling without a potential tax liability being passed onto the investor/owner.  When the lead agency passes on the incentive to the dwelling owner, income tax could be applied to the payment. The administrative solution will resolve the issue by issuing tax offset certificates directly to the investors/owners and in a format that will meet the ATO’s requirements to enable the offset to be obtained by the NRAS investor/dwelling owner without tax applying. The lead agency will also receive a consolidated copy of the certificates with dwelling schedules, as is current practice, for their records. The ATO has confirmed that this approach will meet their requirements. This approach is a short term solution to give practical effect to the Scheme’s policy intent that investors receive the full entitlement of the NRAS Incentive. I hope this letter is of assistance in clarifying the approach to the administrative solution and look forward to working with you to ensure the success of this solution. Yours sincerely Susan FinniganBranch ManagerAffordable Housing Branch8/02/2010

  So as you can see the government is working with the ATO to fix the problems that have arisen.

The tax incentive started off as $6000 fed government and $2000 state indexed linked at the moment it is just above $8600. This amount is in your hand untaxed and will not be taxed so is actually worth a lot more depending on your tax rate. It is obvious that a lot of the reply's on this subject are by people who have not looked in detail as to what the government is trying to achieve. These properties are to a high standard and have to fit certain criteria as to where they are built, such as high need area's. They are meant for single working people earning over $40000 to families earning up to $90k+ . They sign a lease for 1, 3 or 5 years so you have stability. The tax incentive covers the shortfall in rent due to lower returns of between 20-25.1% plus it also covers most if not all of the property fee's this depend on how much the rent is. This is why they are classed as cashflow and secure.   

Hi
I have been investigating NRAS properties in South East Queensland. I have struck a problem with the bank (NAB) I know someone else here said they went through NAB. Bank wants to charge me $500 to look at the documents and then they are just as likely to reject it.  They do not seem at all keen.  Has anyone else struck this? Any suggestions?

thanks

R