Hi All,
New to the wesite and would really appreciate anyone's opinion or advice on the NRAS scheme in Victoria. I have recently attended a seminar held by Trent Park Pty Ltd regarding property investment and the NRAS scheme and plan to do my research first.
I have had investment properties in the past however sold up and moved to a country area on acreage for a change of lifestyle. We decided to put "all of our eggs into one basket" so to speak. The capital growth on my own home has been very positive and I believe will continue to be. I would like to utilise this equity and get back into the property market but not too sure on this NRAS scheme.
Any comments or advice would be appreciated.
Thanks
Craidaniif you do an internet search you will discover a great deal about the company. lots have been discussed on this forum too.
wise to be careful. wiser to get professional and independent advice.
good luck.
I read up a bit on the NRAS up here in QLD. It very much depends on your tax situation…as the benefit is a 10K tax credit….so that will be worth more to you or less depending on what tax bracket you are in.
Personally, i found that having to charge 80% of market rent (one of the NRAS rules) that i would only be about $4k per year better off under the NRAS….taking into account all other cash flow items. That is good….except i couldnt find any areas i wanted to invest in that the NRAS allowed.
It may very well be a different story down in VIC….i know the plan is to increase the number of NRAS qualified houses…so there might be some gems pop up.
NRAS – my experience in Queensland.
I purchased my property of a plan…. some of the issues to consider are this……
1 The builder did not build in accordance with the contracted plans.
2 The builder did not build in accordance with the approved plans (held by council).
3 The builder built in accordance with the not approved plans without my knowledge.
4 No variations.
The builder did not get any variations for the following:
Example 1: Black colourbond roof and not a light coloured tiled roof (as per my contract).
Example2: Separation wall is a CSR 502 not an "interhome" separation wall (as per my contract).
Example3: One electrical meter box not two (as per my contract plans).
Example4: Pine frames and trusses instead of steel (as per my approved plans held by council).
CERTIFICATION
The building certifiers did not certify my NRAS investment property in accordance with the contract plans.
The building certifiers did not certify my NRAS investment property in accordance with
the approved plans (held by council).
The building certifiers certified my NRAS investment property in accordance with the not approved plans.
All attempts by me to have these issues resolved have failed.
The builder is very large on NRAS funding and refuses to communicate.
I did not get what I paid for and the program is not what it first appears in my veiw.
Cheers
Be well aware that the NRAS may well be a government initiative but it is NOT backed in any way by the government.
In my experience of building an NRAS duplex off plan in QLD I was very clearly mislead by the builder (who according to the BSA built nearly 200 NRAS houses last year). The contract plans I signed changed significantly during the build and not one variation was sort by the builder. It also took over 13 months to build my duplex and there are many other disgruntled investors who also have carried the cost of this slow NRAS building process in the same housing estate
If you do buy an NRAS property do not buy off plan, buy one that is already built or not far from practical completion to minimise your holding costs
It must be late at night – but I cannot see how the 'builder issues' are specifically related to NRAS.
Reading both comments it would appear as these are 'bad builder' matters and not NRAS matters.
As a rule of thumb the attraction with NRAS is the tax cresdit/deduction which is used to market the improved cashflow for such properties. As I have stated on a number of occasions and tax benefits should be seen as supplementary to good property choice and not as the reason for investing.
I have seen some pretty lousy NRAS properties and at the same time I have seen some reasonable offerings.
As an investor you need to really understand how it all works. How are is the $9500 paid? Who manages the property? What leasing fee to they charge? What is the pool of tenants like? How does the local area stack up from an investment point of view? How is the state government 25% contribution paid/earned? Do you intend using PAYG variation for your income tax credits? (When I last looked – you can't). What sort of finance are you looking at? Which bank? What LVR is possible?
Many many questions.
Hi Derek,
It may be late at night…. but how is it not NRAS issue?
My understanding is that the builder is approved to build the NRAS properties.
The point I am making is that NRAS is a State and Federal Government initiative.
What I am drawing to your attention to is my experience of not getting the " highest standards"as an outcome inspite of the Governments claim in its brochure on the NRAS and I quote:"Rigorous selection criteria are applied by the Australian Government to the location,
design and amenity of NRAS dwellings to ensure quality properties are built to the
highest standards and comply with State,…………"
Add to that the fact that If you run into any issues (particularly contractual) with your builder you are on your own to defend your NRAS investment.
Try having a dispute with a builder that is well funded by the NRAS…. its no joke.
I did not get what I paid for as listed above in my previous comments.
It is estimated that the changes that were made were worth between 30k-50k in value to my orginal contract to what was delivered as my NRAS investment property.
This was never explained to me when I signed up for the NRAS as I thought a contract meant something…..
But clearly I was wrong.
Cheers
These are serious concerns. I have been investigating NRAS opps for clients and would appreciate knowing which ones to avoid. Having worked for 5yrs as NSW Regional Manager for a firm of property specialist accountants based in Melbourne that negotiate early access to good projects, I can say that it is particularly important to look at the track record of the builder when buying off-plan.
My feeling about NRAS product is that the deal should stack up on it's own …and the tax credits become the icing on the cake .The NRAS Scheme seeks to address the shortage of affordable rental housing by offering financial incentives to the business and investment sectors. The Australian Government will give you as a successful NRAS Investor.
Derek wrote:It must be late at night – but I cannot see how the 'builder issues' are specifically related to NRAS.Reading both comments it would appear as these are 'bad builder' matters and not NRAS matters.
As a rule of thumb the attraction with NRAS is the tax cresdit/deduction which is used to market the improved cashflow for such properties. As I have stated on a number of occasions and tax benefits should be seen as supplementary to good property choice and not as the reason for investing.
I have seen some pretty lousy NRAS properties and at the same time I have seen some reasonable offerings.
As an investor you need to really understand how it all works. How are is the $9500 paid? Who manages the property? What leasing fee to they charge? What is the pool of tenants like? How does the local area stack up from an investment point of view? How is the state government 25% contribution paid/earned? Do you intend using PAYG variation for your income tax credits? (When I last looked – you can't). What sort of finance are you looking at? Which bank? What LVR is possible?
Many many questions.
Yes Derek you are right it is a bad builder story. But it is a bad NRAS approved Queensland builder story that was the point. There is no option when building an NRAS property to use a well recommended builder. All you get is a take it or leave it approach from agents and sales events. I would fore warn anyone to thoroughly check the builders history before taking the NRAS investment leap of faith. Do not presume as I did that somehow the government had done its homework on the NRAS builders.
Clearly in my case they failed and even after contacting federal ministers resposible for the NRAS and they said we cant help….go to court to seek corrections to your building work. That's great if you have got $30k spare ….. if not put up with being
ripped off
"The NRAS Scheme seeks to address the shortage of affordable rental housing by offering financial incentives to the business and investment sectors. The Australian Government will give you as a successful NRAS Investor."
CSQ Town Planner.To the best of my knowledge that is the stated aim of the NRAS
However what I have experienced is this:
The contract to build was not worth the paper it was written on in my view.
The builder built what they wanted and the certifier certified it without my knowledge.
In my view my property was devalued by 30-50K….
No quality controls on the end product by the government NRAS.
So in my view…. not a good outcome from an investors perspective…..
So what is the Government incentive worth if the NRAS approved property is less than the stated contract?
I am simply sharing my experience with a program that delivers less than it promises, in my view as stated above.
Hopefully, my experience, will help fellow investors be aware of the potential pitfalls when dealing with an approved builder.
Cheers
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