Hi,
I listened to a Podcast today that Dymphna Bolt did a month ago and it was about the NRAS (National Rental Affordability Scheme).
I looked in to this back when it was first introduced around 2008 and it was mostly for the big developers and well beyond our capabilities at the time.
I was interested to hear from the guest speaker in the Podcast that it is now open to smaller developers and sounds awesome for us if it is.
Has anyone else heard about this as I can't seem to find any info on the net?
Cheers
Jackie
Hi,
Unless it is an opportunity to buy (rather than develop) a nras property as an investment, I'm not sure what the opportunity is.
Here is a quote from the government's website:
"How can investors participate in NRAS?
Interested investors need to apply to the Australian Government for an allocation of NRAS Incentives.
Investors at scale may apply for NRAS Incentives for individual projects, or partner with not for profit housing providers and property developers to build properties in different locations. Consortiums and non entity joint ventures are common models for NRAS projects.
Because NRAS aims to encourage large-scale investment in affordable housing, NRAS Incentives are unlikely to be suitable for small scale individual investors.
Instead, individuals who are interested in purchasing just one or two NRAS properties as an investment can become involved by approaching entities who are applying or already have a larger allocation of NRAS Incentives."
– Steve
Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
Hi Steve,
Thanks for your reply.
The reason for my post is that we have come across a development site which can fit in total 11 units and sums stack up very well however finding people to help finance it at the moment is another matter. Tassie is extremely slow at the moment.
That's why I thought that if we could get NRAS approval, get the DA and sell the units off the plan as +CF investment properties, it would help us get the finance we need.
How I currently understand the scheme to work is :-
We build 2brm units and sell to an investor for $245000
Market Rent would be $265pw. With NRAS 20% discount the rent would be $212pw
Initially the property would be -CF by $3640pa, however, with the 20% reduction in rent and the $9500 Tax Free the government gives you back each year, the property would be then $3520pa +CF.
Sounds like a good thing to me. We get to develop 11 units and 11 investors end up with Positive Cashflow Properties.
Am I missing something?
Cheers
Jackie
When i looked into buying one my only concern was whether the upfront cost for the investment was higher than a non NRAS property and that was where you may take a bit of a hit. Also there seems to be less lenders out there prepared to fund an NRAS property and i dont know of anyone that will provide an SMSF loan for an NRAS property.
Sorry just a couple of stumbling blocks i found when i was looking into it things may have changed.
Hi Pete & Jackie,
I know this is a bit late but hopefully still of some use to you or others.
In order to have your development approved for participation in NRAS you need to include at least 20 dwellings. This was reduced from 1,000, but it looks like it still may be outside the range of what you are looking to achieve. See page 34-35 of this pdf document from FAHCSIA at http://www.fahcsia.gov.au/sites/default/files/files/housing-support/nras/NRAS_policy_guidelines_fahcsia3.pdf .
Regards,
Melanie
Pros:
– Most NRAS will be positive or neutral cashflow (on Interest Only loan)
– Most NRAS properties will be easily rentable as their rent is 20% lower than market value
– Rents can be reviewed and adjusted to inflation
– 10yrs incentive backed up by Govt
Cons:
– Not always in the most desirable locations for capital growth
– Property management fees are higher
– Upfront costs are higher
– Purchase price is higher than non-NRAS
– Banks may not take into account the NRAS incentive and also might value the property as worth less than purchase price (so you may have to dig into your own pockets for the difference!)
I just built 2 units and the NRAS indorsemnets cost $6000 each. Before we even started. We are wading through the complex jungle and fees now and there are a lot of them.
Hi Evfred,
I have often wondered whether the ongoing fees are higher than your normal rental due to compliance etc. Ares the fees you mention the ongoing fees or other hidden set up fees?
Thanks,
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