Comments for Property and Passive Income http://paulreid.com.au Building Your Property and Passive Income Mon, 01 Aug 2011 07:31:25 +0000 hourly 1 http://wordpress.org/?v=3.0.1 Comment on Who am I by Reidy17 http://paulreid.com.au/about#comment-261 Reidy17 Mon, 01 Aug 2011 07:31:25 +0000 http://paulreid.com.au/?page_id=2#comment-261 Hi Phill, sorry for the delay in response to your question as I just realised I had this question waiting here for me. Please feel free to email me on paulreid@assetz.com.au also. In answers to your questions above. 1 Valuation on NRAS properties can be an issue when some developers have inflated the price purely because the property has a NRAS contract on it, this has been quite bad in QLD and TAS in particular. I do have my own investment company so this is only my opinion and the way we like to do it- We package up properties that we believe are great value without an NRAS contract, then with our contacts we can bolt on the NRAS contract, there is a fee to purchase the NRAS contract from the supplier of @ $10,000 which is once off and you then have the contract in place for 10 years. The benefit of purchasing this way is it allows you to avoid high NRAS concentration in complexes eg Apartment blocks etc, we also recommend you only purchase the property if you are happy without the NRAS contract as it needs to be approved by the government after you have actually purchased the property. The NRAS should purely be the icing on the top of the deal not the only reason you purchase the deal. In regards to valuation I would recommend checking out similar properties on realestate.com.au that do not have the NRAS component and ensure you are still receiving value for money and the price has not been inflated. 2. Capital Gain evidence is hard to come about at the moment as it is a fairly new incentive, I can say I purchased a property in Bendigo the way I mentioned above. I paid 317k and it has been valued at 400k 2 months ago, it is less than 1 year completed and yes I have an NRAS contract in place. Some commentators have commented on how NRAS properties will not receive any capital value??? I do not agree with this, as with purchasing properties the way I have , you would not even know my property had the grant on it so why would my capital growth be any different than my neighbours with out the grant??? I can understand their view if a whole complex was NRAS approved and the prices were inflated to begin with, you would have to wait for time to realise the extra money you paid when you purchased the property. In regards to cash flow it depends on taxable income but here are some numbers on my property- Normal rent is 360pw NRAS Rent Minus 20% =288 NRAS Incentive (tax free)= 176pw Total NRAS rent =464pw plus you have stronger negative gearing benefits as you are only achieving 288 pw rent and the grant is tax free. I hope all this makes sense and if you would like to discuss further please let me know. We currently have one more property in Bendigo that suits the NRAS scheme, here is a link if you wish to check it out. Please ensure when you do you comparable sales you realise our product is fully turn key eg landscaping, flooring, window dressings, air cond etc a tenant can move in on completion. Also as mentioned above you need to be happy to purchase this property with out NRAS and then apply for NRAS, the 10k is only payable on acceptance of the grant. This property will be positively cash flowed from Day1 with NRAS and very close to it with out. Also we believe Bendigo will show strong capital growth in the coming years. here is the link http://www.assetz.com.au/property_search.php and then click on the Kangaroo flat property ,more details. I hope this all makes sense. All the best Paul Reid 0430 008699 paulreid@assetz.com.au Hi Phill, sorry for the delay in response to your question as I just realised I had this question waiting here for me. Please feel free to email me on paulreid@assetz.com.au also.
In answers to your questions above.
1 Valuation on NRAS properties can be an issue when some developers have inflated the price purely because the property has a NRAS contract on it, this has been quite bad in QLD and TAS in particular. I do have my own investment company so this is only my opinion and the way we like to do it- We package up properties that we believe are great value without an NRAS contract, then with our contacts we can bolt on the NRAS contract, there is a fee to purchase the NRAS contract from the supplier of @ $10,000 which is once off and you then have the contract in place for 10 years. The benefit of purchasing this way is it allows you to avoid high NRAS concentration in complexes eg Apartment blocks etc, we also recommend you only purchase the property if you are happy without the NRAS contract as it needs to be approved by the government after you have actually purchased the property. The NRAS should purely be the icing on the top of the deal not the only reason you purchase the deal.
In regards to valuation I would recommend checking out similar properties on realestate.com.au that do not have the NRAS component and ensure you are still receiving value for money and the price has not been inflated.
2. Capital Gain evidence is hard to come about at the moment as it is a fairly new incentive, I can say I purchased a property in Bendigo the way I mentioned above. I paid 317k and it has been valued at 400k 2 months ago, it is less than 1 year completed and yes I have an NRAS contract in place. Some commentators have commented on how NRAS properties will not receive any capital value??? I do not agree with this, as with purchasing properties the way I have , you would not even know my property had the grant on it so why would my capital growth be any different than my neighbours with out the grant??? I can understand their view if a whole complex was NRAS approved and the prices were inflated to begin with, you would have to wait for time to realise the extra money you paid when you purchased the property.
In regards to cash flow it depends on taxable income but here are some numbers on my property-
Normal rent is 360pw
NRAS Rent Minus 20% =288
NRAS Incentive (tax free)= 176pw
Total NRAS rent =464pw plus you have stronger negative gearing benefits as you are only achieving 288 pw rent and the grant is tax free.

I hope all this makes sense and if you would like to discuss further please let me know. We currently have one more property in Bendigo that suits the NRAS scheme, here is a link if you wish to check it out. Please ensure when you do you comparable sales you realise our product is fully turn key eg landscaping, flooring, window dressings, air cond etc a tenant can move in on completion. Also as mentioned above you need to be happy to purchase this property with out NRAS and then apply for NRAS, the 10k is only payable on acceptance of the grant. This property will be positively cash flowed from Day1 with NRAS and very close to it with out. Also we believe Bendigo will show strong capital growth in the coming years. here is the link http://www.assetz.com.au/property_search.php and then click on the Kangaroo flat property ,more details.

I hope this all makes sense.

All the best

Paul Reid
0430 008699
paulreid@assetz.com.au

]]> Comment on Who am I by PHILLIP WINFIELD http://paulreid.com.au/about#comment-238 PHILLIP WINFIELD Tue, 28 Jun 2011 06:57:48 +0000 http://paulreid.com.au/?page_id=2#comment-238 Hi Paul, I am really interested in getting into an NRAS Property Investment but a few concerns exist for me, perhaps you would care to comment or point me in the right direction; 1. Valuation on NRAS properties..apart from obtaining an independant valuation , what other ways can provide a true market valuation. 2. Do you have any advice on the relative performance of NRAS properties, Capital Gain , rental & tennancy performance. 3. The realative liklihood af really achieving a revenue neutral or positive position overall. Interested in your response. Phill. 3 Hi Paul,

I am really interested in getting into an NRAS Property Investment but a few concerns exist for me, perhaps you would care to comment or point me in the right direction;
1. Valuation on NRAS properties..apart from obtaining an independant valuation , what other ways can provide a true market valuation.
2. Do you have any advice on the relative performance of NRAS properties, Capital Gain , rental & tennancy performance.
3. The realative liklihood af really achieving a revenue neutral or positive position overall.

Interested in your response.
Phill.
3

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