Business & Finance Buying Defence Housing Australia (DHA) properties

[Loyal Lion]

I'm looking into buying a DHA property as an investment. It is for negative gearing purposes.

I hear conflicting reports about these properties.

Some say to stay away because the houses are normally overpriced & the rental yield is lower than market price. They could also be harder to sell because only investors can purchase them during the lease period. Also some question the capital growth of these properties, because of where they are located.

Some investors love them because DHA look after the maintenance on the properties as well as organising the tenants. They pay you the rental income even if there is no tenant in there.

At this stage, I'm not particularly interested a great deal in the rental income, although I don't want to pay a huge contribution from my own income, towards the mortgage. Maybe a grand a month would be ok.

I've also thought of buying a property in areas like Mildura or Geelong. Capital growth seems to be good there.

Any thoughts would be appreciated.

 

[powerful girl]

It sounds as though you have thought about all the pro's and con's.

I have researched defense housing a bit, it's easy as you have no hassles, know what you are up for in advance and if you lock in to a fixed rate loan as well, there are definitely no surprises etc so could be a good option for someone that doesn't want hassles. But based on my research the properties are over priced and generally in fairly crappy suburbs with limited capital gain potential, and slightly less than market rate rental, plus you do also pay a managment cost. Over 9-12 years you will probably do ok, but IMO could probably do better $$$ wise.

Depends on what it is you are looking for, chasing the most bucks, or a simple solution with a relatively care-free investment not having to worry about tenant issues. If it is the bucks, i would steer clear and buy in a suburb with more capital gain potential and employ a good agent to manage the tenancy.