Is this the smartest and safest way to invest in property?

Introduction

In the current environment where the share market remains volatile and interest rates are creating uncertainty in the economy it is refreshing to see an intelligent property investment that is a winner for the tenant and the investor. How would you like to buy an investment property where the government actually pays you a tax credit of $9524 for your property each year, for 10 years? 

Background

The government realised with market rents expected to grow at approximately 4% - 7% p.a. over the next two years for most cities, due to a lack of new dwellings being built, they had to provide a solution. Along came NRAS. Treasurer Wayne Swan launched the National Rental Affordability Scheme (“NRAS”) in July 2008. The purpose was to provide assistance and assist funding to increase the supply of affordable rental dwellings across Australia, by reducing rental costs to mid income earners and to encourage investment on a large scale to provide more affordable housing. The NRAS scheme is expected to supply up to 50,000 affordable rental houses across Australia by 2012

How it works

In simple terms the investor acquires an investment property as they would any other investment property. The investor buys a NRAS approved property and the tenant pays 20% less market rent, and the investor receives a minimum tax credit of $9524 per year for 10 years from the government. There are no government contracts or caveats and the investor can sell their property at anytime if they choose to do so.

Even though the market rent is reduced by 20%, there is also reduced risk with vacancy as the tenant appreciates that their rent cost will always be 20% discounted to the market place for 10 years.

Ms Jo Brown, Director and educator of NRAS Real Estate Properties states that our motto is the spirit of what the Governments NRAS scheme is meant to convey – “We sell NRAS approved properties where there is affordability for the tenant and profitability for investors”. This is a feel good investment and importantly helps our key workers live closer to where they work. 

Ms Jo Brown says as more and more NRAS approved properties are being released in the coming months and the investing public are paying more attention knowing that their investment property can be cash flow positive within 2 years. In these current times Jo Brown says, is there smarter or safer way to acquire an investment property knowing that you will receive from the government a minimum of $9524 per year for 10 years?

*Jo Brown has also appeared on the 730 report 3/6/2010 www.nrasscheme.com.au