Defence offers investment

THE perceived increase in risk associated with investment in shares as the market becomes more volatile has caused some investors to return to the traditional ‘bricks and mortar investments which may provide lower returns but are seen to offer greater security.

One organisation which is providing what they term as ‘worry free residential property investment’ is Defence Housing Australia which provides 20,000 houses in fifty locations to accommodate Australia’s military personnel.

Defence Housing Australia WA sales manager Stella Russell explains: “Rather than owning all the houses it supplies, DHA provides opportunities for residential investors to assist in meeting defence needs.

“DHA sells a proportion of the houses it provides to investors, then leases them back for up to nine years, with an option to extend further.

“DHA then manages the property on behalf of the new owners,” she said.

Leases are guaranteed regardless of whether the property is occupied with payments made monthly in advance.

In WA alone, more than fifty houses in twenty suburbs and country WA are available for sale.

Under the current standard leasing arrangements DHA charges a management fee of 15 per cent of gross rental income.

Prices in Perth range from $325,500 for a house in Attadale to $106,000 in Safety Bay.

Houses are also available in Alfred Cove, Joondanna, Scarborough, Waikiki and Yokine – to name a few.

Research indicates that gross yields in WA range from 4.35 per cent to 6.86 per cent.

For a 1987 three bedroom, one bathroom house in Safety Bay, investors will need to part with $106,000 to enjoy rental income of $140 per week. This reflects an initial gross yield of 6.86 per cent and a net yield is 5.84 per cent.

At the lower end of the spectrum a 1986 four bedroom, two bathroom house in Winthrop is offered for $310,500 with rental returns of $260 per week.

This reflects an initial gross yield of 4.35 per cent with a 3.70 per cent net yield.

At the end of a six year lease agreement, DHA will repaint internally, ensure all appliances are clean and in good working order and ensure grounds and landscaping are in neat and tidy condition.

With a nine year lease DHA will also recarpet the house and paint externally.

Challenge Bank has put together a DHA Advantage package for DHA investors including a 50 per cent discount on establishment fees and a discount on building insurance.