NRAS popular with investors

According to a recent straw poll conducted by The Adviser’s sister publication Smart Property Investment, 62.6 per cent of the 107 respondents said they would purchase an NRAS property as an investment.

Flynn De Freitas, principal of Omega Investments, said while NRAS properties had a “bad name” in the past due to developers' receiving massive kickbacks and limitations on how much investors could borrow, most of the issues have now been resolved.

“Having addressed all those negative things, NRAS has now become a very attractive option for investors,” Mr De Freitas said.  

“NRAS properties are located in areas where there is a large rental demand and there is an undersupply of properties. Generally, they are in regional areas, in growth areas.”

With NRAS properties located in growth areas, Mr De Freitas explained, there will be a large supply of houses coming onto the market so investors are unlikely to experience booming capital growth.

“But you will get some capital growth because as new houses are built, there will be an upward trend in house prices,” he said.

However, wHeregroup’s Todd Hunter said he does not see any value in purchasing an NRAS property as part of an investment strategy.  

“I haven’t heard of anyone who has made money from [NRAS] property, including those on my blog who have commented that their properties haven’t appreciated at all. Not even one case,” Mr Hunter said.

He points to the kickbacks and poor location of NRAS properties as factors that undermine investment potential.

“People definitely have to do their homework [to know] what other properties in the area are selling for in relation to the property they are purchasing and to see whether there are kickbacks built in,” he advised.