Buying an Investment Property as an Overseas investor

[nicolac34]

I assume it is possible to purchase a house in Australia as an overseas resident - but does anyone know the process? Do you have to get approval from somewhere first?

 

Would be a cash purchase so no mortgage required.

 

Does anyone know what the tax situation would be like on the rental income?

[Lambethlad]

Check out this site. They should be able to give you the info you need. This is a safe worry-free way of investing in property in Oz.

The government Defence Housing Authority will manage your property, guarantees your rent, and lease agreements are from 8-12 years. And if you ever decide to sell they find a buyer for you. I have a rental property and it is pain in backside with bad tenants always behind in rent, and the hassles involved in trying to get them out, so I'm thinking of selling it and getting a DHA house myself.

http://www.dha.gov.au/investing?gclid=CPHL8ojul7sCFYZLpAod03cA0Q

[nicolac34]

Thanks Lambeth, although probably wouldn't work for the situation I'm thinking about it. Although an overseas resident at the moment they hope to become PR in the next few years so would want to live in it after that.

[Cez]

They need to google "FIRB"'and will need permission from this department before buying property in Aus. I assume they are in Aus already? There are fewer restrictions (if any) around buying brand new properties from developers. If one of the couple is an Aus citizen and they are buying as joint tenants, no FIRB approval is needed.

 

sorry, most of this is dredged from memory, if your friends start with the FIRB website they won't go far wrong.

[nicolac34]

Great, thanks Cez. Yes they are in Aus already, but only on tourist visas (in the parental visa queue).

[nicolac34]

Looks like it's a no go for an established property, has to be a new build.

[flag of convenience]

Looks like it's a no go for an established property, has to be a new build.

 

Thankfully yes otherwise house prices would be even more unaffordable. It does somewhat limit the options available of course as most overseas investors buy into the apartment market. It's going gang busters on the East Coast, not quite as established in Perth. But then an option could be a new house in one of the outer developing estates?

[nicolac34]

Thankfully yes otherwise house prices would be even more unaffordable. It does somewhat limit the options available of course as most overseas investors buy into the apartment market. It's going gang busters on the East Coast, not quite as established in Perth. But then an option could be a new house in one of the outer developing estates?

 

Yeah, not sure they want to be that far out. Just floating ideas at the moment as they intend to go travelling for 8 months but need some kind of income to do it, so either cash in the bank earning interest or cash in their future house with a tenant paying rent - also worried about house prices continuing to rise in Perth.

 

They just got a shock from the bank when they were told that without a TFN they'd be paying 46% tax on their interest. :rolleyes:

[buzzy--bee]

Check out this site. They should be able to give you the info you need. This is a safe worry-free way of investing in property in Oz.

The government Defence Housing Authority will manage your property, guarantees your rent, and lease agreements are from 8-12 years. And if you ever decide to sell they find a buyer for you. I have a rental property and it is pain in backside with bad tenants always behind in rent, and the hassles involved in trying to get them out, so I'm thinking of selling it and getting a DHA house myself.

http://www.dha.gov.au/investing?gclid=CPHL8ojul7sCFYZLpAod03cA0Q

 

I'm in 2 minds about DHA. The yields tend to be quite a bit less, but the rent is guaranteed. Must do more research.

 

BB

[Fisher1]

We researched a bit about defence housing on the net. It seemed to be value versus security. Your rental income was secure, but it was suggested by one or two sites that the property might be slightly overvalued on purchase and perhaps not as easy to sell at the end.

 

I have been considering buying a small flat to stay in when we visit family. Wouldnt be able to afford to leave it empty but could visit for extended periods between tenants. I thought the best way would be to approach an agent and ask to look out for properties suitable for non-residents to buy - any comments?

[Cez]

The barefoot investor had this to say about investing in defence housing the other day:

 

Question of the Week:

 

Investing in Defence Force Housing

 

Hello Scott,

 

My wife and I are in our 50s and are looking for an investment that will fund our retirement. We’ve been researching buying an investment property with Defence Force Housing Australia (DHA), because they sound very safe, and offer guaranteed returns on our investment. Do you have a view on them?

 

Thanks,

 

Tammy

 

G’day Tammy,

 

Yes, I certainly do have a view. Buying an investment property through Defence Housing Australia (DHA) is like going to bed with Hanna Montana … and waking up with Miley Cyrus.

 

Okay, so there’s no wrecking ball. This is a very safe investment. But as I’ll explain, that’s actually its biggest downfall.

 

Here’s how it works:

 

You buy a house through DHA and automatically lease it back to the Defence Force for up to 12 years. Throughout the term of the lease you have a rock solid income stream. You don’t have to worry about vacancies (your rent is backed by the government), and you don’t have to worry about the hassles of being a landlord – DHA takes care of maintaining the place.

 

“Sound good, soldier?”

 

“Yes sir!”

 

Hang on a minute. This safety comes at a significant cost. DHA slugs investors an annual management fee of 16.5 per cent of the rent. They say it’s justified because they cover the cost of day-to-day maintenance (but not major repairs). I say it’s bloody expensive.

 

Yet the real problem happens when you sell. The key to making long-term profits in property is to choose the right location. Which is generally a high growth suburb with a large proportion of owner-occupiers. That’s not what you’re signing up to with DHA. They often build their houses in clusters that are close to army bases, where the major owners are investors.

So Tammy, my advice would be to stay away from DHA. If you genuinely want safety – you need to create it yourself. Buy a good quality family home, in a good quality suburb, and rent it out a little below market rates to a good quality family.