Investing in affordable housing

Investors would normally be wary of putting their money into "affordable housing", but the federal government's National Rental Affordability Scheme (NRAS), where an investor can secure tax perks worth $9140 a year for 10 years, may make you reconsider.

Money reader Ben wants to know more about the scheme so he can decide if it's for him. "I want to invest in residential property but I basically want it to pay for itself and be as risk free as possible."

The NRAS scheme was developed to stimulate the supply of new affordable housing by up to 50,000 by 2014. Properties must be rented at least 20% below market rent to tenants who qualify on an income basis. About 1.5 million households are eligible.

Jo Brown, a real estate agent who specialises in marketing NRAS properties through her company nrasrealestate.com.au, says many become cash-flow positive after the first year.

Brown describes NRAS-approved properties as a new class of tax-effective property investment. Like any other investment property, they can be bought by individuals, self-managed super funds, or any other entity, says Brown. Owners can gear them up and sell at any time with or without the NRAS entitlements.

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