Case studies

Following 12 months of negotiation, Dixon Advisory has entered into an access arrangement with Defence Housing Australia (DHA) to secure an exclusive selection of DHA properties for sale and leaseback on behalf of our clients. The properties have been carefully hand selected from DHA's $1.8 billion property portfolio in areas we believe have the most attractive risk-return characteristics in particular local communities, with an emphasis on maximising capital growth. The properties are located close to schools, shops and transport and are built to meet stringent Department of Defence standards in terms of size, amenity and inclusions.

One such example of this type of asset is the property pictured above, which was purchased on behalf of a client’s self managed super fund (SMSF) in 2011. The property is a single level house comprising four bedrooms, two bathrooms, dual living areas, double garage and landscaped gardens located in Baudinette Circuit, Bruce, ACT.

We bought the property at DHA’s offer price of $625,000 after our independent property valuer inspected the property and found the price to be favourable.

The property was purchased with a 15-year lease to DHA, commencing at $640 per week (5.32% p.a. gross yield), with annual rent reviews to market valuation and a guarantee that rent will never fall below the commencing rent.

Since acquiring the property, the client has been pleased with the DHA property care service and the ease of holding a DHA property within their SMSF.

Knowing when to walk away is important in being able to ensure you pay the right price. Our property specialists have the knowledge of our in-house property valuation plus enough distance from the purchase to be able to walk away when necessary as well as negotiate a better price when the opportunity arises.

This was demonstrated in the purchase of a dual level renovated terrace comprising two bedrooms, one bathroom, study, open plan living/dining, kitchen and a landscaped courtyard in Queen Street, Newtown. We valued the property at $770,000. When it went to auction with an indicative price of $775,000+ we didn’t take part in the bidding because it was above the market value.

The property was passed in and the vendor reduced the asking price to $775,000. Since the new asking price was closer to the valuation, our acquisitions team put in an offer of $745,000. Some tough negotiation followed but the vendor, who wanted to sell quickly, accepted the offer. This represented a saving of $25,000 on the market value and $55,000 off the initial asking price.

Having an in-house valuer, Kellie Landrey, who inspects each property, gives our clients an edge because we can ascertain the right price for the property and then negotiate with the seller on that basis. Sometimes, we are even able to buy properties below market value, which further increases the potential capital gain.

In late 2010, Kellie valued a dual level terrace comprising two good sized bedrooms, one bathroom, lounge, open plan living/dining, kitchen and a small side courtyard in Wilson Street, Darlinghurst, at $645,000. We negotiated a price of $610,000 and purchased the property for the client, saving them $35,000.

A similar property, which Kellie considered to be slightly inferior, on the same street sold in December 2010 for $659,000.

On hearing the news of the other sale, our client was very pleased with the price we had secured for them.