Is SDA Property a good investment?
What do I need to know about investing in Disability Compliant Property?
What location works best for SDA Property?
Where should I buy my SDA property?
Pros, Cons & Pitfalls of investing in SDA Property?
What to be aware of when investing in a NDIS property.
Transcript of video above :
Hello, my name is Stephen Lazar, the director and owner of properT network for the past 18 years. My passion is helping my clients grow and secure wealth through educated and astute decision making, using Investment Grade Property as their preferred investment vehicle.
I welcome you to our latest informative video blog on SDA Property.
Be mindful, most people refer to it as NDIS Property, this is incorrect – the correct terminology is SDA Property.
How we work is when we have a clear understanding of what you, our client is looking for, your purpose for the investment and your Why, we then match a selection of best fit properties to your investment goals.
Just over 4 years ago, when SDA property started getting the attention of investors such as yourself, we educated and upskilled ourselves, in this complex space, adding SDA Property to our offering; for the purpose of further assisting, you our clients in accelerating your own financial planning goals, using SDA Property as your preferred Yield investment strategy. Then using this Yield to invest in a second or third SDA or other properties.
Four years ago, there were very few other groups offering SDA’s or as people now incorrectly call it NDIS Property. From the outset, and in line with our strong morals and valued work ethic, we made a deliberate and conscious decision to meet the Purpose and Needs of the NDIS head on, which is to build on a designed and suited floor plan and in a location in which participants can access required infrastructure to not only live, but to thrive, calling their new home their forever home. This being the primary purpose of an incredible initiative.
We know from experience, that when you source land and build with the Participants first and foremost in mind, then the carers needs and lastly yours, it is easier to attract and hold onto participants, compared to if you chase “high yields on paper”.
Of late, there are now a plethora of sales groups and even Mortgage Brokers out there pretty much spruiking SDA properties, jumping on the band wagon to earn a fast dollar, sadly willing and readily able to sell you, their trusting investor anything and in locations with little to no demand or high supply already. Sad Reality you want to be fully aware of!
Revisit our previous videos and blogs, you will note that we mentioned a statistic of around 80% of what is being touted out there to investors like you, just should not be.
We warned and continue to caution, that just because someone is selling it or can build it, that it does not mean you should be buying it. It certainly does not mean that they should be packaging it up and selling it to you either, with limited regard and zero accountability.
This is even more applicable today, with the plethora of these companies flogging SDA’s!
I cannot express myself strongly enough and caution you sufficiently, Yet, want to be investors are buying up these types of SDA properties in locations where there is little demand for them, merely buying based on spruiked yields…. which are merely yields on paper, and almost always not achievable”. If you don’t understand what I am saying ask me and I will explain it to you.
Why are investors so fallible?
Humans make decisions on the back of fear of missing out and or greed. This is why they are chasing these touted yields being quoted by salespeople. Chasing them with little regard for the reality of the situation, mind you.
Hey, we do acknowledge and agree that, “the yields on paper are frikking incredible! On paper they ARE. And a lower priced package makes the yield look even more desirable.
But when you don’t know what it is, that you don’t even know you don’t know, you are making an emotional decision to invest, and this is on the back of someone else’s sales skills and marketing. Not the required educated decision, devoid of emotion. And we all know the result is not in your favor.
The only way to offer a lower priced NDIS house and land package is to source land that is cheap, and to build a smaller, lower quality house. To get land that is cheaper, one has to go further out of any city or regional CBD. BUT what is the demand out there, and will a carer drive that far out of their area of work, just because you built a SDA there?
Ask yourself this question. This you owe to yourself, yes?
The 20% or so of us, doing right by this incredible investment opportunity, and right by the participants who desperately need NDIS houses, as well as the carers who work in these homes, continue to shake our heads with what is going on in this marketplace. It should be illegal. But sadly, it is not regulated at all. And thus, a free for all. Their free for all is your risk.
I work with highly ethical teams that I have deliberately surrounded myself with, and that includes the SDA Providers, the very people you would give your property to once it is built, to find you your Participants …. and do you know what their biggest concern is?
Vacancy Rates
Vacancy Rates in locations with already high supply, yet there are more SDA’s being sold into these locations. It should be illegal. The very “rental managers” you would need to appoint, are already sitting with high supply of built SDA’s on their books, built primarily in outer post codes, where there are too few participants and no required infrastructure for them to thrive, built in greenfield areas with a young socio demographic, the very populace attracted to these areas to live in, due to affordability.
For goodness sake’s, I am wondering if you are even aware that NDIS Participants can only qualify for SDA approval from the age of 18? Did you know this?
How many young families in these post codes have children of that age? We know very few. Then how many of those are disabled? Again even less. And this is where that sales company is advocating you build a very expensive build? It defies logic
Can you now identify why we and the industry are that concerned? Hoping that this information makes sense and offers you the insight you require to become more informed, when wanting to invest in this incredible sector, being SDA Property.
Why, almost ensure that you are guaranteeing yourself an over promised, yet highly under delivered investment vehicle … just because someone is selling it?
Please be careful who you choose to listen to in this complex space.
To further make you aware, Australia wide, sales and marketing companies selling more SDA properties, creating increased competition for you, their very own clients … probably misquoting the need in those areas for SDA’s, or stating a major hospital is being planned there, or they have waiting lists – I am sure you have already heard these so called, yet very questionable validations, as to why that location will have participants for your investment.
Yes?
Where is their responsibility in all of this to ensure that you have made a sound investment decision? Where?
Now, with your permission I’d like to explore another important looming problem : Following on further to this issue of selling SDA’s in wrong locations, there is a marketing machine in the SDA space who states he only does Robust, and pretty much states he does way more Robust than all others combined, they do so because, according to them, Robust has a significantly higher number of Participants out of the 4 categories of NDIS Participants. Have you seen their marketing videos on this, Yes? Very smooth and impressive videos and marketing.
What you are not being told is what is on the other side of this same coin and that is, when you combine the other 3 SDA categories, combined they substantially have way more participants than Robust does, and the income levels for the lower categories are just a small percentage below Robust, anyway.
I just had a thought, if they are that huge in supplying Robust, isn’t this creating competition for you, their own clients, selling so many of them? Makes one think, doesn’t it?
You may not be aware that it is exceptionally rare, that any other category will or can share with a Robust Participant, yet the other 3 categories easily share with each other, and do share. Thus, offering you further risk mitigation having access to a wider target audience of SDA participants amongst the other 3 categories, logic tells us.
Does this make investment sense to you now?
To compound the concern we share, market statistics shared by SDA Providers, validate that most Robust category homes only ever occupy one Participant. Due to behavioral issues. This statistic indicates that you will thus have a lower yield from your investment. That is income from only one Participant, in a home built for 2 or more Robust Participants. Leaving you around 50% short on the Tabled Income that sales company told you, you will be getting, when they sold it to you. Isn’t’ that what excited you and help you make your decision to do so after all?
If that is what you signed up for, and if you knew this statistic upfront, ask yourself “would you have committed to this investment, knowing what you now know?”
Are you aware that the opposite is true for HPS builds?
The industry statistics demonstrate that NDIS compliant disability homes catering for 2 or more participants, attract on average 2 participants per SDA Home.
So we do question this style of sales marketing, and rightfully so, as it impacts you the investor.
Some groups suggest you build for Improved Livability, as it is a cheaper build. We can discuss the pros and cons of this strategy when we catch up.
You are probably unaware that SDA Providers are getting a higher number of inquiries from Investors, just like you, who have completed their build, and are unable to find participants or a second participant. More so in further out locations or locations with a growing supply of SDA Properties, as explained earlier, and a lot of this inquiry is for Robust category too.
When questioned as to what happened to the promises or offers the company that sold them the SDA property made, and why have they not found them Participants as offered upfront, the answer that comes from these sales companies is that the market has changed, or no promises were made.
Huh, the market has changed?
Who changed the market? Perhaps these companies selling in unsuited locations, because the yield on paper looked excellent, should morally put their hand up saying they got it wrong for the client? Such a poor excuse, stating the market has changed.
These companies have earned their fees from their investors, now shirking their responsibility to fulfill their upfront discussions they shared with their clients whilst trying to sell them something. Incredibly irresponsible behavior, with an unacceptable level of substandard ethics. For the record, this is not any personal attack and is a generalisation of the market. It is definitely a real concern, and we stand by the fact that many areas being sold for SDA homes, remain unsuited or highly supplied with looming vacancy rates.
Now their own clients are left with a very expensive so-called paperweight and a high mortgage and insufficient income to cover their outgoings. Meaning a poor investment decision was made on the back of sales skills of someone looking after their own pockets ahead of their clients.
Be mindful of already built SDA properties for sale, dig deep as to why someone would be selling a goose that keeps on laying the golden egg?
Again, the purpose of this video blog is to raise awareness, that just because someone is selling a SDA Property, just because the yields on paper look so good in the tables, just because they quoting or misquoting demand for SDA’s, this does not by any means, mean you should invest in it with your own hard-earned dollars.
And when they present you with a Package, ask the right questions of them. Or send them to us to review on your behalf, we are highly proficient and knowledgeable in this complex investment space.
SDA Property certainly does remain an incredible initiative and a brilliant do-good investment, but only when you get it correct from the outset. Sadly, the NDIS is a growth industry, as our population grows, so does the level of people with disability, so does the level of those under the NDIS qualify for Specialist Disability Accommodation, and thus could be your Participants. Build with Participants first and foremost in mind and they will come.
What kind of Investor are you? Are you attracted to the “yields on paper” kind of investor?
Or would you aim toward strategising to mitigate risk and still earn a very healthy income from your investment over the life of your investment?
Decide upfront if you are chasing yields on paper or preferring to mitigate risk and be realistic about your investment returns, err on the side of caution, and any income above that, is a beautiful bonus in your pocket for you.
Reach out to me, for a conversation. My details are below, email or call now.
We deliberately elect to remain highly ethical to our core, this is not about us, this is firstly about the Participants and secondly about you and your investment.
Invite us to help you mitigate your risks, so that you make an informed decision as to whether SDA suits your investment strategy, and if yes, which SDA Property is a sound fit for your requirements and purpose for the investment. Invite us to work with you and provide you with a selection of ‘best fit’ SDA Properties to meet your investment requirements, strategy, budget and purpose for your investment.
This is Stephen Lazar, director and owner of properT network signing off. Come say hi to me.
