SDA Property for Investors
SDA Property demand increases year on year
Currently 28,000 people with disability require Specialist Disability Housing (SDA) and unfortunately this number increases annually. Our population continues to grow, more people become disabled is a fact of life.
The NIDS is an incredible initiative to help those less fortunate than us in body and mind, help their carers and now on the back of Government launching SDA dwelling initiative help find ideally suited accommodations for people with disability, in and amongst our communities and in a dwelling that looks like and feels just like home to them.
Federal Government under the SDA program announced that people with disability under the age of 45 who are in Nursing Homes will be put into SDA Housing within 3 years, followed by those under 65 within 6 years!
We know that demand is not static, on the opposite, unfortunately is it growing especially with hundreds of spinal injuries a year in Australia. The current number of SDA houses required is based on only 6% of the just under half a million Australians with disability.
The demand in trial regions has doubled this 6% estimate resulting in the number of SDA properties being required to be built outgrowing supply.
Legislation for the NDIA requires agreement form all States and Territories before any changes can be made, meaning this program is not only sustainable, but here to stay. The Australian Government have committed $700 million dollars a year to this incredible program for a period of 20 years from the time your SDA investment property has been built.
And it is very sustainable. We have heard that it costs us tax payers and government around $1m dollars per year to accommodate one person with disability in the system as it stands today. The system is broken and people with disability are housed in mostly unsuited accommodations. Assuming this figure is wrong and is only $500k pa, and for housing one person with disability in your investment property the government give you around $38k as your incentive to do so. This means that you will save tax payers and the government $462,000 per annum!!
Now can you understand why your financial incentive to provide a home for someone with disability makes financial sense to the government and also to you!
Financials
Taking into consideration building a SDA home in a high demand area to accommodate 2 x participants who have disability and qualify to be your tenant. You could earn an income / yield of around :
- 2 x $88,000 from the NDIS
- 2 x $12,000 from the participant
- This could total around $200,000 per annum
- For 20 years
- Indexed to CPI
- On a property, valued around $950,000
- A gross yield of around 21%
*The above figures are for demonstration purposes and are extrapolated from the NDIS Government Calculator, the numbers will differ upon location, number of participants, type of dwelling, type of disability category
NB :
As important as it is to select the right location, where demand for SDA dwellings is strong it is as important to have a licensed SDA Provider (Rental Manager) to find participant and manage them on your behalf.
As important as this is, it is as important that this SDA Rental Manager charges you reasonable market related fees to provide their services.
Current Problems :
- Very few licensed SDA Rental Managers across Australia
- In NSW and Vic the ones who return our calls or emails unfortunately are also the ones who only pass across less than 50% of the above mentioned income to you
- Sure they offer Rental Guarantees
- But anyone who offers you any form of Guarantee is very confident that they will find Participants to live in your dwelling, or they would not offer the guarantee would they?
- There is a demand map, there is a very low supply in most locations
- You have to put up all the Dollars and Risk, they then step in and keep 55% to 60% of the income (sometimes more) and pass on 45% or less to you, who have taken all the risk
- How is this not greedy and not realistic
- But we have clients whose fear outweighs logic and go for a guarantee, when the same monies invested elsewhere could be working harder for them
- If you secure a SDA property and do not have a SDA Rental Manger who will agree upfront before you sign contracts to manager the property, be very aware. Without a SDA Rental Manger, you own an expensive liability.
Your investment opportunity
- Work with a team who on getting a clear understanding of your investment objectives and purpose for the investment will provide you an end-to-end customised solution
- Meaning matching the location, type of dwelling, budget to your preferred outcome thus getting your investment $’s working hard for you
- Source the suited block of land, liaise with care providers in the area who are managing their clients with disability as to what the dwelling should include, designing the home to suit, tendering the build to work with the ideal developer, again liaising with the care providers to secure expression of interest from participants who will become your tenant, through to managing your Asset and at realistic management fees – where you get the majority of the income the property will generate.
- This way you will save time, stress and make more money. Which is the purpose for your investment after all. Yes or Yes?
