SDA Property Update
July 2021
The next 13 minutes read could change your financial future … getting your SDA property investment correct at the outset is imperative you would agree.
If investing in a SDA Property under the NDIS is a priority you are wanting to solve, may I ask you to reach out to us and demonstrate your valid interest.
It is unfortunate that an excellent investment opportunity such as this one continues to attract ‘tire kickers’ who continue to drain us for information – yet are typical of the 80%’ters who just cannot commit to affording themselves an ideal opportunity to improve on their own and their future generations wellbeing. Unfortunately, they also steal our time which we’d rather give to you!!
So if this is not you, and you are genuinely interested and prepared to step up outside of your current comfort zones, in being committed to improved personal financial results, that can be achieved through a SDA property investment, read on below, enjoy the videos BUT we urge you to reach out to us to demonstrate your intent. Is that a reasonable request?
What is the purpose of the NDIS incentivising you to build a SDA property?
The government, under the NDIS is throwing silly money your way because they want to incentivise you to build for purpose. Build a home, that feels like a home to give someone far less fortunate than you in body or mind, a place to call home. Right now, there is a continued growing problem in that so many people with disability are living poorly in unsuited accommodations and you the tax payer, and our government are paying a lot for a system the Government and the NDIS want to fix.
The NDIS are giving the participants the opportunity to choose where they want to live and in what style accommodations. If you build with purpose, a home that looks and feels just like a home, with sufficient space to more than sufficiently cater to attract and hold onto participants … not only will you hold onto your participants longer, but you will improve your returns on investment.
Be mindful of offers out there where the build price is low. Building to full spec it is not possible to build cheaply! Your warning bells should ring out loudly if the build price is low. This means certain things are not being included and or the floor plan is smaller and unsuited, which will lead to dissatisfied participants, cramped in the common areas and being forced to their own bedrooms for more space and privacy. Who wants to spend most their life in a bedroom for privacy? And why force this, when you can invest more and build to suit?
Where is the SDA Property opportunity at today?
There is an increasing trend to securing SDA property to suit either a 2 participant + carer home or a 1 participant + carer home.
Why you may ask? The reason being that the average number of participants across all SDA dwellings is around 1.45 participants. Meaning if you build for 3 x participants, you may experience a vacancy on one of the rooms. Whereas if you build for two or one, there is every chance you will have full occupancy rates.
If you are fixed on a 3 bed and you are ok with perhaps the yield for 2 regulars and the third being irregular, then we urge you to ensure that the home design includes a media room, and also a larger area for the dining, lounge and kitchen areas.
Can you imagine 3 x participants + 3 or more carers in a small open space all vying for cooking space whilst others trying to watch TV and all the noise and personal space disruptions. Build to suit your participants needs to keep them happy and they will stay longer. We have seen too many floor plans that are just not conducive to making your participants comfortable and happy to call your place their home! What is worse is that there are groups out there trying to sell you unsuited floor plans. We urge you to be very wary. Save a dollar today, means you will loose tenfold over and over for the live of the investment.
See our video on High Physical Support SDA homes here, further explaining the requirement for a larger floor space which also includes further enhanced ‘private’ space, being the media room and more outdoor usable areas.
Budget under $600k, but you can’t access quality SDA Property?
Look no further!
By way of example, part of our development team is now focused on sourcing land to build One Participant + Carer Villas under the HPS category, we feel the pricing will average around $540k with yields 11% – 12%. How good is this.
Fantastic HPS opportunities, especially with high demand by participants who do not want to share, who prefer to live alone and have a carer onsite.
Also ideal for a SMSF as they will be single contracts!! Where else can you mitigate your risk and achieve a yield of 11% pa linked to CPI and have an opportunity to Leverage using borrowings?
Crazy thing is “as we launch them, they are getting reserved!!” There is a need, talk to us if you are interested.
Invest with a Rental Guarantee or Not?
If you are considering investing in a SDA property with a rental guarantee … watch our video where we explain how this is fraught with risk, whilst those giving you the guarantee stand to earn double what you earn, and you have taken all the risk.
BIG QUESTION : “Who is guaranteeing the guarantor??” … this is your highest risk + are they building to the right specification, and are they building too many of the same in the same area guaranteeing you increased rental competition? Let me know your thoughts after you watch the video here
SDA Property Rental Management
Did you know that you can source your own participants, and are you aware that without a licensed SDA Rental Manager (Provider), you are unable to access your income from the NDIS?
Meaning, each SDA property requires a fully licensed SDA Rental Manager for you to access the high yields being offered by the NDIS.
BUT be MINDFUL … there are some exceptionally greedy SDA rental manager out there!
Whenever our Government throw good money at a project, it brings out the greedy providers who want to earn more than you do?? They say that “money does not change people; it just brings out more of who you really are!” …. so true.
What this will do to your yield is detrimental, especially when you look at the numbers over 10 years, can you imagine the lost income and significant lost opportunities, if you went the 20 years???
The table below is for demonstration purposes only, but is based on actual numbers clients have shared with us. Which SDA rental manager would you choose and why?
The numbers have been extrapolated for your benefit using the same rental yield. Would you prefer that $142,263 in after tax dollars in your pocket … or in a rental managers?
Investing in a SDA property is not about the fantastic yields, it is about what you do with the extra income, how you invest it that will maximise your return on investment and positive financial impacts it will have on your life and your next generations life!
What lost opportunities and compounding returns will you lose out on if you employ a SDA provider to manage your property who has unnecessary high fees, who are greedy?? Just contemplate this for a while …. as an ex financial planner of 15 years, and as a property professional for the past 16 years I can enlighten you. It is significant.
Sadly we have seen worse, and most clients have no idea. They believe this is how the whole industry works! Hoping you have had your eyes wide open, prior to going into a SDA Property.
I thrive on helping you get to know what you don’t know, so you can make an informed investment decision. We save you time and help you make more money by informing you.
Now when you compare the above to a Rental Guarantee, a rental guarantee is a sad expensive joke. Did you know if you only had one participant in your home built for 2, you would get more than the 7% or 8% guarantee?
Again, who is guaranteeing the guarantor, and are they building the right product?? If they close their doors, is there another SDA Rental Manager who will take on the management for you so you get your NDIS income???
Knowing what we know, I’d say highly unlikely unless it is another over offering and over charging. So you end up with an expensive ‘paper weight’.
SDA Rental Managers are a scarce commodity across Australia, meaning you would want to go into this with your eyes open very wide. I may have repeated myself, the purpose is to ensure it sinks in, because it will make a significant financial difference to you and your next generations.
We are in discussion with two SDA providers who both want to secure their SDA licenses to manage properties in different parts of Australia. BOTH have commented that they will not touch a SDA property which does not comply to their own stringent requirements. And nor will the other two we already refer to.
Please read that again “neither will not touch a property which they are not 100% happy with!”
What this means to you the investor, if you build incorrectly there is a strong chance you will not secure a SDA Rental Manager, you may secure one that will ‘rip you off’ with high fees because you are a sitting duck, owning a SDA which is not well suited to the NDIS category you have built for.
You would want to be getting your investment correct from the outset!
Yes or yes ??
Does converting an existing dwelling into a compliant SDA property make financial sense?
We continue to receive requests for help and advice on this subject.
This is not our area of focus, however, do your numbers upfront and get a consultant on board to help you get it right.
What we will share with you is that for each disability category and dwelling type (apartment, villa or house etc) the NDIS have stringent requirements and Minimum Refurbishment Costs. When you discover these, why on earth would you go down that road when you can build new from scratch, ensuring latest compliance and design, full depreciation benefits, build warranties and guarantees, lower ongoing maintenance costs, wider choice of location and stamp duties on land value only on new house builds?
Do the numbers first, then use a SDA consultant and at the same time speak to and secure a SDA licensed Rental Manager ensuring they will manage the end product … before you spend a cent on this strategy as you may find that it is not financially viable. Oh – suggestion “before you go down this route, ensure you have a SDA licensed Rental Manager on board! Read above why.
Oh, also be mindful of properties being advertised online saying NDIS suited …
Why properT network?
Because we take what we do at properT network seriously and invite you to take it as seriously as we do, so that your investment dollars are working as hard and efficiently as possible for you.
We consult with you our client, to firstly understand what you are wanting to achieve, then to help you match your investment objective and return on investment requirements, with the ‘best fit’ property, in a location, that will ensure your investment dollars are working hard for you. We achieve this by educating you to know what you don’t know that you don’t know about investing and SDA Property (and or other property) under the NDIS for the purpose of you coming to an informed investment decision.
Our promise is to save you time and help you make more money coming to this informed investment decision, through our end-to-end consultation and delivery process.
Hey, that is only if making more money is one of your objectives? 😊
If it is and securing a high yield, risk mitigated investment vehicle is a priority you want to solve … that is great, reach out to me now using my contact details below and let’s share a discussion.
Please do this only if you are committed to yourself, is this a reasonable request?
Important Videos you may want to review
Synopsis on Robust Housing Compliance here (5minutes)
Synopsis on High Physical Support here (9 minutes)
Understanding NDIS Property and NDIS Precautionary here (10minutes)
What you need to know when wanting to invest in a SDA property here (11 minutes)
SDA Property Investment comes with its own complexities, questions are important, and we love questions, we value and urge transparency in sharing your thinking with us. You would want to be open to being challenged as we are open to being challenged … all for the purpose of you coming to an informed investment decision Luke
Once again, due to increasing inquiry we are time poor. When you demonstrate your own personal commitment, we will team up with you. May I ask that you reach out to me now to further discussion for the purpose of working together to source a SDA Property that will ‘best fit’ your investment objectives, purpose, budget etc. Click here now or phone me now on 0413 108 125.
Regards
Stephen
Pingback: NDIS Property | SMSF Property Investment