Knowing what I know, this is why I would not invest in a SDA property under the NDIS!!
Amongst other things …
- If you are more committed to your bullshit than improving your financial destiny, this is not for you!
- This is not an investment for me, if I am not prepared to rise above my current comfort zone.
- I would not invest if I am an investor who expects this to be an easy investment decision, that matches my current comfort zone!
- And if you are ‘risk averse’ run the other way, it doesn’t suit you at all.
- I would not invest if I am an investor who is making an investment decision out of fear of missing out or greed attracted to the high yields.
- I would not if I am an investor who wants a guarantee of tenants and or a rental guarantee, who does not understand demand for SDA properties increases with more people becoming disabled and joining the NDIS.
So you understand where I am coming from, by way of reminder … I was a financial planner for 15 years, gave it away as the products did not suit my client base, and for the past 16 years have been helping my clients grow and secure achievable wealth investing in Investment Grade properties.
What this means to you is …
“At properT network, we are all about the numbers which drive and underpin your investment vehicle and ensuring the investment suits your purpose and goals for it. My passion is to educate my clients to make informed investment decisions in line with this proven strategy; to save you time and help you make more money … and we are very good at it!”
SDA Property
We added SDA properties to our portfolio of investment property solutions around a year ago, as the shift for SDA property shifted from Corporate and Super Fund investment (who built larger developments), towards you the private investor – for the purpose of you offering a more homely and livable product for participants who have disability.
“When you don’t know what you don’t know, how can you make that all informed important investment decision??” … yes or yes?
especially pertinent to SDA property investment
SDA Property investment is complex and not suited to a high percentage of investors who are attracted to the opportunity, primarily because of the crazy high yields you can achieve. Yields from 10% up to 18% are being touted. And sure, they are inviting. Be careful of who you choose to listen to when looking at SDA Property!
So why would I not invest in an SDA property under the NDIS you may ask?
- These properties are known to be more expensive to build and banks tend to undervalue them.
- This means you need a larger deposit around 20% to 30% of the value of the property. Most people do not have access to this large a deposit.
- This is not for you if you are continuing to ask, “why is it a more expensive build, when I can build a 4-bed house for much less?”
- And if you are saying this, you are correct and SDA property is not for you
- If you are worried about getting participants (tenants) then this is still not for you.
- If you are not overly concerned and still interested, please be mindful of LOCATION, as some locations are being ‘over supplied’ by marketing groups who are transactional and just trying to sell you something.
- Not only an over supply potential and of the same type of home and floor plan, but more importantly rental competition for you and your investment.
- These same marketing groups are appealing to your greed (high Yields) and fear of missing out (FOMO), tend to offer cookie cutter floor plans, which most often, are not conducive to having happy tenants needing to share very small common areas. This is not conducive to attracting and holding onto your tenants.
- Sure 3 participants is very appealing cash flow wise, however it is unlikely that you will be able to attract and hold onto 3 x participants under one roof; due to personality clashes, lack of common area space etc. Sure, the income at the high end is incredible …. but at what expense in terms of consistent occupancy?
- Back to location – why are investors being offered locations in regional areas that are 30 or so minutes outside of these regional CBD’s, when one can access property much closer in, that better suit Participants and Care Providers?
- If you are not overly concerned and still interested, please be mindful of LOCATION, as some locations are being ‘over supplied’ by marketing groups who are transactional and just trying to sell you something.
- This is not for you if you are chasing higher yields at the sacrifice of better locations. And how do you know that there is demand in the area these companies are trying to sell you into?
- Did you know that there is no data base in Australia for participants looking for a SDA home to live in?
- We raise pertinent questions about some of the locations we continue to see being marketed out there.
- Why go so far out, participants don’t want to feel isolated and far from the essential services and lifestyle they need and want.
- Do the demographics further out suit the Participants? Just because one is disabled, it does not mean you need to be forced into a location that is unsuited to who you are and your lifestyle! When wanting to invest in a SDA property, place your participants needs ahead of yours when making a decision.
- Did you know care providers charge for travel time, and if further out, more funds come out of a participants overall NDIS package? Participants are not happy having to pay more out of their pensions.
- This is not for you if you need a Rental Guarantee to minimise the above risks.
- I definitely would not take a guarantee, based on this video shared here, check it out then you decide.
- Any company offering you a rental guarantee is appealing to your fear, and using your insecurity, to earn themselves a bucket load of $’s – and you have taken all the RISK !?!
- Question : “Who is guaranteeing the company giving you the guarantee??”
- This is not for you if you feel that Property Management Fees are very high!
- They certainly are way above market related residential property management fees.
- And rightfully so, because there is a fortune of behind-the-scenes ongoing compliance work needing to be done so that you can get access to the high NDIS payments.
- Also, to secure a participant as your tenant takes a great deal of work, skills and effort, to ensure your participants match up personality wise and can get along with each other. Meaning to secure participants is worth every dollar a SDA Provider (licensed SDA rental manger) earns and you need to be comfortable with their fees. Your income is reliant on them performing adequately.
- Of course, at the same time, you would want to avoid ‘total fees’ above that 15% mark. Some providers might not call it management fees, but if you are paying away anything above 15% pa, question it.
- More importantly, you would want to work with a SDA Provider who has your interest at heart, this will mean thousands of $’s difference to you over the life of the investment. Read more here
- This is not for you if you are comfortable signing over your property rights to someone else for a period of time through a punitive Head Lease agreement on the property.
- We believe they are necessary because of Insurance requirements. It is best that the Head Lease is signed with an easy, non punitive exit clauses.
- What does not suit an investor is signing the management rights of your property away for 5 or 10 years.
- What if you are dissatisfied with the rental managers and want to change but you are locked in?
- What if you want to or need to sell the property and you are locked in, what are your exit clauses?
- A Head Lease comes with stringent clauses and long notice periods required to give your property manager notice. It will not suit most circumstances and is punitive on you the investor. Read more here
- This is not for you if you do not have access to a SDA Provider (licensed rental manager) to manage your property and get you the NDIS funding.
- Avoid those offering rental guarantees, they will either only offer you a small rental guarantee and keep any CPI increases, sign you up for 7 years and you have taken all the investment risk and they get to keep the same amount of $’s derived from the participants as you would get.
- Also, if they close their doors – what happens to your property and who would step in to manage the property for you? There are very few SDA Providers around and won’t take on your property if it is unsuited.
- OR if you do find a SDA Provider, their fees in these locations may be very high, meaning a lot less income in your pocket over the life of the investment.
- This is not for you if you are like most investors, who make a decision that includes EMOTION.
- We know that your emotion involved in any investment decision will result in you the investor earning a lower return on investment. SDA Property investment needs a decision devoid of emotion!
- Emotion will ensure that you earn a lower return on your investment, but only 100% of the time.
- We know, to achieve new results requires new thinking, which sits outside of your current belief and comfort zone.
- A complex investment decision made on ‘being comfortable’, will guarantee you lower investment returns. Especially with SDA Property Investment, which is a complex investment and unsuited to about 80% of investors and unsuited to investors who have a need to be “risk averse”.
- When you are risk averse you are making an emotional decision that sits in your current comfort zone. Meaning guaranteed lower returns on your investment.
- Investors who “need to invest where they live” to have that ‘perceived’ control, and qualify it by saying “I know the area”, are also emotionally committed. And again, we know that emotion results in a lower return on investment, but only 100% of the time.
- So if this is you, then investing in SDA property is not for you. In fact investing in any property is not for you, as you are limiting your financial destiny when emotionally committed to investing.
- We know that your emotion involved in any investment decision will result in you the investor earning a lower return on investment. SDA Property investment needs a decision devoid of emotion!
- If you are unable to match the investment vehicle to your goals and purpose for the investment, then SDA property is definitely not for you.
- Anyone with Super, where you are contributing 10% of your monthly income into a super fund, you do not have the need to be able to drive past the companies in which your super monies are being invested into. Am I right?
- Remember that this is a whopping 10% of your income – and there is no need to be able to ‘feel and touch your investment’. And rightfully so!
- Then why do you need to ‘feel and touch’ your investment property?
- Why do you need to invest where you live?
- Surely, for the exact same dollars invested, with the exact same risk profile, you would want to maximise your Return on Investment over the life of the investment? This will amount to significantly more $‘s in your pocket positively impacting financial value to your next and next generations. If you cannot accept this, then SDA property investment is unsuited to you. Walk away.
- Anyone with Super, where you are contributing 10% of your monthly income into a super fund, you do not have the need to be able to drive past the companies in which your super monies are being invested into. Am I right?
