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Why you shouldn’t invest in NDIS Property

SDA Property
Pitfalls of investing in a SDA Property

Why you should not invest in SDA Property

Keep in mind that the SDA Property Investment opportunity is relatively new to investors just like you.

When it was launched several years back, it was aimed at Super Funds and Corporations, to provide accommodation’s for people with disability, for which these investors would receive higher than average investment returns in the form of funds received through the NDIS.

What resulted was definitely not the type of accommodation’s the NDIS envisaged or wanted.

With the ultimate purpose of a SDA Dwelling “being purposefully built for people with disability, to be able to live in and amongst our own communities, to live as normal a life as possible, in a dwelling you and I would happily call home, which is also close to required infrastructure.”

What was built were ‘hospital type’ accommodation’s, or micro units with kitchenette and bathroom to house 8 to 12 residents under one roof …. basically not the types of accommodation’s wanted by the NDIS or the care providers.

NDIS Property is a scam

It sure is, when offered to you by a scammer. It is also a scam if your mate told you it is, or you read it on an online platform and you choose to believe it.

Anything no matter how legit, offered to you by a scammer is a scam. And the opposite is also true where a legitimate product offered by a professional becomes a sound investment.

It is your choice : “Do you avoid the ‘stories’, do you avoid the scammers and invest OR will you look for the reasons not to invest in one of the most rewarding, risk mitigated investment opportunities, linked to CPI for 20 years?”

The only scam is the story you are telling yourself, and when you choose to believe that SDA property is a scam then it is! But when you do your due diligence and all the facts point to it being a risk mitigated investment opportunity promulgated into Australian Federal Law … who would you choose to believe and what decision would you make then?

Current Situation around the Market

There are a lot of untruths around SDA Property and how ‘property mavens’ on social media are espousing that everyone should avoid them by misquoting fact.

Right now, there is very little market information around the preferred type of dwellings the NDIS are requesting to be built, meaning very little reliable information off which you the investor can make an informed decision as to which disability category you should build for and in what locations to build.

Yes there are apartments and houses being purposefully built, yet to be completed or tenanted, so no data here. Of the new property supply, they are pretty much evenly spread nationwide, based on recent feedback by the NDIS.

As early adopters into any new market, the early adopters mitigate their risk, get in early and more often than not come out the other end ahead of the next wave of investors who then follow the early adopters.

Undertake your own due diligence, speak to industry professionals for the purpose of arriving at an informed investment decision and then decide to avoid or decide to Invest.

Current Situation around SDA Rental Management

Whenever the Australian Government come up with an initiative and there are $’s to be had, it brings out the greedy folk wanting to make a quick dollar, always at someone else’s expense! Sad but oh so true.

This is occurring in the market right now is that SDA Rental Managers

  • Are either charging very high fees to find you a SDA approved participant to be your tenant. Fees from $6,000 to even $30,000 we have heard.
  • And / Or very high ongoing rental management fees
  • And / Or only passing on a smaller percentage of the NDIS funding available over to you the investor by offering you “Rental Guarantees”

To expand on this, we continually see SDA builders reaching out to investors offering to build an approved dwelling and providing a Rental Guarantee back to the investor. Meaning that they are using your money or your risk of borrowing funds from the bank to line their own pockets. Whenever you see a rental guarantee offered, remember you are paying for it. NB : watch video explaining this here

  • Very Low Yields as low as 6% to 8% being offered under this arrangement AND “who is guaranteeing the company guaranteeing the Rental Guarantee??

Acquiring Tenants (Participants)

It is a risky investment when you do not have an end to end solution on hand.

What we mean by this is that, sure anyone can go and buy a SDA property or build one on their existing block of land, but without a licensed SDA Rental Manager, your asset is dead in the water and becomes a rather expensive purchase. Without one, you are unable to access NDIS payments, even if you have participants occupying the dwelling. I hope you understand the importance of this statement. No SDA licensed SDA Rental Manager = no NDIS payments to you, even if you have participants in the dwelling!

What this should mean to you is that “as important as the SDA property is to you, having a licensed SDA Rental Manager (and one who charges reasonable management fees) is just as important.

You would want to work with a professional firm, who on getting an understanding of all of your requirements and purpose for the investment, match the NDIS property to your goals and outcomes you are wanting, who also provide an end-to-end solution for you and your investment.

Right dwelling, in right location, who have sound relationships with Care Givers in that location, who are open to providing you with tenants (participants), managed by an approved SDA Rental Manager.

For sake of repetition, “Are you aware that only an approved and licensed SDA Rental Manager is able to manage your SDA Property?”

Meaning that you cannot do it nor can your local agent.

The risk mitigated way of investing in a SDA Investment Property is working with a professional firm who has these relationships firmly in place. Acquiring participants, managing the property and giving you access to NDIS payments, is a vital element to the success of your investment.

So having a SDA approved rental manager, who incurs an incredible amount of ongoing compliance, just so that you can receive your NDIS Funding for your SDA Property … makes their higher than average fees worthwhile, to ensure the overall success of your investment.

SDA Rental Management Fees are too high

SDA Rental Management Fees should be around 15%, as per above; as there is an unusual amount of ongoing compliance required, to ensure you get your regular high rental yields.

As mentioned earlier, be wary of fees higher than 15% and also those quoting 10%. What you will notice is that where a rental manager is charging 10% they include several other fees, ultimately pushing your costs above 15% annually.

Meaning be very wary of fees on top of quoted rental management fees such as : charges to secure a tenant, annual compliance fees, incidentals, other management fees, etc which will push up the fees way higher. This would be tantamount to greed.

Head Lease Agreements

Avoid Head Lease Agreements, this is tantamount to you signing over your asset to another party for the period stipulated in the Head Lease Agreement. Upfront they look inviting, safe and secure … but dig deeper and you will soon establish that they better serve the person getting you to sign off on one than they do you.

Again, what is the bottom line yield you will achieve with a Head Lease Agreement and what say do you have over your Investment during the agreement period. What if you found another rental manger at lower fees during the term of the Head Lease.

Did you know, if you intend on claiming GST on the construction, you are unable to if you sign a Head Lease.

Which States in Australia is it best to invest in a SDA Property?

Our experience is proving that Queensland and Perth SDA Investment Property Market are the most mature and least greedy markets. They are set up to provide investors with an end to end all encompassing service, from finding the preferred location, best fit dwelling, sourcing SDA participants and managing your investment for you at reasonable management fees.

Meaning they are more professional and you experience a lot less stress, save time and make more money.

In Victoria and NSW there is a lot of greed in the high fees you will be charged, just to get you a tenant and or the excessively high ongoing rental management fees. We have not come across SDA Rental Managers who either return our calls or emails or who are not working under Rental Guarantees. Without a licensed SDA Rental Manager, how will you secure participants and how will you get access to the NDIS payments?

Which Category of SDA should I invest in?

This question is the penultimate!

You will hear so many stories (and if you dig deep, they will merely be just a second hand story) and far from the truth about the different SDA Categories. Which to invest in and which to avoid. Do so at your peril they will tell you.

So what is the truth?

The truth is what the market evidence and statistics tell you, if you are open to that truth.

It is said in the industry that the demand for Robust is exceptionally high and supply tragically low. as investors remain fearful of tenants destroying their home and resultant repair bills. This is not so factual, the main problem is having more than one Robust Participant in the dwelling often results in participants just not getting along with each other. Robust participants also are not in control of their own faculties and damage can result.

Building for 3 Robust participants and expecting to accommodate 3 on a regular tenancy could be unrealistic. Some are unable to tolerate noise, some cannot tolerate light, some hate other people nearby. Two participants may work, and one is a far better option. Under Robust, it is unlikely that you will be able to secure a participant under a different disability category to occupy the other rooms, if you cannot secure enough Robust participants.

The other popular category is High Physical Support dwellings which also offer the higher level of NDIS payments. The supply in this category is naturally higher than Robust homes, meaning more rental competition for you in attracting participants. So it is imperative that one chooses a location with low supply and high demand for HPS homes.

Under the HPS model, if you are unable to secure full participation of HPS participants, you are able to source other level of disability participants to fill the home. You will achieve a slightly reduced yield, but at least you will have each room rented out.

Logic tells us that with 28,000 participants around and supply so far under 4,000, there is still plenty of room for more High Physical Support dwellings.

These are the two more popular categories for Investors building a new SDA dwelling.

The Improved Livability and the Fully Accessible categories seem to be taken up by investors who already own a dwelling and want to convert it to offer it to the SDA rental pool. Be mindful when doing this that your property complies. Also, for the exact same dollars invested in this property, could you perhaps not achieve a far higher yield and save more income tax rather investing in a brand new build?

As it is easier to build to suit the two lower disability categories, an investor will have a lot more rental competition in this sector. And of course lower NDIS payments. Perhaps not as attractive as HPS or Robust?

In summary and who to believe?

Be mindful of greed!

Unfortunately there are very hasty decisions made around greed of higher yields being touted and the fear of missing out. Your greed in wanting to get the highest yield, versus achieving realistic high yields needs to be checked.

Then there is the greed emanating from the marketing companies offering NDIS properties. Get to know what is realistic and what is greed, avoid those over promising and under delivering. Also you would want to avoid those offering you a rental guarantee (watch video above). Why would you use your money and borrowings to make them a serious amount of money, more often than not, making them more than you will be making and you have taken all the risk.

Avoid SDA Rental Managers greed in offering you yields below 10%. A more realistic yield is 12% to 16%.

Remain realistic, match the Investment Vehicle to your investment goals and requirements.

Who to believe?

It is guaranteed that you will believe either yourself or those telling you what you want to hear.

Why avoid accurate market information and statistics that might not be aligned to your belief?

If you are greedy, you will look for all the reasons ‘why’, in order to justify your greed. You will be open and susceptible to being told exactly what you are wanting to hear. And you will make your decision off this basis, as it matches your thinking and your belief.

If you are realistic you will undertake your own due diligence by reviewing factual market evidence, by talking to industry professionals who have your interest at heart, and by coming to an informed investment decision.

What will you choose?

The difference between getting it wrong, and getting it right is worth Hundreds and Thousands of Dollars to you over the life of your Investment!

21 thoughts on “Why you shouldn’t invest in NDIS Property”

  1. hi I was looking at investing. ndis or sda homes are they a good secure investment of 10 to 15 % return regards Michael. 0450784760

  2. Very useful information, though NDIS stipulated specifications for all SDA housing has been introduced since your article

    1. Hello Colin, thank you for your comment and recognising our contribution. I am a little confused by what you mean “stipulated specifications … since your article”, we have been aware of the impending changes coming up at the end of this current financial year. The information is a bit “tongue in cheek” to garner attention and help dispel unfounded bias against SDA property under the NDIS. It remains an incredible do great, feel good, high yielding, risk mitigated investment vehicle.

    1. Hello Sudath, wondering if you have progressed with your NDIS investment purchase yet and if you used the company you mentioned. You may want to have his information and product offering reviewed by a NDIS consultant prior to signing to ensure you fully understand what is being offered, why that and the reality of the location.
      Share what you have received with us, as you know we are consultants in this space and we will offer review and questions you would want to ask.
      Be mindful, the vast majority of NDIS product being sold out there is designed to appeal to you the investors greed … sadly not designed to meet the purpose of the NDIS or participants.

        1. Hello Patricia
          Are you asking who is the best NDIS company to invest in?
          If yes, the NDIS is an Organisation owned by the Australian Government.
          Perhaps you are asking which company who are marketing SDA Property under the NDIS should you consult with.
          Now that is a very challenging decision as 80% of what is being sold out there is providing bare bones minimum, so your purchase price looks lower and thus your yields look higher. Appealing to your greed and FOMO.
          Here is a very insightful thought provoking video you would want to watch when thinking about investing in SDA Property. Let me know your thoughts Patricia.

      1. Hi Steve,
        Just received an offer from the Meridien Group ( Nov 2021 ) . The first thing I noticed was the very high purchase price compare to the substance of the houses/properties. Vital parts / details like Management expenses etc missing however, I have no doubt that these details will be provided when approached.
        Your article is detailed, very informative and comes exactly to the right time for me…… make an informed decision.

        Thanks again for your research.

        1. Hello Marc, thank you for your comments.
          Marc, yes properties are more expensive as they do cost more to build. Hence the generous government yields they offer investors for putting their hands up.
          Be mindful though, there is more expensive and there is unnecessarily more expensive!!
          As consultants in this space, we know what to look for and what questions you might want to ask Meridien Group.
          Our offer to you (and anyone else who reads this) is to send us the package, we know what to look for and what questions you may want to ask the group wanting to sell you the property. Could save you hundreds and thousands over the life of your investment.

          Send to and include your contact number for a discussion. We take property investment very seriously and ask that you do too and hence request a contact number to demonstrate that you are serious.

          Regards, Stephen

      2. Hi Stevel

        I am in contact with 2 companies for SDA investment property.
        1. Dream home investment is offering $60,000 per year for 20 years. Their built price for High physical support is $465,000.
        2. Another company, I am in contact with is SDA housing investment.

        Your inputs in this regard will be highly appreciated.

        1. Hello Shalinder, is it correct you have chosen a cheaper NDIS offering on the oustkirts of Mildura where on paper the yields look incredible. Can you share why you went into Mildura and the disability category and number of participants they recommended for you?

      3. Hi Steve,
        Are the % yields you refer to Net or Gross? I have been offered a long-term tenanted 12-unit SDA property with only a 5% net yield, which seems low in comparison. What net yield would you say is reasonable for SDA?

        1. Hello Lynda, thanks for your question. The returns estimated are gross, budget around 1.5% for ‘costs’.
          If you are being offered 5% net, either it is an investment fund (not a direct property), or the marketing group selling you that product are keeping the majority of the income for themselves and you are holding 100% of the risk.
          Read the contract carefully, something does not bode well knowing how much the NDIS program is paying investors.
          Happy to review any offers you have received and share our insights, as skilled consultants in this space.
          Regards, Stephen

      4. I have just built a HPS home for 2 residents and 1 carer in Townsville. I have signed a head lease but my issue is the lack of transparency! The SDA management received keys in March but I never hear from them and have received no money. They say it can take a few months to get tenants but I thought you would look for tenants while the build is happening? I am a little anxious at this point. Insurance has been extremely hard to find and expensive but poor communication means it can be hard to think they are doing anything in my best interest.

        1. Hello Leanne
          I emphathise with you and so that other potential investors can be made aware that there are many sales and marketing groups out there quick to take your Dollar at your expense. One needs to be well versed in SDA Property which is a complex investment vehicle prior to entering into any agreements for the land, the build, the property and the NDIS Provider. LET THE BUYER BEWARE!!
          Perhaps if they have not delivered on their end of their contractual obligations you can appoint a solicitor to help you exist what might be a very punitive Head Lease Agreement?
          IF a SDA Provider insists on a lengthy Head Lease Agreement, it is in their interest NOT your interest!!! If you still go ahead, like a lot of others before you have and after you will, ensure you have an easily evoked Exit Clause.

        1. Hello Steph. I can only offer you feedback based on what we have been sent and from his clients who have shared, this is not advice

           In the construction industry material has a very similar cost to each and every builder, meaning very little price discrepancy when buying supplies to build
          o Yes or yes?
           When it comes to Trades People, they all have very similar charge out rates across the industry and in fact under such times of incredible demand for their services their rates are higher and they pick the jobs where people will pay them more
          o Yes or yes?
           Location determines price of land, as does scarcity in that location
          o The only way to offer cheaper land is to go out to cheaper locations

          Having shared the above logic with you – if you sit back to contemplate NDIS Investing’s offers the only way; the only way he can come in cheaper is by :
          • Paying less for materials or buying inferior stock
          • Paying Trades People less, and in times of trade demand as it is means he will be hiring lower level trades who can’t get same work at better pay elsewhere
          • BUILDING AN INFERIOR FLOOR PLAN which does not meet the purpose of the NDIS (although meets the minimum standards of the NDIS)
          • IN AN AREA that does not meet with the Purpose of the NDIS, the participants needs nor their family or friends needs

          If an investor sets aside the all to powerful need for greed; and builds fit for purpose of the NDIS and the Participants, this investor will not only attract a participant sooner, but they will also hold onto them for longer as explained in our video here.

          And without a doubt, this strategy of building fit for purpose is more expensive than building at bare bone minimum standards and thus Andrew from NDIS Investing is only competition to other marketing and sales groups who continue unabated to spruik their product to meet investor greed head on.

          Your choice : greed of incredible yields on paper, versus building fit for purpose and earning a bucket load anyway?

          SDA Property under the very successful NDIS program can be very complex, and when you “don’t even know what it is that you don’t know you don’t know, how can you make that all important informed investment decision?”

      5. Hi Steve,

        Indeed an informative piece of information regarding NDIS property investment! I will like to have your thoughts on ASRW run opportunities at Gosnells WA. Some specifics:

        WA Opportunity 14% Net Yield

        “14% net yield.
        Long term tenancy – NOT SHORT TERM STAY.
        12-15 month build time.
        2.17million dollar raise.
        Project Name: ASR Property – Gosnells

        Location: 174 – 175 Hick Street, Gosnells, WA

        Please be aware to get access to this opportunity we will charge you a percentage of your investment over a 10-year period (10% upfront).
        There is also a 2% syndication fee which is a one-off charge, and a 0.66% management fee is included in this. ”

        Please let me know if you need more details to comment.


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