How to be part of the NDIS property investment boom

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How to be part of the NDIS property investment boom
NDIS service providers tend to rent the whole property for lengthy periods of time.
Photo by Tierra Mallorca on Unsplash

Property continues to be a star investment performer during the pandemic with certain types of property delivering even better returns than others. 

NDIS approved dwellings fall into this category.

Property is king at the moment and many people who are investing in property are making significant gains.

What we are finding is that investors who are purchasing NDIS approved dwellings are achieving extremely attractive returns of up to 20 percent per annum. The most common question I receive is how do I find or invest in an NDIS approved property. People want to know what the process involves which is a very good question.

I have outlined some of the most common NDIS property questions.

What is an NDIS property

Specialist Disability Accommodation (SDA) is housing that has been specially designed to suit the needs of people who have extreme functional impairment or very high support needs.

There is a significant undersupply of SDA properties across the country. Property investors who invest in the sector are not only generating strong returns, they are also helping to solve a social crisis.

SDA properties offer improved liveability. Improved liveability includes features such as external doors and outdoor private areas must be accessible by wheelchair and facilities such as the bathroom vanity and hand basin, kitchen sink, bench, cooktop and key appliances should be accessible in either a seated or standing position in order to meet the resident’s needs. In addition the properties must also be more robust which reduces the likelihood of reactive maintenance.

The current government incentives and structure for SDA properties means the rental income is much greater, on average by three to four times, than what investors would generally expect from a non NDIS property.

How can I purchase an SDA property

There are several ways you can purchase an SDA property. Firstly, you can purchase a property and adapt it based on SDA housing requirements, however, this tends to require substantial and complex work and the scheme set a minimum spend the investor must be able to demonstrate to qualify as a new build in the scheme.

There are builders and architects that specialise in undertaking this type of work. In addition, there are also advisory organisations that specialise in providing this type of guidance.

Alternatively, you can purchase an SDA property that is already approved and equipped to house NDIS participants. These can be sourced through real estate agents and specialist agents however they are in short supply. Family Offices, investment groups and other institutional investors actively seek out these properties for addition to their investment portfolios.

The scenario we see the most is for retail investors is the house and land package. This involves the purchase of a block of land in an SDA friendly location and then the construction of an SDA approved house on that parcel.

How do I find an NDIS tenant/s

This is a good question and one that many people want to know. How do NDIS participants and SDA dwelling owners connect.

The NDIS operates under a broad market approach. On this basis, participants are expected to find and apply for appropriate advertised vacancies themselves. This is done in two ways. Either a participant finds their own property directly through sites such as realestate.com.au, or via organisations such as NDIS service providers that lease entire properties and rent out rooms to participants.

NDIS service providers normally provide live-in house coordinators and provide other levels of support to participants. Organisations also search realestate.com.au and have connections with agents that know what properties are coming up on the market that are SDA appropriate.

Who pays the rent

The income from an SDA property is structured slightly differently to a standard investment property.

The income consists of several parts: SDA payment and the Reasonable Rent Contribution which is 25 percent of the recipient’s base disability support pension. Given the structure of the payments, the rent is virtually guaranteed which is important when it comes to investment returns.

NDIS service providers tend to rent the whole property for lengthy periods of time. SDA properties are typically not subject to the same market forces as other sectors of the community such as people who have lost their jobs through COVID.

Yannick Ieko is the founder and managing director of NDIS Loan Experts.

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