Property Investment in NDIS SDA (Specialist Disability Accommodation)

Danger on 09/12/2020 - 22:52
Last edited 09/12/2020 - 23:27

Fellow bargainers,

I'm looking at investing in property by building NDIS Specialist Disability Accommodation in QLD (near Brisbane). Currently, i'm doing my groundwork by digging around various sources to understand this sector and also contacted few consulting firms to express my interest for coming opportunity. I would like to listen from someone who has successfully built and tenanated the property to the tenant/participant(s) or in the process of building one.

https://www.ndis.gov.au/providers/housing-and-living-support…

My questions are:

  1. How did you build (or building) the property:
    a. Did you engage any consulting company doing end to end work ? Or
    b. Did you just purchase the land separately, engaged the builder of your choice and approached care providers for tenants?
  2. Have you built (or building) "Robust" or "High Physical Support" design standard property?
  3. How many bedroom, bathroom and parkings ?
  4. How diffiucult was to finance/loan the property and what is the percentage of deposit/cash that you had contribute since lenders are undervaluing this type of properties. Are you going with Residential or commecial categorry loan ?
  5. Did you manage to get the participants straightaway or needed to wait for long ?
  6. What is the rantal yield (gross & net) being genrated by that property ?
  7. What are other potential issues/problems to look out for when building this investment property.

Any general feedback or comments are welcome.

Thanks in advance for your time

Financial

Comments

  • whooah1979 on 09/12/2020 - 23:03

    This sounds like a lot of work for a 5% return.

    • Danger on 09/12/2020 - 23:04

      Apparently consulting firms are advertising between 10% to 18% return (gross)

      • whooah1979 on 09/12/2020 - 23:06

        Are you really falling for that?

        • mini2 on 10/12/2020 - 07:26

          There's a reason for that - these properties will need to be suitably built/modified for these tenants and banks are offering lower LVR's than usual as well.

          Think about throwing in a higher deposit amount than usual and a higher build cost, the increased return isn't exactly without its reasons.

          • whooah1979 on 10/12/2020 - 07:49

            @mini2: The construction industry would be falling over themselves trying to build as many units as they can if the advertised returns were true.

            The potential returns for this programme sounds like the new HIP rort.

      • brendanm on 09/12/2020 - 23:06
        +2

        You'd think these firms would be churning these things out then, if they are so sure of the excellent returns. Please keep in mind that, as with all these similar things, the NDIS could be abolished at any time, you then have an extremely specialised bit of housing you can't do anything with.

        • OzCheapo on 10/12/2020 - 07:29

          That's true but when you consider the political fire (replace with another popular four letter word) storm caused when you remove healthcare benefits… it'll probably stay until we need to go to austerity

        • mini2 on 10/12/2020 - 07:33

          Judging by how NDIA as an organisation has expanded over the last couple of years, I don't think NDIS will be going anywhere just yet. There are whispers that they will be moving from Canberra to Melbourne.

      • SF3 on 09/12/2020 - 23:50

        do they practice what they preach? otherwise your money is safer bet for them.

      • ihbh on 10/12/2020 - 07:23

        For them or for the investor?

  • [Deactivated] on 09/12/2020 - 23:11
    +3

    As someone who has tried to use the NRAS, this sounds like a similar nightmare.

    You must be able to stoop to absolute new bureaucratic lows, as your tenants would most likely be people that have 'worked the system' for their entire lives, and all they do is 'work the system'. Unless you too 'work the system', this will be quite painful.

  • AustriaBargain on 09/12/2020 - 23:14
    +1

    I'd look at installing squat toilets as well as normal toilets. Clambering up over a toilet isn't always so easy with some disabilities. A lot of the guests will be crawling on the floor anyway because often they don't actually like using their wheelchairs. A squat toilet would mean you can potentially have carers that don't need to assist with lifting just for toilet use.

    I think it's a great way to make money but special needs means special buildings. Will all the doors be wide enough for a wheelchair? If the guests themselves don't like your building then you're kind of boned because they have more control over their own funding than ever before. And what if the carers don't like your building either. Plenty of other NDIS providers would be happy to take your bored guests off of you. Which means they'll also be able to afford to poach your best staff.

  • Danger on 09/12/2020 - 23:22

    There are building standards outlined by SDA to get the certification, which is a requirement to get NDIS funding. Obviously, certification doesn't mean that participants are going to like the property. Building needs to go beyond the standard to cater for wide hallway/doors and include other features to make it easy for participant.

    Edit - I meant to reply @ AustriaBargain but accidently created new comment

  • littlepcat on 10/12/2020 - 01:36

    Hi,

    I'd like to say location is extremely important.

    Some people with disability get around by wheelchairs, gophers or on foot. If the area is flat, not too hilly and your property is close to shopping centres / public transportation, it helps them to maintain some independence, enjoy their lives more and save them money, too.

  • ihbh on 10/12/2020 - 07:25

    save them money, too

    But are they willing to pay for the premium location or is the OP looking at realistically low returns?

  • Meho2026 on 10/12/2020 - 08:22
    +3

    This is not a normal property investment.
    You wont make capital gains like a regular property.
    You are basically getting into partnerships with the government and private disability service providers, you will be at their mercy.
    The yield looks high on the face of it but your expenses will be higher too. Just think of the increased build specs, the maintenance of all the additional fixtures and the likely obligation to regularly upgrade the facilities. Probably higher insurance and property management fees. Higher loan interest rates and an asset with no liquidity, locking up all your money.

    Its really a scam, you will be basically providing housing on behalf of the government, adopting all of the risk and giving the private disability housing organisations a cut as the middleman.
    If you want to invest in disability housing then look at investing in the companies that are signing people like you up. Thats where the profits are.
    You'll probably find these organisations are owned by the friends and family of the politicians who approved the whole system but you may find a way in.

    • whooah1979 on 10/12/2020 - 09:13

      This is the same dud real estate as DHA.

  • Duckie2hh on 10/12/2020 - 10:00

    What's the benefit of going through this method vs standard rental accommodation?

    • Danger on 10/12/2020 - 10:48

      Higher rental yield and satisfaction that disabled person is in a better accommodation.

      • whooah1979 on 10/12/2020 - 10:55

        Why don't you try a SDA fund and see how that goes before jumping head first on a concrete slab with a $1m capital?

        The NDIS delivers subsidy’s to the SDA providers which benefits fund investors through a stable 10% return.

        Minimum $25,000 Investment – 10% Return

        • Danger on 10/12/2020 - 11:37

          That's a good point mate. Did you get this from the weblink I have in the post..I need to know more on this.

    • Korban Dallas on 18/12/2020 - 08:53

      Guaranteed rental return for 20 years.

      • Duckie2hh on 18/12/2020 - 08:57

        High fees though?

      • whooah1979 on 18/12/2020 - 10:58

        Guaranteed rental return for 20 years.

        No investment instrument can guarantee a return for 20 years.

  • Korban Dallas on 18/12/2020 - 08:44

    Work for a builder who does 50 NDIS homes a year in SEQ. Quite well versed in actually building and estimating them.

    Got a number of plans. PM if interested.

    You need to be cashed up and many banks do not provide loans.

    Market is getting saturated and there is competition so be sure yours is attractive. Hurry up or move on.

    2 and 3 bedrooms more attractive than 4. Can also do secondary dwellings like 3 + 2 rooms.

    HFS is the way to go, FA is cheapest.

    A decent 4 bed HFS will cost you about 430k.

    Cut out the middle person and marketer fees, go with the builder direct

    There is a funding table which shows how much p/a the participants and the gov provide you as a return.

    It literally pays for itself and is actual income. So at the end of the 6 years after you pay it off you have a 800k asset.

    • whooah1979 on 18/12/2020 - 11:02

      many banks do not provide loans.

      This is a sign that the NDIS SDA is a high-risk investment.

      • Korban Dallas on 18/12/2020 - 14:50

        Banks don't touch what they do not understand. Either way you still get a perfectly liveable home.

        • whooah1979 on 18/12/2020 - 15:00

          Legacy banks follow the money. Some faster than others with Australian banks being one of the slowest in the western world to adopt new tech.

          • Korban Dallas on 18/12/2020 - 15:08

            @whooah1979: Indeed. A NDIS home converted into student accommodation would be high yield and somewhat illegal depending on some or all states. 4 bedrooms 4 ensuites

            • Samto on 10/02/2021 - 22:53

              @Korban Dallas: @Korban Dallas, would you be able to pm me the building company you work for. Thanks

              • Korban Dallas on 11/02/2021 - 01:38
                +1

                @Samto: can't… says you won't accept conversations

                • brgnbrd on 12/09/2021 - 18:12

                  @Korban Dallas: Sorry, couldn't get tags working in below post. Wouldn't mind some info if you could please send me the builders details as well please. Thanks

  • mingwaitt on 18/04/2021 - 12:29

    @Korban Dallas can I also get the builder contacts? Thanks.

  • brgnbrd on 12/09/2021 - 18:10

    Hi Op @danger:, did you end up going ahead with plan?
    Just looking into it myself so very interested to hear experiences from anyone that has gone through the process. @Korban Dallas: are you still working with the builder and seeing many SDA homes being built currently? If you don't mind, could you please shoot me the builders details via PM. Thanks

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