SDA Housing Investment: Beware of Property Spruikers
As an investor, you may be guided in your investment decisions by the old adage ‘if something’s too good to be true, then it probably is’. This sensible perspective allows you to remain objective and not get swept away by enticing promises and propaganda. Prudent investors know to assess the merits of every investment option before committing, which is why for those looking into NDIS property investment, accessing reliable information can help cut through media hype to know they’re accessing a fundamentally and financially viable addition to their property portfolio.
At Apollo Investment, we are specialists in NDIS property investment, backed by a panel with decades of collective investment, taxation, specialist disability accommodation (SDA) and finance experience. If you’re looking to silence the media noise and tune into the facts around NDIS property investment, keep reading as we discuss Apollo’s points of difference when it comes to investing in SDA properties and choosing the right NDIS property for sale.
Understanding Specialist Disability Accommodation
Specialist Disability Accommodation (known as SDA) is a range of housing that has been introduced under the National Disability Insurance Scheme (NDIS) to provide suitable housing for Australians living with disability. For tens of thousands of Aussies, standard housing is insufficient to meet their living needs; without suitable accommodation, many end up in aged care facilities.
SDA homes provide housing options for Australians with very high support needs or extreme functional impairment. NDIS funding criteria must be met for those with special disability accommodation needs before they can live in an SDA dwelling. For the NDIS participants who live in the specially designed home, it is a life-changing experience, with many tenants considering their new home their forever home.
Specialist disability accommodation must be SDA compliant, meaning that the average homeowner can’t simply make minor modifications to their home and become an SDA housing provider overnight.
The SDA rules outlay the design categories for SDA dwellings, which are:
1. Improved livability
For people with intellectual, sensory or cognitive impairment, improved liveability homes incorporate enhanced provisions and a reasonable level of physical access.
Robust homes provide high physical support provisions to help reduce the risk of harm to participants and the community. Their products, materials and features are designed to reduce the chance of reactive maintenance being required.
3. Fully accessible
If an NDIS participant has a significant physical impairment such as losing mobility, toileting, behaviour management or mobility, fully accessible homes provide sufficient features and provisions to achieve maximum accessibility and independence. Assistive technology is often incorporated into the design of these homes.
4. High physical support
The potential tenants that suit high physical support homes are NDIS participants with very high support needs and/or significant physical impairment.
The SDA property market
To diversify any investment portfolio, investors often seek ways to diversify. The SDA market offers a completely unique set of properties to the residential market, with different tenant, supply and demand characteristics.
Specialist disability accommodation is in high demand across the country — the NDIS frequently updates their demand data, meaning that you can access current information to combat oversupply in certain areas.
Due to only certain building types suiting specific design categories, the opportunities within the SDA market mean that your NDIS investment property may be one of the existing homes available, or you may purchase a block of land to build.
Investing in National Disability Insurance Scheme properties
In searching for reliable, trustworthy information on the mechanics of investing in SDA housing on the private market, it’s easy to stumble upon property spruikers’ advertisements. With outlandish claims and a bullish sales approach, it’s little wonder that readers question the validity and viability of the promises that are often made; we’re here to help you differentiate SDA property investment spruikers from SDA property investment specialists.
The Apollo Investment difference
At Apollo, we provide a complete end-to-end solution instead of making a quick sale and leaving investors to their own devices in a complex NDIS SDA environment. Rather than being pitched the promise of high-rental yields and then disappearing, Apollo Investment is in it for the long run, as are our clients.
Keep reading to find out more about the Apollo Investment difference when it comes to NDIS property investment.
The promise of high rental yields and Vacancy mismatching
Often, the promise of high-rental yields is heavily promoted by many investment companies. Unfortunately, some companies use information out of context to make promises of high rental yields to attract investors. They do this by only detailing one of the SDA categories and basing their projected yields on the assumption that every room in that home is tenanted at any one time.
For investors, these claims are unfortunate because these companies work on a commission base and are not committed to fully tenanting properties. Apollo only looks to source properties designed for maximum appeal to ensure high occupancy and attract solid capital growth over the long term. The expected yield that we are able to accurately project for our investors is based on sound research, numbers and transparency rather than on sales tactics.
Over-supply of specialist disability accommodation
Our team of experts include an SDA specialist architect, project manager, buyer’s advocate and SDA provider with exclusive knowledge of high-demand locations. What this means for our investors is that we provide transparent research and guidance on the location and housing type to ensure that we do not place investors into a situation where their return potential is diluted due to an oversupply of specialist disability accommodation.
There are few things in life that are guaranteed — including many investments. Specialist disability accommodation is no different! Any prudent investor ensures that they conduct their due diligence on any investment option before making a commitment. At Apollo, we are proud to work with a suite of finance, taxation and NDIS specialists to ensure that we provide the ultimate level of transparency and numbers-based research to guide your investment decision.
Exercise caution with any offering that promotes a ‘guaranteed’ return on SDA housing as an investment. There are many benefits to having the SDA scheme backed by the Australian Government, however, your financial return is dependent on many factors, not just federal government support.
What do ‘government-backed returns’ or ‘government-guaranteed’ actually mean?
Throughout your reading on SDA properties, you’ll come across the term ‘government-backed returns’ or ‘government-guaranteed’. What this refers to is the fact that once an SDA property achieves compliance, it will be classified as an SDA for 20 years. This is the period in which the investor is eligible to receive the government-funded SDA payments, which is one of the drivers of the high rental yield relative to regular property investments.
After the 20 year period, the home converts to a “normal” house for NDIS purposes. However, the tenant (NDIS participant) is still able to remain in the home, and may be eligible for a reduced rental subsidy under the NDIS — meaning the rental yields will likely still be higher than regular property.
The SDA payments are linked to CPI, so as the CPI increases, so too does the amount the investor receives. This is not something typically done for regular property.
The benefits of Specialist Disability Accommodation
One of the disappointing aspects of media scrutiny towards the cowboys in the NDIS investment is that they specifically use the angle of SDA being an Impact Investment as nothing more than an emotional pull on the heartstrings of potential investors. For the families of NDIS participants and the participants themselves, the impact of SDA investment is very real.
The NDIS has been life-changing for millions of Australians, and to be able to support NDIS participant needs by supplying suitable housing, which is otherwise unavailable, is undeniably benevolent.
The most frequently asked questions about Specialist Disability Accommodation
We help answer some of the frequently asked questions about SDA properties.
How does SDA funding work?
SDA funding is the funding under the NDIS that’s provided for participants who meet the speciality criteria of having extreme functional impairment or very high support needs. SDA payments are paid directly to SDA providers to help cover the cost of building and then maintaining the SDA dwelling.
How is the rent paid on SDA properties?
The participants who occupy the SDA dwelling are required to make a reasonable rent contribution to the SDA provider. The SDA rent amount is set out in accordance with the maximum reasonable rent contribution calculation. The SDA provider is paid the reasonable rent contribution and SDA payments directly.
Will I be considered an NDIS provider if I invest in SDA housing?
No. Investors can become a registered provider if they like, however, many use an external SDA provider. The SDA provider registers the home under the appropriate category and takes care of the tenancy arrangement.
NDIS SDA homes can only be offered by registered NDIS providers in order to receive funding from the government. These may be organisations, family members of people with disability, or private landlords. Our service offering is a true end-to-end solution, meaning that we provide guidance and support every step of the way, including the process of using a registered NDIS provider.
How do potential tenants find my SDA property to rent?
Housing seekers in the SDA market are able to source SDA dwellings through many channels. Organisations such as the Summer Foundation help connect those seeking SDA homes with SDA providers through initiatives such as the Housing Hub. The Housing Hub allows the opportunity for housing seekers to connect with housing providers and showcases available SDA supply.
How to access SDA specialists rather than salespeople
To make a real difference in the life of an Australian living with disability and access a real return potential on property investment, you need specialists in NDIS property investment.