If you’re considering starting a property portfolio, you’re probably keen to secure your financial future. Like any investment, conducting due diligence and research is key to navigating the path to owning your first investment property.
We explore the starting steps to investing in property, including a game-changing move that could fortify your financial future and the life of a person with disability.
Know your investment time frame and goals
It’s important to understand that property is generally best viewed as a long-term (more than ten years) investment to maximise your returns. Taking a long-term view allows you to maximise your chances of capital growth (in other words, the increase in value of your property over time) and your income-earning potential from tenants (known as your rental yield).
You should set goals for both capital growth and the income you want to achieve from your investment to help you with your subsequent research to find a suitable property.
Know your budget
Borrowing funds is a common strategy to break into the property market, with many existing homeowners using their available home equity to support the deposit amount required for their investment.
You need to be able to afford the repayments on the borrowed amount. One benefit of buying an investment property over your own residential property is that you can use rental income to help you make some or all of your repayments. This allows you to borrow more than you could afford if you only made the repayments yourself.
Once you have a better picture of the budget you’re working with, you’ll be able to start narrowing down your investment options within the property market.
Research the property market, including NDIS housing investment
The property market includes different types of properties in other locations. Standard types of residential properties include houses, apartments and townhouses. Properties with various features and in different locations have different prices based on supply and demand.
It’s essential to understand the properties and locations in high demand by tenants when you buy any property as an investment. Properties with high capital growth potential in favourable locations with good rental yield will often be in high demand — it’s housing stock that can be the issue!
Investing in National Disability Insurance Scheme (NDIS) property
One relatively new and lucrative area of the property market that is worth researching is NDIS property. NDIS properties are available for private investment under the Specialist Disability Accommodation (SDA) scheme. SDA housing has been purpose-built to provide suitable accommodation for Australians living with disability.
The specialist dwellings have been built under a strict design standard to ensure that they are SDA compliant and are built across four distinct categories:
- High Physical Support
- Fully Accessible
- Improved Liveability
The four categories of the SDA design are set out in the SDA rules and have been developed around the needs of those with extreme functional impairment, significant physical impairment and very high support needs.
The benefits of investing in specialist disability accommodation
An investment in specialist disability accommodation (SDA) not only provides eligible NDIS participants with suitable housing, but kicking your property portfolio off with an SDA home may also come with a long list of benefits to you as an investor.
- There is high demand across many areas of Australia for NDIS SDA property, and currently a shortage of SDA homes being offered by housing providers. NDIS homes can be purchased via a house and land package, meaning you don’t need to buy an existing dwelling and can therefore make a more meaningful difference to an NDIS participant requiring housing.
- SDA properties generate above-average, government-backed rental yields, thanks to long-term investment by the Federal Government.
- The SDA market works differently than the standard property market, which could introduce opportunities in a flat standard property market.
- Any property expenses or costs incurred are fully tax-deductible against your income, just like they are with any other investment property.
More to know about investing in an SDA property
Going down the NDIS investment route includes many terms you may not be immediately familiar with.
SDA Providers: An SDA provider receives funding from the NDIA and can charge a reasonable rent contribution from the tenants. Investors can apply to become an SDA provider if they wish, however this is not necessary as there are many SDA providers who can take care of this aspect on behalf of investors (as well as act as a specialist property management firm, which is handy given the unique tenant needs and arrangement. NDIS service providers are different to SDA providers).
SDA Funding: SDA funding is provided to SDA providers directly from the Australian Government to help cover the building and maintenance costs. In addition to SDA payments, there is a reasonable rent contribution that is required to be paid by the NDIS participants themselves.
How to access NDIS property investment
Before you purchase approved SDA housing, speak to the experts in NDIS investment property. At Apollo Investment, we help private investors navigate accessing a socially-focussed investment with income backed by the Federal Government.
Contact our team to discuss how we can help you navigate your first investment property.