The National Disability Insurance Scheme (NDIS) has opened up fresh avenues for property investors seeking to support disability housing while capitalizing on the burgeoning market in Australia.
Through its Specialist Disability Accommodation (SDA) scheme, the NDIS allocates funding for specialized disability housing. This has generated significant demand for purpose-built dwellings designed to cater to the requirements of individuals with disabilities.
However, the current supply falls short of meeting this demand, resulting in a notable gap between supply and demand. This presents an appealing investment opportunity for Australians. To address this shortfall, the government actively encourages private investment to help bridge the gap and address the shortage of accessible housing.
Fortunately, there are numerous incentives available to incentivize investors in SDA properties, making the prospect even more enticing. In this guide, we will navigate you through the realm of NDIS property investments, outlining how potential investors can assess the risks, returns, and complexities associated with entering this niche market.
NDIS as Property Investments
When assessing potential returns, aim for realistic projections based on actual development costs and fees. A lot of claims flood the airwaves that you can get rental yields of 10-25%. However, after accounting for expenses such as vacancy periods, landlord insurance, and maintenance, the net yields could average only 8-15%.
Study local market demand dynamics through research and expert advice on SDA housing in Australia. During this process, target areas that face an undersupply of approved NDIS dwellings. Obviously, there also has to be a high demand as well, and the location needs to have good infrastructure to support local residents.
We recommend educating yourself on NDIS investment property rules and guidelines relating to:
- Housing types
- Accessibility requirements
- Modifications
- Policy changes and trends.
Note that all properties need to comply with a number of these factors, in order to be eligible for NDIS and SDA funding.
How to Purchase an NDIS Investment Property
Investing in an NDIS or SDA property remains a lucrative avenue for securing robust rental returns, factoring in expenses, all while contributing to the vital need for housing among NDIS participants.
Now that you’ve completed your risk assessment and due diligence, how do you initiate the process? Here are some pointers for acquiring an NDIS property:
- Research Rental Market Trends and Growth: Dig into comprehensive research to grasp the dynamics of demand and supply for NDIS properties across various locations. Concentrate on areas experiencing undersupply, as they typically boast higher occupancy rates, growth potential, and yields. Additionally, analyze prevalent disability types in the area to ensure alignment with local participant needs.
- Engage with Specialists: Collaborate with reputable NDIS-approved property firms or specialized real estate agents to identify suitable listings and gain insights throughout the transaction. They offer guidance on regulations, construction requirements, financing options, and more.
- Consider Off-the-Plan Purchases: Opting for an NDIS housing investment or a land package tailored for SDA properties allows for customization of accessibility features. However, anticipate potential delays, particularly due to recent challenges in sourcing building materials in Australia.
- Secure Suitable Financing: Explore specialized NDIS property loans catering to both acquisition and construction expenses. Prepare for larger deposits, sometimes up to 30-35%, and consider stamp duty valuations and concessions applicable to disability accommodation across different states.
- Strategically Choose the Location: Select a location that provides access to local amenities and services, enabling residents to actively engage in community life. Exercise caution with regional towns possibly encountering oversupply issues.
- Optimize Management for Success: Enlist an accredited NDIS property manager to source approved tenants, manage paperwork and compliance, and oversee maintenance. Quality tenants are essential for consistent rental income.
With meticulous planning and preparation, NDIS property investments can yield strong financial returns while making significant social contributions. However, conducting thorough due diligence is imperative to mitigate risks effectively.
How can we help?
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