If you’re looking for a real estate investment that could make you feel as good as its potential high returns, you should consider NDIS properties. NDIS or National Disability Insurance Scheme housing aims to boost the supply of specialist disability accommodation (SDA) for Australians living with a disability. NDIS investment promises tons of benefits, from higher-than-average market rental income to returns guaranteed by the government. Plus, you get to help PWDs live more comfortably.
Let’s Talk More About the Advantages
You can own approved SDA housing and lease it to approved or eligible NDIS participants. This investment is high-yield and secure since it’s government-backed.
Higher rental yields (7 to 15%)
Persons with disabilities (PWDs) who are NDIS participants pay a portion of their disability pension in rent. The NDIS tops that up to provide investors with returns that are higher than average. If you’re an SDA owner, you have the opportunity to earn net yields from seven to 15 percent (some even get to 20 percent) over time. You also get extra risk mitigation as the investment is government-backed.
With NDIS investment, you have the potential to gain high returns in a low-risk environment. That explains why NDIS properties attract many real estate investors.
Besides high-yield rent that translates to thousands of dollars in income each week, NDIS investment comes with another perk: a longer lease or tenancy period.
Since traditional houses aren’t designed to meet the needs of PWDs, they are likely to stay longer in SDA dwellings. That gives you stability and comfort, knowing your property will be occupied and billable for long periods. And if ever your tenant moves out, you can get a replacement through the NDIS that assists other participants in obtaining a rental home that best suits their everyday needs.
To date, SDA dwellings are still in short supply in Australia. So there will always be tenants eager to lease your property, and most will likely stay as long as possible.
Another advantage of investing in SDAs or NDIS properties is that these homes are convertible. If you want to cash in your stake, you can either sell it as SDA to another investor or convert it to sell it as a regular house by taking out some living aids. You don’t have to remove all the accessibility features. Wide entrances and skid-proof flooring attract most homeowners anyway. That’s especially true for those with senior family members or who want a future-proof house where they can age in place.
What About the Pitfalls of NDIS Investment?
Like any other real estate investment, buying & running rental SDAs or NDIS properties also comes with a few pitfalls. Let’s explore them so you can avoid them.
When it comes to property investment, location always matters. While hundreds of thousands of NDIS participants are eager to move into SDA, you still need to pick the right location for your SDA. Find cities with an undersupply of SDAs to ensure your property will be in high demand. In Victoria, for instance, Ballarat and Shepparton are some of the regional cities that are in dire need of SDA supply. Most towns & cities in ACT, South Australia, and New South Wales are undersupplied, too. So don’t be afraid to go outside Melbourne & Sydney to explore more options and study the demand.
Once you’ve shortlisted a few locations, make sure to work with NDIS investment experts & conveyancing lawyers who can practice purchase due diligence on your behalf. You don’t want to purchase land or property with arrears or other issues.
SDA scheme compliance
SDAs are highly monitored & regulated. The NDIS has set design standards that your property must meet before qualifying as SDA. Ensure that you and your builder are aware of such standards to ensure certification & prevent delays. Some investors are so eager to construct SDAs that they neglect to follow the standards.
For your guidance, here are the four design categories of SDAs:
- Improved Liveability: SDA in this category is meant to enhance tenants’ everyday lives by providing a reasonable level of physical access.
- Fully Accessible: This housing provides a high degree of physical access for people with significant physical impairment.
- Robust: Robust SDAs offer a reasonable level of physical access to tenants. These dwellings are also resilient and require non-reactive maintenance.
- High Physical Support: SDAs in this category provide high-level physical access to tenants with physical disabilities and require high-level support.
High-interest property loans
If you need additional funds to own and run SDAs, you can apply for mortgage loans. But since SDAs must follow strict design standards, they can be harder to finance than regular housing. That can translate to high-interest loans. Also, since it’s a specialised property, some lenders might not accept it as security. There could even be valuation issues as the lender might value the property as traditional housing and fail to account for the value of the special modifications made to it.
Fortunately, you can avoid this pitfall by working with an NDIS investment expert. This professional will help you navigate the process—from picking out the right location or property to selecting an SDA builder and getting low-interest loans.
NDIS Investment Is Great As Long As You Avoid the Pitfalls
Compared to other real estate investments, NDIS properties offer lower risks and higher returns. That’s why they are becoming a favourite among Australian investors. But like any other investment, you should practice due diligence and study the market & rules surrounding the scheme to ensure you avoid the common pitfalls.
About the Author:
Samuel Fyans a freelance writer and content creator. I have over 16 years of experience in writing for publications, marketing collateral, and social media. I have a wealth of knowledge on NDIS Investment properties and I am committed to helping people grow their investment portfolio.