Investing in NDIS Property: A Comprehensive Guide
The National Disability Insurance Scheme (NDIS) has opened up new opportunities for property investors looking to support disability housing while benefiting from a growing market in Australia.
Why Invest in NDIS Properties?
The NDIS provides funding for Specialist Disability Accommodation (SDA), leading to a strong demand for accessible, purpose-built dwellings for Australians with disabilities. Despite this demand, the current supply falls short, creating a supply-demand gap that presents an attractive investment proposition. To bridge this shortfall, the government actively encourages private capital investment, offering several incentives to make SDA property investments even more appealing.
Conducting Due Diligence on NDIS Property Investments
While NDIS housing promises attractive yields, it requires the same level of scrutiny as any other investment. Here are some key steps for conducting due diligence:
- Assess Potential Returns: Aim for realistic projections based on actual development costs and fees. While some claims suggest rental yields of 10-25%, net yields after expenses like vacancy periods, insurance, and maintenance typically average 8-15%.
- Study Market Demand: Research local market demand dynamics and target areas with an undersupply of approved NDIS dwellings. Ensure the location has good infrastructure to support local residents.
- Understand NDIS Rules and Guidelines: Familiarise yourself with NDIS investment property rules, including housing types, accessibility requirements, modifications, and policy changes.
How to Purchase an NDIS Investment Property
Purchasing an NDIS or SDA investment property can yield strong rental returns while providing much-needed housing for NDIS participants. Here are some tips to get started:
- Research Market Rents and Growth: Conduct detailed research to understand NDIS property demand and supply dynamics in different locations. Focus on areas with undersupply and high demand.
- Use a Specialist: Partner with a reputable NDIS-approved property firm or specialised real estate agent to help source appropriate listings and provide expertise throughout the process.
- Buy Off the Plan: Purchasing an NDIS housing investment or land package specifically designed for SDA properties allows input into accessibility features. Be aware of potential delays in new builds.
- Finance Appropriately: Explore specialised NDIS property loans for both purchases and construction costs. Prepare for higher deposits, sometimes up to 30-35%, and consider stamp duty valuations and concessions.
- Choose a Location Wisely: Ensure the location provides access to local amenities and services, enabling residents to participate in community life. Be cautious of regional towns with potential oversupply issues.
- Manage for Success: Use an accredited NDIS property manager to source approved NDIS tenants, handle paperwork and compliance, and oversee maintenance. Quality tenants are essential for consistent rental income.
Key Takeaways
- Strong Yields and Social Benefits: NDIS properties can provide strong rental yields of 8-15% (net) along with social benefits, but thorough due diligence is essential.
- Target Undersupplied Areas: Research demand dynamics and target areas with high occupancy rates.
- Use Specialists: Seek advice on regulations, financing, and finding listings from specialists.
- Buy Off the Plan: Allows input into accessibility features but comes with construction risks.
- Higher Deposits: Expect higher deposits of around 30-35%.
- Infrastructure and Participation: Ensure locations have infrastructure enabling resident participation.
- Quality Management: Manage properties via accredited NDIS managers to secure quality tenants.
- Realistic Projections: Conduct realistic projections based on actual costs and fees.
- Compliance: Comply with all policy rules around housing types, modifications, and accessibility.
- Seek Independent Advice: Get independent financial advice before committing funds.
For more advice on NDIS property investments and property valuations, get in touch with the Duo Tax team now.
PS – you can fund NDIS through SMSF – both purchase and construction – lets chat to learn more
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