I had a Zoom meeting with the builder/developer on Friday of the SDA houses and will be preparing a Q&A to send to you later on pertaining to the guarantee of income for 10 + 10 years at an average of 7% net, with no management or maintenance fees during this period…..I will also send over a copy of the guarantee/lease agreement as well.

For now, as you scroll down below, you can review information for an investing in a standard SDA house, without the 7% guarantee of income in place.

You can purchase a property as per below and your returns maybe even higher that the guaranteed return, however should the property be untenanted for periods of time, there is no income coming in…..Also as you can see, the management fees are lot higher than your regular property manager as there is a lot more involved in managing this type of property.

I was initially attracted to these properties due to the guaranteed of income, with no maintenance of management fees, as it offers a very “hands off investment” and no stress or headaches.

However in future, I will be dealing with both the SDA houses with the guarantee of income for 10 + 10 years PLUS “stand alone” SDA housing depending on my client's circumstances and cash-flow.

Moving forward, I will be setting up appointments via Zoom or phone to discuss the opportunity and answer any questions you may have.

I will only have a few opportunities to secure houses with the lease/guarantee in place, so please raise your hand if securing one will be of interest to you.

As soon as I have finished the Q & A, I will send over to you.

Best Regards

Terry

In this email, we will look at how SDA investors get paid through the government scheme, rental return projections, the long-term viability of SDA, and opportunities for re-selling your SDA property....This is excluding the guarantee of income at 7%.

How does the investor get paid?

There are two parts to an investor’s income from a Specialist Disability Accommodation investment property, where the payment is received quarterly and fortnightly.

Quarterly payments

The largest part of the income (approximately 70-90%) comes quarterly from the NDIA (National Disability Insurance Agency) as SDA payments. This amount gets paid by the NDIA to the SDA provider, who withholds their provider fee from this amount, and after their cut, the rest goes to the owner of the SDA/landlord.

Fortnightly payments

10-30% of the total income comes fortnightly as Maximum Reasonable Rent Contribution (MRRC), an equivalent of the rent payments in a traditional rental property.

This amount comes from the participant’s Disability Support Pension as well as their Commonwealth Rent Assistance and is collected by the SDA provider and forwarded to the owner of the SDA/landlord.

Provider fee

The provider’s fee is typically 10-15% of the total investor’s gross income per participant.

There are several factors that may affect your income as an investor, which are:

• Type of property (apartment, villa, house, group home), and the number of bedrooms in the property.
• The type of SDA-funded NDIS participants you get as your tenants and their SDA funding levels.
• The number of NDIS participants residing on your property.
• Mixed tenancy. A mixed tenancy is an arrangement where participants of different SDA categories live together in the same house. For example, in a Fully Accessible SDA, you can get participants with Fully Accessible and Improved Liveability funding living together.
• Location of your SDA property.

Investor's income projections

For an SDA House with 2 participants your income can be:

• Robust = 108k for 2 participants per year.
• High Physical Support = 115k for 2 participants per year.
• Fully Accessible = 92k for 2 participants per year.
• Improved Liveability = 72k for 2 participants per year.

We have chosen 2 participants as an average number for a house. The number of participants and the associated income will vary based on the factors above.

The numbers look pretty good but how reliable is the Specialist Disability Accommodation initiative?

Would SDA funding be cancelled or reduced?

No. SDA funding under the NDIS is a legislated commitment of Australia’s Commonwealth, State and Territory governments, set out in the NDIS SDA Rules (2016) under the NDIS Act (2013). This legislation provides the foundation for the government’s long-term and firm commitment to SDA funding under the NDIS.

Beyond the legislative commitment, SDA funding enables eligible participants to achieve better outcomes while representing value for money for the NDIS.

This is due to high-quality fit-for-purpose dwellings making it easier and less expensive to provide the range of person-to-person supports that SDA-eligible participants require.

Improved design in SDA dwellings can reduce person-to-person support needs, and allow for choice in models that utilise shared supports.

Broad benefits to all parties including participants, providers and the NDIS underpin the long-term commitment to SDA funding.

Can SDA property be re-sold to the regular property market?

SDA houses and apartments are built to look and feel like regular or traditional dwellings. Ideally, it should appeal to anyone regardless of whether you are someone living with a disability or not.

The Australian Federal Government has allocated $700 million annually for the next 20 years to fund SDA in order to attract investment and the development of homes.

SDA houses can be transitioned into legacy housing at the end of the 20 years stipulated by the NDIA and can also be rented as a regular residential property or sold.

Improved Liveability and Robust properties can be easily transitioned into the regular residential market and would fall under the category of a ‘smart home.’

High Physical Support and Fully Accessible ARE NOT suitable as a traditional residential house because of the inclusions like provision for hoists, adjustable benchtops, accessible bathrooms (that will look more institutional) and a modified kitchen.

Therefore if you would be looking to sell down the track to potential owner-occupiers then improved Liveability and Robust properties should be on your radar.

Is it too late to get involved?

It is not too late to get into SDA property investment because of the massive undersupply and slow process of rolling this initiative out across Australia.

Over 30,000 NDIS participants are currently eligible for SDA funding, yet just over 19,000 people have the funding. Partially, this is due to the slow process of awareness and getting funding.

Only around 5,100 disabled people live in 2,849 newly built SDAs, thus, about 14,000 SDA-funded people are waiting for a new SDA property to become available throughout Australia. Many of these ~14,000 participants are currently residing in legacy and basic housing that is outdated and/or does not meet their needs that will be defunded over the coming years, while some are residing in aged care centres or in hospitals.

The NDIA projects there will be 40,000 SDA-eligible people in Australia by 2025 and up to 50,000 SDA-eligible people by 2030.

Therefore, Australia needs a total of 25,000 to 30,000 new dwellings by 2030, yet we are only at 2,849 dwellings at present.