NDIS Property Investment refers to a specialised form of real estate investment that caters to participants of Australia’s National Disability Insurance Scheme (NDIS). This type of investment involves purchasing or developing properties specifically designed to meet the needs of people with disabilities.
NDIS approved properties are modified or purpose built to accommodate individuals with various disabilities, ensuring mobility, accessibility and safety. These modifications may include wheelchair ramps, wider doorways, modified benchtops, adapted bathrooms, and specialised equipment installations. Additionally, NDIS properties may include provision for a carer or medical professional to reside at the residence overnight.
Advantages of NDIS Property Investment
Investors in NDIS properties can benefit from potentially higher rental yields when compared to traditional residential properties. In our experience in delivering many NDIS properties, we regularly see gross annual yields of 10%, and in some cases over 12%. This is notably higher than the average 4 – 7% yield attainable in the traditional property investment market.
The NDIS provides funding for Participants’ housing needs, which can result in stable, long-term tenancies and government-backed rental payments. It’s true that once a tenant moves into an approved NDIS property they tend to stay for longer periods. This has much to do with the limited number of properties available for rent and the potential difficulty in relocating. Tenancy terms are typically longer in comparison to traditional investment property leases
While the source of the Participant rental home funding is initially provided by the NDIS government program, an important caveat needs to be made. Funds are directed from the NDIS to an approved Specialist Disability Accommodation (SDA) provider who handles payments to property owners on behalf of a Participant. The funds always follow the Participant. This differs from other government backed rental programs, like the Defence Housing Authority (DHA) initiative, where the contract follows the property. When investing in NDIS property it is important to understand that unpaid vacancies can occur and will need to be taken into consideration by the investor. Having made this distinction, NDIS investors will often see that working with an established SDA provider lessens the traditional risk of an individual tenant not making a rental payment and can lead to more stable income over time.
NDIS Smart & Simple Investment Guide
Our 11 page guide covers the eight must do steps to succeed in your NDIS property investment journey.
Opportunities for both new constructions and repurposing existing investment properties exist. By far, the majority of NDIS approved and tenanted properties are newly developed, custom designed residences. Due to the unique layouts and custom facilities required by the Participants it is often cost prohibitive to retrofit existing non NDIS properties into this space. Having noted this, options to repurpose underperforming traditional investment properties exist, often in a knock down/rebuild arrangement. Such a strategy can work for two reasons. Firstly, when repurposing land in this way the location may be very suitable for a Participant’s lifestyle, and secondly, these one off rebuilds are often far removed from greenfield estates where larger percentages of NDIS housing are commonly provisioned. This can enhance a properties uniqueness or scarcity profile, and lessen the chance of an investor from having to compete with other NDIS homes in the nearby area.
Investors can contribute to the provision of much-needed accessible housing. As of the most recent published data there are approximately 22,000 active NDIS participants with approved Specialist Disability Accommodation (SDA) provisions with a little over 7000 SDA certified dwelllings delivered. Investors in this space should know they are delivering a much needed positive social impact.
Potential Drawbacks of NDIS Property Investment
One potential drawback of NDIS property investment is the higher initial cost and ongoing maintenance expenses. Investors must ensure their properties meet the strict accessibility and safety standards enforced by the National Disability Insurance Agency (NDIA) through the SDA Design Standard. These guidelines ‘outline design requirements and give providers the flexibility to respond to participant needs and preferences’. Maintaining the extra (and likely custom) fixtures and fittings will require regular upkeep and can eat into potential profits, thereby increasing financial risk.
Another challenge is the complex regulatory environment surrounding NDIS housing. Investors must navigate intricate rules and compliance requirements, which can change over time. Failure to adhere to these regulations could result in loss of NDIS approval and subsequent income. This is where working with reputable SDA providers, developers and specialist NDIS advisors (like PPA) can mitigate this eventuality.
Market saturation is also a concern. As more investors enter the NDIS property market, competition for tenants may increase, potentially leading to lower occupancy rates and reduced returns.
Tenant management can be more challenging in NDIS properties. Investors may need to work with support coordinators and service providers, requiring additional time and effort compared to traditional rental properties. There’s also the potential for property damage due to the specific needs of some NDIS participants.
How can PPA Help You Maximise Returns and Minimise Risk
PPA help you adopt a strategic approach that balances potential returns with risk management. We factor in and are careful with our location selection, focusing on areas with high demand for disability-friendly housing.
We introduce you to well regarded and highly experienced SDA providers, allowing you to discuss any questions you may have regarding tenant/participant placement and management.
PPA, alongside our builders and NDIS certifiers, ensure the design and build of your investment property meet the NDIS specifications and guarantee NDIS certification upon completion.
We’re with you throughout the entire build of your NDIS property. Working closely with experienced NDIS builders and developers and keep you up to date on the progress of construction.
We can help your diversify your NDIS investments across different types of NDIS properties and geographical areas. This approach helps mitigate risks associated with changes in local markets or NDIS policies.
And we keep you informed about NDIS regulations and funding models, as these can significantly impact the viability of investments.
Is NDIS Property Investing Right for You?
Investing in NDIS property can be a lucrative opportunity, but it’s not without its challenges and considerations. Before making a decision, it’s crucial to weigh the pros and cons carefully. Your decision should be based on thorough research and careful consideration of your financial goals, risk tolerance, and investment strategy.
Remember, while NDIS property investment can be rewarding, it’s not suitable for everyone. Assess your personal circumstances, conduct due diligence, and make an informed decision that aligns with your investment objectives and values. When you’re ready to discuss your next investment, get in touch with the team at PPA.
