Understanding the Potential of NDIS Investment Properties
The National Disability Insurance Scheme (NDIS) is a government-funded initiative aimed at providing support and services to people with disabilities across Australia. As part of this scheme, there is a growing shortage and demand for suitable housing options for individuals requiring disability-specific accommodation. This situation has created a niche market for investors interested in making socially responsible investments while benefiting from increasingly attractive financial stimulus.
Case Study: How John and Sarah Are Achieving Financial Independence through NDIS Property Investment
In this case study, we’ll explore the inspiring journey of John and Sarah, who are on their path to achieving financial freedom through investing in NDIS properties.
John and Sarah’s story is a testament to the power of strategic investment and the positive impact it can have on people’s lives. Through careful research and guidance from PPA’s disability housing investment team, they embarked on a path that is not only securing their financial future but also contributing to the betterment of services to those in desperate need.
Identifying the Opportunity
Having already acquired a traditional residential rental property, John and Sarah identified an opportunity to expand their portfolio by investing in disability housing properties, largely due to the Australian Government guaranteeing rental payments for eligible tenants through the NDIS program funding. John and Sarah saw that this secure backing would ensure consistent cash flow while minimising vacancy risks normally associated with their traditional property investment.
In addition, the 20 year lease agreement term between property owners and the Specialist Disability Accommodation (SDA) provider meant they could plan their strategic long term goals, secure in the knowledge that their NDIS property would continue producing an income far into the future.
Through thorough market analysis and due diligence, John and Sarah, along with their PPA consultant, identified areas with high demand for disability housing across Australia. Armed with this knowledge, they whittled the list of areas down to the Perth region. Perth, as one of Australia’s most vibrant and rapidly growing cities, offers a plethora of opportunities for investors looking to make their mark. The key reasons behind their decision included:
- Perth’s strong participant demand;
- it’s significant growth potential;
- the diverse industry base; and
- a lower initial buy in when compared to eastern states;
With PPA’s assistance, John and Sarah were able to project both the income and expense expectations of a new NDIS property and with these figures in hand, met with with an SDA provider who confirmed participants were available and awaiting accommodation. John and Sarah subsequently entered into an agreement to purchase a vacant block of land in Balga and build a custom designed freestanding house enabling three high physical support (HPS) participants to live comfortably, along with a dedicated space for a carer to stay overnight. Build time was estimated at 12 months.
With regular updates and photos of the progressive build provided along the way, John and Sarah’s investment property continued through to completion, where the new home surpassed many of the requirements established by the National Disability Insurance Agency and was granted NDIS certification. True to their word, the SDA provider had tenants available to move in shortly thereafter.
Maximizing Rental Income
Estimated financial projections for a freestanding 3 high physical support with onsite accommodation for a carer*.
|Full Turnkey House & Land Package||$886,238|
|Stamp Duty (land only)||$7,975|
|SDA Participant Placement Fee (one time fee)||$15,000|
|NDIS SDA Allowance||$165,339|
|Reasonable Rental Contribution (RRC)||$32,736|
|Estimated Gross Annual Income||$198,073|
|Estimated Gross Weekly Income||$3,809|
|Estimated Gross Yield||22.34%|
|Loan Interest (interest only loan)||$45,586|
|Insurance, Maintenance (estimated)||$3,500|
|SDA Management Fee||$23,469|
|Estimated Net Annual Income||$123,018|
|Estimated Net Weekly Income||$2,365|
|Estimated Net Yield||13.88%|
* Please note, the net income figures outlined above do not include considerations for tax deductions claimable against the personal incomes, such as loan interest, depreciation or ongoing property expenses.
Needless to say, John and Sarah estimate they will be ready to procure another NDIS property within 6 – 12 months.
Hopefully, this case study serves as an inspiration for others who may be seeking avenues towards financial freedom while making a meaningful difference in society. By exploring opportunities within niche markets such as NDIS property investments, individuals can create sustainable wealth while positively impacting communities in need.
If you are interested in talking to a PPA specialist about your individual circumstances and whether investing in NDIS properties is the right fit for you, please contact us to schedule an obligation free discussion. We have participants waiting and are eagerly looking for investors to meet demand.