|  1300 747 867   |      
Property Investment Store




a warning for new investors

Pitfalls of NDIS SDA Investing

Are you considering owning rental property in Australia?

The trending NDIS/SDA government-funded scheme is an excellent investment path that could replace your current job and set the stage for a financially promising retirement.

Among its many perks are the following:

  • Socially responsible investment
  • Government-backed, low risk
  • Long-term rental yields
  • Low vacancy risk

Promising, indeed.

But remember, there is no such thing as a risk-free investment—the NDIS SDA housing investment also has its share of pitfalls.

Owning a rental property like the SDA is a potentially rewarding long-term investment. But, besides the rental property expenses, this investment route comes with challenges that can be easily trumped with the right property investment management professionals.

Before you hop on this income-generating train, let’s show you four key pitfalls many SDA-housing providers may never mention. They’ll help you make well-informed investment decisions.

  1. Capital-intensive investment with strict requirement 

An NDIS housing investment may not suffer fluctuations like the Aussie share market, but the initial startup costs of an NDIS can’t be overlooked. The good news is that the ongoing rental property expenses are negligible once the tenants have moved in due to the high income of the property.

Ideally, this investment journey begins with the search for a reputable SDA-housing specialised builder. Your everyday building contractor may build a design that could disqualify you from enrolling in the NDIS housing investment.

Alternatively, consider buying any rental income property for sale or modifying your existing property to suit SDA’s specifications. But, retrofitting a home to meet SDA requirements is a significant endeavor and these types of unnecessary investment property expenses will cost an arm and a leg.

Worse, traditional home occupiers have easier access to loans than NDIS property investors. Lenders feel safer with more ‘flexible’ properties, short-term leases, and realtors who can quickly put up their rental income property for sale.

This understandable bias makes SDA investment a no-no for many traditional banks.

Thankfully, over the last four years, we have built a track record with specialised lenders that understand this space and can make your financial journey to owning rental property a seamless experience.

  1. Demand-supply controlled market 

As mentioned, it requires additional cost and effort to find an experienced SDA-housing builder and fit in stipulated designs.

Some regions have saturated SDA-approved dwellings; others have too few eligible tenants. In either case, high chances are that your home may end up unoccupied after all your investment property expenses.

A 2021 study shows the NDIS property market recorded a higher vacancy rate than anticipated, leaving many highly expectant investors without rental incomes.

Unoccupied rental properties are often reported when investors deal with inexperienced builders, developers, or sales groups without a property management business.

  1. It’s about your tenants, not you

The SDA initiative focuses on the housing needs of disabled persons. If you want to get a tenant/participant, ensure your property focuses on these needs and, importantly, go where there’s favorably high demand.

But it’s likely that such in-demand areas are not where you would ordinarily consider owning rental property.

Most vacant properties result from investors building the wrong house designs in the wrong location. These investors are ignorantly cajoled by builders that lack SDA management experience and have a shallow understanding of the complexities of sourcing eligible SDA tenants.

So, before you choose a builder and incur all the investment property expenses, remember tenants are not easy to find, and there is no magic list of SDA-approved tenants. Hence, you need experts to help you journey through this hurdle and keep your rental property occupied.

Interestingly, we boast a 99% occupancy rate for all our homes at the Property Investment Store and no arrears on rental payments.

Poor Valuation 

In many cases, valuations do not stack up. Valuers and banks don’t fully understand SDA yet, so they take a conservative stance.

Worse, poor-quality homes are declining the sector’s reputation and, unfortunately, tarnishing all NDIS homes with the same brush.

Being a relatively new initiative, some lenders have unnecessarily long processing requirements and duration. Some valuations come back at over 20 percent under the purchase price.

Reassuringly, our homes boast excellent standards and quality, and the increasing SDA property investment awareness seems to usher change.

We have found that once our NDIS homes have been fully occupied, landlords can refinance using a higher valuation to extract any additional equity back from the purchase.

Frequently Asked Questions

How long does an SDA-approved home building cost? 

Averagely, six months. The count begins after you get a nod from the Council.

After completion, who enrolls the property, scouts for matching tenants, and manages the property? 

After making the rental property expenses, SDAMA handles everything else. SDAMA (SDA Management Australia) is an NDIS-certified Service Provider that collaborates with Care Providers to help suitable NDIS tenants get the most suitable SDA.

They enroll you into the housing provider scheme, help you source tenants and also manage your property—ensuring you get your due returns for your rental property expenses.

How soon can I get tenants into my property? 

Several factors influence the ease (or difficulty) of getting an SDA-approved occupant—property location, demand, and home designs are common determinants.

However, SDAMA makes finding suitable tenants for your property a key priority. In fact, SDAMA liaises with Service Provider and begins a tenant hunt for your property even before the building construction commences.

The Property Investment Store assumes front-roll responsibility in filling up all your SDA home’s vacancies—well, that’s how we get paid. The fact is, we hate to see investors’ property unoccupied as much as you do.

For how long can a tenant stay? 

A typical rental lease runs for 12 months.

However, the NDIS tenancy provision permits occupants to end the agreement whenever they wish with a 90 days’ notice. Yet, due to the special condition of these tenants, most SDA homes are occupied by the same tenant for many years-–in most cases, for life.

Who is the SDA investment most suitable for? 

Everyone can acquire residential assets and register them under the scheme. But in practice, this program and the associated investment property expenses may not be convenient for everyone.

From experience, we find this investment opportunity most suitable for working-class Australians that qualify for a bank loan and look forward to a fulfilling retirement.

The SDA investment is an excellent fit if you’re a homeowner with built-up equity you wish to borrow against to get financially ahead. Owning rental property supports your dream of generating a steady income flow, retiring into a financially stable life, and setting up your kids financially.

Why should I use a Property Investment Store? 

Here are a few reasons you should consider owning investment property through the Property Investment Store.

  • Fully licensed SDA-experienced real estate agent – with years of experience in the real estate industry, we’ve built robust relationships with finely selected SDA-inclined builders with a decent track record.

We know exactly what makes a typical SDA-themed property and the eligibility requirements across disability levels.

  • Low vacancy – Although the demand and supply indices determine tenancy level, we bring in our experience –-from finding a fitting location to ensuring all properties we provide investors are fully occupied.
  • Experienced management – We promise the peace that comes with knowing that our professional management team will handle your investment [and burden the associated risks], assuring you of the monthly payment of your rental income into your account.
  • Robust broker network – We’ve built a network of brokers that help simplify the funding process.
  • Professional partnership – all through your journey, our professionals will partner with you, explaining the procedure to ensure you are involved in every stage and making your investment journey transparent and rewarding.

Still skeptical about investing in the SDA scheme? Feel free to book a free consultation and our client-friendly expert will discuss the opportunities with you to enable you choose whether to–or not to—make the NDIS investment move.