Yes, the builders we work with will have High Physical design aswell as the other variety of different specs and design layouts for the other categories.
No, we cannot be sure of who the participants will be that ultimately live within your property. Even though a High Physical Support design is built, the participants may end up being "HIGH PHYSICAL SUPPORT" + "IMPROVED LIVABILITY" + "FULLY ACCESSIBLE" for a 4 bedroom house, with the 24/7 onsite carer (OOA).
We offer these homes to investors who fully understand the downside of these investments but are prepared to accept those for the higher cash flow they will get. The downside is that they are building a more bespoke home to allow for wheelchairs so the bathrooms, corridors etc. are a little larger than normal, which may not be seen as the same value as the house next door. These are still a relatively regular 4 bedroom home but as you'd imagine, you can notice the additional features on a casual inspection of the property and this may slightly impact the future sale value.
We cannot disclose this info for the main reason that the builders we consult with to produce H&L packages in the NDIS sector, have partnered with different care organisations, some of which are private, some public and some are not for profits. This information is normally provided once the landlord has engaged the provider with an application & paid upfront costs, to be hired as their provider. Their role and business is to look after care providers and also participants, not to be fielding calls from a bunch of individual investors calling them to talk about 'property related matters'. Their focus is caring for people with disabilities, not managing investor questions. They simply aren't equipped for that and don't get involved with the property side of things at all (and they usually don't understand it all really). Ultimately they just want ready-made properties for their clients, they really want to stay away from the investment and property development side of things which is why they work with the builders to handle that side of inquiry for them.
The SDA provider is the company who is tenanting and then managing the property handle everything. They do the monthly submission to collect the SDA payments according to the number of tenants you have and the payment category they are in. They also collect the Reasonable Rent Contribution (RRC) from the tenants. This is then forwarded to your account monthly (less their management fees). They also do the annual audit of the property that is required too but this is not an additional fee as it is covered by their management fee. Your experience of it is very passive, it's mostly hands free except for the annual rates and insurance bills etc. What this is called, is an 'armchair investor'. You sit back and let the professionals deal with all matters relating to your NDIS investment property.
Yes, they are finished and "ready to rent". Turnkey is a word too loosely used in the building world and can in fact represent a very low level of finish (i.e. no clothesline, mailbox, gardens etc.). The builders we work with have NDIS compliant inclusions that make sure that there is nothing else that's needed for the property to spend on. You of course get to go through this contract in detail with your lawyer during the cooling off period, just like you would for any property.
Once land is registered, and Building Approval is lodged, these builds will have an estimated range of 16-20 weeks time frame, however this may vary depending on builders and regions.
In most cases land is registered or close to registration, but investors will know if it isn't the case. Since the HOMEBUILDER SCHEME was launched, all the home buyers are out in droves on land estates snapping up all available lots. This will have an adverse affect on land availability over the coming 6 months for all buyers, both investors and first home buyers, and thus we cannot predict that the packages we recommend for sale will be registered.
Absolutely yes. This is warranted within your build contract. Both your land and house will meet the standards for the SDA and will be on-boarded into the program. The on-boarding fee is paid at the unconditional phase of your build contract. so that the care provider can begin sourcing tenants ready to move in way in advance, so as to avoid vacancy at handover of the brand new house.
The answer is yes and no and maybe, depending on how you view it and who you talk to. Sometimes it is true, however more often than not the issue is that properties are over captalised for a certain area. If you build an $750,000 SDA home in a suburb full of $600,000 homes you will definitely have problems with your valuation being short. Factors which affect the valuations are: the size of the home being too large, or the land price is way too expensive given the demand right now in certain areas, and the fact that these homes may have a lot of special features and that naturally pushes up the cost. We know of builders who are thinking of doing very high custom builds which aren't necessary, just because the SDA provider wants the "bells and whistles" plus gold plated toilet seats (kidding!). The problem is that these features push up the cost of the build but make zero difference to its valuation, and as a result the valuations come in lower than expected. We advise investors to allow for a 15-20% discrepancy in the valuation, and thus it is recommended that investors have cash or equity of around $250,000 - $350,000 (for a 20% deposit + valuation shortfall + SDA provider costs + loan repayments during construction). Also, the lender will calculate the serviceability of the investment property based on a market rate of 4%-5% pa rental income, not the expected rental return forecast. This also plays a part in their calculations in valuations because their job is to protect the lender and the mortgage insurer, not the borrower.
The houses designs we prefer to work with, are usually designed for 3 tenants with an OOA. The packages we had for sale recently were $600,000 (SOLD OUT!). These are in highest demand due to the lower price point compared to others in SE QLD. New homes are easier to design, build and modify, rather than strata titled property. We don't work with apartments or townhouses like some other groups in Sydney, where high density living is more prevalent, and lack of land is the biggest issue within such metropolitan areas.
To show some rough calculations, let's use the above $600,000 example, and assume there are 4 different categories of participants within a SDA home, being looked after by a onsite carer. Lets use only 3 of these categories below to mix the examples around. For a High Physical Support home, the net rent that an investor would clear, after costs (but before tax), could look like one of examples below:
[DISCLAIMER - GENERAL INFORMATION ONLY | NOT FINANCIAL ADVICE | REFER TO BASE RENTS ISSUED BY NDIS]
Obviously we can keep 'mixing and matching' the different types of participants to give you a matrix of results, but we just wanted to show EXAMPLES ONLY. The above numbers are based on an example of $600,000 purchase price, and remember, they are net returns. The gross figures would probably make it proposition of 15%-25% pa before costs. A higher purchase price of $750,000 plus (which is more the norm) would obviously dilute the yields lower because the rent is roughly the same no matter where the house is built. Clients receiving these kind of returns should be satisfied with building this type of home, even if there was a 15-20% valuation shortfall one might argue, given the massive cash flow possibilities.
Remember, don't stress over the little things like "Can I get all High Physical Support participants" or "Where do they find the tenants from" or "What if there is a 5 week vacancy once my house is completed" etc. There is roughly 20 years of positive cash flow to benefit from for investors.
REMEMBER. THINK. LONG. TERM.
There is absolutely zero guarantee that anyone - the Real Estate Agent, or the SDA Provider, or the SIL Provider or the Builder - will guarantee you tenants. It's simply impossible to do that and anyone doing this is to be avoided. However, our team have mitigated that risk as much as possible, thanks to the process of building the design of the home according to participants requirements in the area, and consulting with the SDA provider(s) as to whom they have on their waiting list for accommodation. Sometimes, we may only build once we have participants qualified and thus building to their specific requirements (custom build) but this will add much more money to the price tag. Then, and only then, is there is a very strong chance that the property will tenanted quickly after completion of the brand new house. The provider must be approved with NDIS, and the builder needs to be approved by NDIS, and the house package must be approved by NDIS. We are not going out to market to find a 'block of dirt' to get a house 'plonked onto it' just to leave it empty. That's not what we do!
When our team put a property together, the steps are:
What we say to anyone looking at investing in NDIS property, is that the absolute WORST CASE SCENARIO, is that the house can be rented on the open market, if there is no participants available to rent the brand new home. Yields would be about 5.0% pa usually, but the likelihood of this happening is very very very unlikely. The demand right now, is very strong, especially in Queensland as the program is quite new and there are many more participants than properties. If you are building a NDIS home in an area where there are 40 people on the waiting list to find accommodation, then the chances of having a vacant home funded by government with free 24/7 care provided for free, is impossible to fathom.
P.S - assume you get only one tenant who is a High Physical Support participant with a OOA, and the other two rooms are vacant for the rest of the year, that means the rental income is $41,470 + $9,300 = $50,770 pa, just from this one room only, and this is twice as much as you would get if you were to lease the entire home to a family at $500 per week.
P.S.S - with one High Physical + one other participant + one vacant room, the rate is for the High Physical participant is higher = $44,500 + $9,300 = $53,800 just from the High Physical tenant "alone" (see table below). Therefore, the less people in the SDA home, the higher the rent per room occupied.
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