The NDIS has opened up a new world of opportunities for property investors who want to make a difference in the community. NDIS property investment promotes more independent living arrangements for people with disabilities.
The NDIS Specialist Disability Accommodation (SDA) program funds purpose-built, accessible housing for Australians with disabilities. But the current supply of suitable dwellings is nowhere near the demand, so if you’re willing to help fill the gap, this is an investment opportunity.
In this guide, we’ll take you through the key points of NDIS property investment in 2024 and show you how to assess the risks, returns, and complexities of getting in.
Housing Demand for the National Disability Insurance Scheme
A 20-year projection model by the NDIS estimates that by 2042, 36,684 SDA homes will be required at an average growth rate of 2.4% per annum. This is a big increase and means more SDA developments are needed across Australia.
Recent data shows a big jump in the number of NDIS participants eligible for SDA. As of 31st March 2024, SDA-eligible participants grew 12% per annum over two years to 22,022. SDA payments rose 32% per annum over the last two years to $290 million from $166 million.
The growing number of SDA-eligible participants highlights the need for more SDA-compliant properties.
Why Invest in NDIS & SDA Properties
- Social Impact: Investing in NDIS properties allows you to make a positive social impact. You’re providing high-quality housing to people with disability, which aligns with socially responsible investing.
- High Demand and Low Vacancy Rates: There’s more demand for SDA than supply, so NDIS properties have low vacancy rates. The mismatch reduces vacancy risk and means consistent occupancy and steady rental income.
- Attractive Rental Yields: The main attraction for investors is the potential for higher rental returns, reportedly around 8-15% (net). Depending on location and other factors, SDA housing can provide higher cash flow than traditional residential property.
- Government-Backed Income: Once you find a tenant, you can expect a long-term, stable income funded by their NDIS package. SDA housing has a government-backed funding model, so it’s a reliable income stream.
- Hedge Against Inflation: As property values increase over time, investors may experience capital growth that outpaces inflation rates, preserving and growing their wealth. SDA income is also annually indexed to the CPI.
- SDA Investment Properties Have High Returns: Investing in an SDA investment property involves financial assessment, building, tenant acquisition, and wealth management. This type of investment offers potentially high returns.
Do Your Research
While NDIS (National Disability Insurance Scheme) housing can offer good yields, you need to approach it with the same level of scrutiny as any other investment. Understanding the specific requirements and standards for an SDA property is crucial. Do your due diligence before you commit your money.
When assessing returns, aim for realistic projections based on development costs and fees. Claims of 10-25% rental yields flood the market, but after you account for vacancy periods, landlord insurance, and maintenance, the net yields are usually 8-15%.
Here are some statistics on NDIS property investments and the SDA market:
| Description | Value |
| The current shortage of NDIS housing places | Over 7,700 |
| SDA participants as of March 2024 | 22,022 |
| Annual growth in SDA-eligible participants over the last 2 years | 12% |
| Total SDA payments in 2024 | $290 million |
| Annual growth in total SDA payments in the previous 2 years | 32% |
| Average annual growth in SDA payments per participant | 15% |
| Projected number of SDA homes required by 2042 | 36,684 |
| Projected average annual growth rate of SDA homes to 2042 | 2.4% |
| Typical entry-level SDA investment | $900,000-$1 million |
| Average annual returns for SDA housing | 13-15% |
What About Specialist Disability Accommodation Properties?
Target areas with an undersupply of approved NDIS dwellings and consider high demand and good infrastructure to support residents.
Educate yourself on NDIS investment property rules and guidelines around housing types, accessibility requirements, modifications, and policy changes. Properties must comply with these to be eligible for NDIS and SDA funding.
How to Buy an NDIS Investment Property
- Research average rents and growth: Research NDIS property demand and supply dynamics in different areas. Target undersupplied areas as they will have the strongest occupancy rates, growth, and yields.
- Use a specialist: Partner with an NDIS-approved property company or specialist real estate agent for guidance on sourcing listings, regulations, building requirements, and financing.
- Buy off the plan: Buying an NDIS housing investment or land package for SDA properties allows you to input the accessibility features. Be aware of potential delays due to material shortages.
- Finance correctly: NDIS property loans are available for purchase and construction, but expect higher deposits – around 30-35%. Make sure to factor in stamp duty valuations and concessions for disability accommodation across different states.
- Choose wisely: Ensure the location allows residents to access local amenities and services and participate in community life. Be cautious of regional towns that may have oversupply issues.
- Get an accredited property manager: Use an accredited NDIS property manager to source approved tenants, paperwork, compliance and maintenance. Getting quality tenants is key to maintaining rental income.
Key Takeaways
- NDIS properties can offer 8-15% (net) rental yields and social benefits but come with risks, so do your due diligence.
- Research the demand dynamics and target undersupplied areas for the highest occupancy rates.
- Use specialists for advice on regulations, financing, listings, etc.
- Buying off the plan allows input into accessibility features but also construction risks.
- Finance correctly, but expect deposits of around 30-35%.
- Ensure locations have infrastructure to support residents in participating in community life.
- Manage properties via accredited NDIS managers to get quality tenants.
- Make realistic projections based on actual costs and fees, not hype.
- Comply with all policy rules around housing types, modifications, and accessibility.
- Get independent financial advice before you commit your money.
If done correctly, NDIS property investments can offer strong yields and social impact. Do your due diligence to navigate this space of specialised housing and reduce risks.
For more information on NDIS property investments and valuations, speak to our experts at Duo QS. NDIS is an opportunity to invest purposefully and get good returns in a growing market. You can also check out our FAQ to learn more about how building materials can affect your expenses.