NDIS Investing: is there anything safer than having the federal government paying your rent?

how do the different categories fit together?

IMPORTANT: You only need around $120,000 to get started. There is another option where you can get going with as little as $60,000.

I understand that I am setting an appointment to discuss an investment into an NDIS property. I understand and accept the fees and charges as detailed in the video if I choose to move ahead.

What's The Catch?

Where Too From Here? How Much Does It Cost To Work With Us And Get Into An NDIS Property?

I understand that I am setting an appointment to discuss an investment into an NDIS property. I understand and accept the fees and charges as detailed in the video if I choose to move ahead.

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Rich people use debt to leverage investments and grow cash flows. Poor people use debt to buy things that make rich people richer.

Grant Cardone

How much cash is needed for an NDIS Property?

In this video we break down every single cost you need to cover to get into an NDIS property. There are several costs unique to NDIS properties that you need to be aware of.


 

What are all the NDIS property types?
What is the lowest cost option?
The highest cost option?
Highest cash flow?
Guaranteed cash flow?

Everything is covered in this video.

 


 

ndis rents seem too good to be true?
Why is the government paying so much rent? It just seems crazy... and without all the facts it is. Understand the facts and you understand the rents.

 



 

how does the cash flow work and what are all the ongoing costs?
See how the cash flow works with just 2 of 3 possible tenants.

 



 

how can I be sure i'll get tenants?
We have a house shortage problem, not a tenant shortage problem.

 



 

How do the different NDIS housing options overlap?
Short breakdown of how the different NDIS housing categories overlap with each other.

 


 

How much vacancy will I get?
There are two types of vacancy you need to be prepared for. See how to manage them.

 



 

What is the best funding source?
There are two main funding options for NDIS properties.

 



 

how do the valuations work on ndis properties?

NDIS properties are more expensive to build than houses in the exact same street, so how so the valuations go?

 


 

do tenants want to live in a group home?
The big homes with 4-5 tenants look great on paper but do tenants want to live in them? What about a home with 3 tenants, do they work? Doesn't everyone want to live in their own?

 

 

Where do we get the best demand statistics?
Are the NDIS websites the best place to understand the waiting lists of tenants?

 

 

How many people are there with disabilities?
How much future housing is needed for people with disabilities?

 

 

What's the catch?
How much does it cost to have us set this all up for you and get you into a turn key NDIS investment property?

 



 

we also get to contribute
Not only can we make a fantastic cash flow that can replace our income but we also get to make life better for others.

 



 

Is the NDIS here to stay?
People worry that the NDIS is a flash in the pan bucket of money that will disappear. Look at what the Investor documentation has to say.

 



 

The types of properties that will fail and why?
Some properties have a fatal flaw built into them.

 



 

how many potential tenants are there?
How big is the NDIS tenant pool?

 



 

Is it true that NDIS properties don't grow in value?
People think NDIS properties will grow slower than other properties. Let's think about this one logically.

 



 

how much money do they save from this program?
The SDA is a money saving program. See how...

 



 

can you retrofit an old property for ndis?
Because the cash flow on traditional properties is so low compared to NDIS, people always ask if they can convert their existing property into an NDIS property.

 


 

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The most important word in the world of money is cash flow. The second most important word is leverage.

Robert Kiyosaki – Rich Dad, Poor Dad

10 properties in under 7 years

I understand that I am setting an appointment to discuss an investment into an NDIS property. I understand and accept the fees and charges as detailed in the video if I choose to move ahead.
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Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years.

Warren Buffett

Frequently Asked Questions

Do you ever build High Physical Support homes?

Absolutely, however this is usually “done to order” because a care organisation has specifically requested a home.

Generally speaking, if we do not purchase these homes ourselves, 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. 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. Having said that, these homes still value well when applying for finance so we do not anticipate a significant reduction.

Rather than building big 5 bedroom homes, these houses are designed for 3 tenants with an overnight carer and the current ones we are building are a $520,000 package. These investors will clear (after costs but before interest)

Two tenants: $76,672 a year
Three tenants: $111,317 a year

That's anything from a 14.7% to a 21.4% yield. Clients going into these are happy to receive for building this style of home. They see that level of return over a decade or more as more than compensating for the homes potentially being worth $10,000 to $20,000 less when they are sold at some point in the future.

Who are the care organisations you work with?

We partner with several care organisations around the country, some are private, some are ASX listed and some are not for profits. They have asked us to only share who they are with our clients who they will be working with directly. They ultimately don't want to be fielding calls from a bunch of individual investors calling them out of the blue. 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 (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 us to handle that side of enquiry for them. 

Who manages the property and collection of rent? Does it get paid directly by the Federal Government?

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 you or account monthly (less their management fee of 16.5%). 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. 

Are these properties stand alone properties in other residential areas, or they are in a complex?

Definitely stand alone houses. If you enter the duplex/villa arena you get much less rent. As an example, 2 tenants in a villa/duplex you get $15,696/ tenant. For a house you get $22,922/ tenant. That's $14,452 a year less. 

Are the properties easily accessible to public transport?

The care organisations have a matrix of requirement for the properties and we need to meet these before they will sign an EOI for the property. Easy access to transport is just one of the many requirements that we need to meet. 

Are the build contracts turnkey contracts?

We much prefer the term "ready to rent". Turnkey is a much abused term in the building world and can in fact represent a very low level of finish (i.e. no clothesline, mailbox, gardens etc.). Our build contract inclusions make sure that there is nothing else that's needed for the property (i.e. no more money to spend). 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.

Are the build contracts fixed price contracts?

The term "fixed price contract" is used very loosely by some builders. They will say they have a fixed price, but then within the industry standard build contract they have a clause that allows for variations... so clearly the price is not fixed if that's the case. Our contracts have no variations allowed. This is one of the advantages we have when we are operating on a wholesale level with the builders, we get wholesale terms like this.

Is there a guaranteed build time on the contract?

Yes, there is guaranteed build time of 20 weeks on the contract. Most importantly this comes with significant liquidated damages for going over time. These damages are set to market rent. With most build contracts there are no liquidated damages or they are very low, like $20 a day. In this situation they can run 6 months over schedule and it costs them just $3,640, which is hardly a motivator to get the job done. We've never had a build run overtime, in fact builds are frequently completed in 18 weeks. 

Who finds the tenants and once they tenants are in the house who manages them?

The same organisation who recruits the tenants, manages them into the NDIS/SDA programs and they also continue to manage the relationship and the properties. They want a unified end-to-end process for the tenants so they have a single point of contact. They charge a one time tenanting fee to find and onboard these tenants for you and this is determoned by the category of tenant and the number of tenants.

Improved Liveability: $6,600
Robust: $7,700
Fully Accessible: $8,800
High Physical Support: $9,900

For subsequent tenants it's 25% less for each one. For example with 3 improved liveability tenants you pay…

Tenant 1: $6,600
Tenant 2: $4,950
Tenant 3: $3,712.50

Total: $15,262.50

Income generated from these tenants: $72,400 a year.

The tenanting fee is only paid after they find a tenant for you and you accept them as a tenant for your property.

 

Is there any way to guarantee I get tenants?

There is absolutely zero guarantee that we will get tenants, it's simply impossible to do that and anyone doing this is to be avoided. However, we have mitigated that risk as much as possible we believe and thanks to this process we have 100% of our properties tenanted. When we put a property together the steps are...

  1. Coordinate with the care organisation and meet the need where they have existing demand
  2. Test demand in new areas by placing ads to get interest or applications from tenants. 
  3. After establishing demand we package we first need to find land that comply with the NDIS specifications
  4. After identifying sites we then need to confirm that the location meets the requirements of the care organisations
  5. Determine the right house design wanted by the care organisation can be placed on the land.
  6. Get a signed Expression Of Interest (EOI) on the property from the care organisation.
  7. Present property package to our investors (i.e. you)
  8. Take sales advice deposit from investor.
  9. Have the sales contracts for the land and construction drawn up from the land developer and the builder. Note: we have fixed price contracts with zero variations allowed to eliminate any surprises during construction.
  10. Contracts signed and returned to the builders and you enter the standard finance period before moving onto unconditional.
  11. Upon moving to the unconditional phase the care organisation begins the process of getting tenants onboarded into the SDA. This gives them about 6 months to have tenants prepared. 

What we say to our clients is that the absolute last resort, their ultimate "back up plan" is that the house can also be rented on the open market. Yields would be about 5.5% usually... but we have never had to fall back on this option. The demand right now, is very strong, especially in Queensland as the program is quite new and there are many more participants than properties.

Can you guarantee my property will be SDA approved?

Absolutely yes. This is warranted within your build contract.

Both your land and house will meet the standards for the SDA and will be onboarded into the program. The onboarding fee is paid at the unconditional phase of your build contract.  

I’ve heard that NDIS properties are overpriced?

Some are that is true, however more often than not the issue is that properties are over captalised for a certain area.

If you build an $800,000 home is a suburb full of $650,000 homes you will definitely have problems with your valuations being out by 10% to 15%.

Usually the properties that fail to me their valuations by this kind of margin are the more expensive houses ($750,000 and above) which are built like mini-hospitals to take 4-5 High Physical Support tenants. They are very big homes and require a lot of special features and that naturally pushes up the cost.

The problem is that these features push up the cost of the build but make zero difference to its valuation, and as a result valuations come in very low.

We like to allow for a 5% discrepancy in the valuation. Please see the video on the valuation process that explains why the houses have a problem with the valuations.

 


 

I understand that I am setting an appointment to discuss an investment into an NDIS property. I understand and accept the fees and charges as detailed in the video if I choose to move ahead.

Level 19 / 10 Eagle Street
Brisbane QLD 4000
Phone: 1300 852 024
Email: support@diogenes.com.au
Gray Holdings Trust
ABN 90 095 371 433