What is the NDIS?
The National Disability Insurance Scheme (NDIS) in Australia is a significant government initiative aimed at providing support and services to individuals with disabilities. Launched in 2013, the NDIS operates on the principle of giving people with disabilities more choice and control over the support they receive.
Total expenditure from the Commonwealth and the states and territories on the NDIS is estimated at $36.7 billion in 2022–23 and is expected to be $41.9 billion in 2023–24, a growth rate of 14.4%. The NDIS is now the second most expensive social program after the age pension, which is expected to cost taxpayers $55.3 billion in 2022-23.
Essentially, the NDIS provides funding to eligible individuals to access various services and supports tailored to their specific needs and goals. These services can include therapies, assistive technology, personal care, and help with daily tasks. The scheme aims to empower individuals with disabilities to participate more fully in their communities and lead fulfilling lives.
For property investors, the NDIS presents an opportunity to invest in properties designed to meet the unique needs of people with disabilities. This could involve properties equipped with accessibility features such as ramps, wider doorways, and modified bathrooms to cater to individuals with mobility challenges. Investing in NDIS-friendly properties can potentially offer stable rental income streams, as demand for such accommodations is expected to grow with the ongoing rollout and expansion of the NDIS across Australia.
How much can you earn?
The earnings for property investors per participant in NDIS housing can vary significantly based on several factors, including location, property type, rental rates, maintenance costs, and the specific terms of the lease agreements with NDIS participants or their support providers.
In general, property investors who provide housing for NDIS participants can earn rental income that is significantly higher than the average market rates for standard rental properties. This is because NDIS housing often requires specialised features and modifications to meet the accessibility and support needs of participants with disabilities. As a result, rental rates for NDIS-compliant properties command a premium.
The exact earnings per participant for NDIS housing can vary depending on the local rental market conditions, demand for accessible housing, and the level of government funding allocated to NDIS participants for accommodation and support services however as an example a property investor who has built a High Physical 3 bedroom house that allows for two participants and a carer can earn between $80,000 and $90,000 per participant per annum which was introduced in 1 July 2023. This is a game changer for NDIS!
What are the main risks?
NDIS housing is like a commercial property and the key is finding two participants who will guarantee you the government funding you need to make this investment property worthwhile. There is no point just building a NDIS approved house unless you have a strong plan to get participants. In order to get participants you need to partner with an SDA provider who will be responsible for selecting and managing your participants. Not all SDA's are the same and some are a lot better than others.
An experience SDA provider should deliver you two participants in 3 months after the house is completed. A less experienced SDA provider will leave you with a vacant property for a period of time and an extended period of time with only one participant. I have spoken to many property investors in this situation. The choice of SDA provider is key for this investment strategy.
The house design is also a major key to success. It is critical to choose a builder who understands how these participants want to live for example seperate living areas and bathrooms. If the design does not work well for two participants it will be difficult to receive maximum income.
Choosing the right area where there is consistent high demand is also important. This is why it is important to work with a builder who is receiving regular feedback from a group of SDAs about where the participant demand is strong.
How does finance work for NDIS?
NDIS houses are unique when it comes to finance. Your broker will order a commercial valuation and you can borrow up to 90% of the valuation depending on your level of serviceability. There is a high chance that the commercial valuation will be equal to the purchase price of your NDIS house which is a refreshing outcome in the investment property space.
Due to the high income you will be receiving from the government, your serviceability is higher than for traditional investment properties.
How long do NDIS houses take to build?
They typically take 6 months to build the same as a standard house however they need to pass a more rigorous approval process to ensure they comply with SDA standards incompletion and prior to your first participant moving in.
Conclusion
It's important for property investors considering NDIS housing to conduct thorough research, including consulting with real estate professionals and understanding the specific requirements and regulations governing NDIS accommodation in their area. You can purchase NDIS housing options all over Australia however in order to maximise capital growth alongside strong cashflow it is best to invest in strong growth suburbs and pay a little more for the land.
Investing in housing in housing has proven to be a winner over a long period of time and when combined with NDIS government funding this is a game changer for peoples' investment strategies.
Want to know if you qualify to purchase an NDIS property? Click here to see if you're eligible.