Specialist Disability Accommodation

Discussion in 'Investment Strategy' started by lil85, 7th Feb, 2019.

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  1. lil85

    lil85 Member

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    Anyone here has experience in owning an SDA? Or maybe can give opinion what do you think of it?

    The payment sounds very attractive.
     
  2. Angel

    Angel Well-Known Member Premium Member

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    What payment? Please tell us more.
     
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  3. lil85

    lil85 Member

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  4. Cmelderis

    Cmelderis Well-Known Member

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    Did you end up finding out more about ndis/sda housing?
    I am also looking into this option currently
     
  5. Illusivedreams

    Illusivedreams Well-Known Member

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    Any more information on this scheme? What did you find out?
     
  6. Cmelderis

    Cmelderis Well-Known Member

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    I found out a little more from a friend who is offering them as investment strategies in QLD....
    "In terms of NDIS property you'd be owning a 4 bed house which at full capacity would be delivering $83k a year.
    The suburb locations are selected based on high demand and where we can deliver a cluster of homes for the carers.
    So I would recommend basing your calculations on 3 tenants as there will be transitioning tenants in these group home scenarios.
    Therefore base on $60k per year.
    The houses are in the $550k range, and the banks will want a 20% deposit. ($110k).
    You also need the $25k furniture pack to be NDIS compliant. Additionally $2k in compliance costs as a supplier to NDIS.
    So I'd say you need access to circa $145- $150k equity/savings to take in everything including an average valuation which is common in the current banking environment. The banks will look at your house as a normal house, normal rent. So the changes in the design won't rate in their valuation process. So typically expect val to be $10 - $15k below actual.
    I've attached a sample Head lease doc - which is how these NDIS properties will be managed - its quite comprehensive when it comes to daily management, any damages to the property are covered etc.
     
  7. Cmelderis

    Cmelderis Well-Known Member

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    "I might be able to put an NDIS property into Griffin which is quite close the SC - and the coast - these properties are in the mid $500's.
    Albany creek is more than the normal investor budget at $650k range.
    Another location there's good NDIS demand is Redland Bay - which again is in the $550k range.
    If you wanted to be in the Gold-Coast/Brisbane Corridor then Ormeau is good as well, at $560k.
    Yes the furnishing pack worth $25k is required by NDIS on top of your property"
     
  8. Cate Bell

    Cate Bell Well-Known Member

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  9. Derman

    Derman New Member

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    Have been looking at this as well. It seems the funding is there to make it work but the hard part is finding a SIL to lease it out to. However a number of recent changes in the space have made this a bit easier (including pre-registration of dwellings off the plan): Today Is the Biggest Day for SDA Since Launch

    @Cmelderis curious to know more about that head lease you mentioned... would you call it triple net or not quite..?
     
  10. That Finance Guy

    That Finance Guy Member

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    Hello Cmelderis,

    Any chance of you attaching the head lease doc mentioned for these?
    I only have experience with a few community housing head leases for my properties over the years (they covered tenant damage etc) and was wondering how the NDIS/SDA housing lease would differ.
    Cheers, Jac.
     
  11. Stvn

    Stvn Member

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    So the way I am reading this is if you (1) register as an SDA provider and (2) purpose-build IPs that meet the SDA criteria you can then rent these IPs out at SDA rates - is that correct?

    Is there a way you can reverse-engineer this process ie. see whether the IP you already own meets the SDA criteria and then find an SDA provider to rent & manage it on your behalf?
     
  12. Cate Bell

    Cate Bell Well-Known Member

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    The only way I could see this working is if you have the land and build a property that meets the SDA criteria. I am looking at this. Difficult to retrofit a property to meet the standards.
     
  13. RPI

    RPI Property Lawyer, Town Planner Business Member

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    Hi All

    I am involved with a registered SDA provider, it's not as simple as what you might think. It is a lot of work and lots of compliance and procedures and audits etc. You need to have carers stay in the onsite overnight accommodation in the house or building. It's like being an NFP or a government department. You need to have procedures audit ($3,500k straight up). To give you an idea, many NFP's are charging 7% for SDA compliance and then outsourcing the property management to someone else.

    We manage other people's properties for 2% SDA plus usual 8% property management fee. We currently have north of 120 properties under development and I am about to post a wanted to buy section in here cause we need a lot more. (we are acting on behalf of some large funds). There are 3 other groups who originally started to register as SDA providers and have since handed their stuff over to us because the compliance is a nightmare. And to make it work you really need to have a staffed office. My group have been working on this for 2 years and some staff full time for 12 months.

    But yes returns as an investor can be great. You need to have relationships with the SIL's (supported independent living) to source the tenants. But also you need to have relationships with them to build the properties that suit the different tenants. There is a lot of rubbish out there.

    The properties will value some 15% under cost, there is a lot of extra stuff in here. Originally did this philanthropically to help get quadriplegics out of hospitals and young disabled people out of nursing homes. The goal is to get a lot of quality housing developed to get even more out. We currently have north of $320m in funds committed to purchase property over the next 3 years. We would like there to be multiples of this so that we can get all young people who want to be out of homes and Quadriplegics out of hospital quickly.

    EDIT - should post some possible returns

    HOUSES
    5 Bed 5 bathroom house - 4 residents plus carer accommodation $124,529 pa AFTER management fees and additional care support ($769K in Shailer Park, $500k in Doolandella, $1.4m in Norman Park)

    But - the house above will not be attractive to many residents or SILS

    5 Bed 5 Bath house - 3 residents plus carer accommodation $104,696 pa AFTER management fees and additional care support

    6 Bed 6 Bath house - 4 residents plus carer accommodation, plus relative accommodation $124,529 pa AFTER management fees and additional care support

    UNITS
    2 Bed 2 Bath - 1 Resident carer accommodation in complex $94,550 pa AFTER management fees and additional care support (Rochedale $750K Norman Park $700-$780k, Redcliffe $900k+)
     
    Last edited: 27th May, 2019
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  14. Cate Bell

    Cate Bell Well-Known Member

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    And there lies the problem, for small investors it can be too difficult (I have a health background and good relationships with SIL's, and will partner with a SDA provider if we go ahead, we already have the land). Large funds have got on board, because it can be a good investment, but that also raises many questions about how they will be managed. I am curious to know what your fees include for 10%, and are you a private company?
     
  15. RPI

    RPI Property Lawyer, Town Planner Business Member

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    Yes typical of this type situation, great in theory, but the red tape puts it out of reach of small investor.

    There are some scary SDA providers at present, not happy at all with what we are seeing.

    We are a private company yes, but controlled by very philanthropic people who are currently disgusted with what some of the large NFP's in the space are doing. Both with SDA and related under the NDIS.

    8% is property management fee (fully licensed agency)
    2% is SDA compliance fee (NFP's charge 7% on average for this)

    We won't manage a property unless, at minimum:

    1. There is a large PWD bathroom to each bedroom being occupied by a resident (no sharing);
    2. The build is of great quality (preferably one of our builders, but as long as quality, not cutting corners etc);
    3. All doors are 1200mm (exceeds requirments);
    4. Our Electrician does all the automation/voice control/assisitive tech at minimum, preferably is involved at rough in;
    5. There is a quality OOA as part of it;
    6. We are comfortable with the SIL after meeting and seeing how they operate elsewhere.

    Even some of the NFP's are cutting corners and building terrible stuff with shared bathrooms.
     
  16. Cate Bell

    Cate Bell Well-Known Member

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    I have been quoted approx. $110K in technology for a 5 bed 5 bath house and a $40K furniture package. My vision would be to see smaller investors involved who have an interest in providing excellent accommodation and support, but I believe that will be the exception.
     
  17. RPI

    RPI Property Lawyer, Town Planner Business Member

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    Hi Cate

    A solar system with a battery is best for critical power - more upfront but less in maintenance. that'll eat $20k of your budget. If the $110k included strengthened ceilings, reinforced walls in bathrooms and toilets etc then would be there. Otherwise that is high now. Used to be more because everything was wired with cat6 cable through the system. But a top quality Z Wave system attached with google homes and mini's being mikes and speakers is significantly cheaper.

    Yes that was our vision as well and continues to be our best bet for getting the volume of beds to get those disabled people who want to be in, and qualify for, better homes. Opening up something to the mum and dad investor market is kind of like crowd funding it but where people get a real return.

    We just have a couple of large funds we are buying on behalf of also that means we have the volume to do the SDA compliance fees at a lower market and also spend time on educating SIL's and assisting people to get SDA in their plans rather then needing to focus on getting investors to buy.

    The sourcing, design, build contract, SIL agreements, tenant sourcing and enrolling in NDIS costs about $40k each property.

    Summer Foundation is charging $10k a person to find a tenants alone.
     
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  18. Cate Bell

    Cate Bell Well-Known Member

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    I just wonder how much is going in fees and charges, that takes away from client-centred care. I think too many people have jumped on the gravy train. Next we will have a Royal Commission on how the NDIS was rorted. The technology includes assisted technology, automated doors and a lift (2 story)
     
  19. RPI

    RPI Property Lawyer, Town Planner Business Member

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    upload_2019-5-27_18-48-42.png
     
  20. RPI

    RPI Property Lawyer, Town Planner Business Member

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    That makes more sense. Our lifts are $67,500 plus GST - commercial grade for 4-6 units. Some of the residential ones will be a bit of maintenance system.

    Our owners provide an additional 100 hours of day time care or equivalent to each participant each year.

    It's the user choice model that some of the old school big ones are hanging on like hell to. Hopefully the NDIA / Commission will push ahead and require separation between support coordination/ plan management and service providers