SDA Payments are Extremely Generous – There is No Need to Build Cheap Rubbish SDA Yet They are Everywhere
SDA Funding is Generous
A Fully Accessible Room in a 3 bedroom house is almost $30k a year, a High Physical Support is over $40k. Yes that is per room, not for the whole house. With the Reasonable Rent Contribution adding an additional $8k or so per room so that an FA house is getting gross income of over $110k a year, or $2,192 a week and HPS over $140k a year or $2,769 per week.
Sometimes Good Intentions, Sometimes All About $$$
We are nice people, we only work with nice people. NDISP tends to have a very optimistic culture where we think the best of people. In a lot of instance we see good intentions in SDA but people just not having access to the right information to allow them to build the right product. But in some cases it just has to be profteering. Investors should be thinking what extra can I put into my property to make it the best that it can be for particpants, not what %return they are getting (all of the returns from a full SDA are great, no need to chase massive ones)
Cheap SDA Property Example 1-4
Where I am at the moment there are several SDA’s by one company in this city and you would think they had engaged a Buyer’s agent with instructions to find the 2 cheapest blocks of land in the 2 worst possible places in town. Sites that flood and you need to build the place up to have ramps p to have ramps and may as well put a flashing sign on the place that says disabled housing. Not to mention being in the highest crime spot, especially with juvenile troublemakers. Then they have built what looks like dongas (mining camp places). Now inside these places may be OK and they may have some good attributes. It looks like they work better than most. But the point remains that there is no need to have built them on such terrible cheap sites and with such cheap construction materials. Especially as there is more than one SDA on each site, the investor/owner there is absolutely raking it (one of the sites alone would have gross income of $240k if full).
Cheap SDA Property Example 5
In the back of an outer new land estate sits a 5 bedroom 2 bathroom home. Supposedly 5 high physical support participants are supposed to share 2 bathrooms. Transport costs to anyway would be insane. And this place would bring in over $200k a year if full.
Cheap SDA Property Example 6
In an outer northern land estate sits a 3 bed 3 ensuite plus OOA (well oversized broom cupboard) that is a registered as a 3 participant HPS house. It has enough room in the lounge room for 1 power chair and a carer, then it’s full. There is no solar or battery (a computer type UPS is used for power back up). The tenants can’t afford to run the airconditioner (a single ducted system for the whole house). This house cost and land package cost under $600k and would get over $140k a year if full.
Cheap SDA Property Example 7-14
In a regional city sits 8 approved and enrolled SDA properties. Mostly Robust category share houses. These properties are not actually that cheap and have been built using decent materials and are not bad sizes, these places are just built wrong. Robust participants, except in exceptional cases, do not share. There are shower screens in bathrooms and ceiling fans etc. Yes they meet the Robust standard, but they are not fit for purpose for robust participants. While I could calculate the returns on these if full, they never have been and never will be, not with SDA participants anyway.
If Full – That’s a Big If, Especially as Supply Increases
Fortunately NDIS participants have full choice and control and it costs them no difference to live in an ordinary place as it does in a great one. This means that the places will be empty or only have tenants until something better comes along.
At the moment there is not enough stock and people will move in to cheap places because they are better then where they live now.
How do We Know? – People Living in These Places are Moving Into Ours
We have been inside some of these places to meet the tenants living there to sort out the paperwork so they can move into one of our properties. Or we have met with their support co-ordinators or loved ones to discuss how we can help move them out of these places.
Cheap SDA is Bad for Everyone
We don’t want to be seeing all this rubbish. We don’t want to be talking to people moving out of these and into ours. There is so much need for people to have great places to live in that are fit for purpose.
Bad for Participants
Obviously it is bad for participants that they have to live in places that are not fit for purpose, even if they are better than where they were. It’s potentially worse for those not currently living in SDA, bad stories about SDA vacancy rates just makes it harder to build more SDA.
Bad for Future Investors
Banks and financial institutions are already wary of SDA and many don’t believe there is any demand. People building cheap rubbish with high (or total) vacancy rates just reinforces this. That makes it harder for future investors to get funding. SDA relies on private money to fund the builds. Without them there will be no places for people to live.
Investing in SDA is All About Participants Not the Numbers
The numbers in SDA even when someone spends way over the top on a property are still great. It’s not about the numbers on the paper. It’s about the participants. Happy Particpants means full SDA and real numbers. Build Real SDA not Cheap Rubbish that is either vacant now or will be.