One mistake appears again and again.
Investors begin with the advertised return.
They see a projected six-figure income and then work backwards trying to justify the property.
I would begin with the future resident.
Who is expected to live there?
Why would they choose this property?
If those questions are difficult to answer, the projected yield deserves much closer scrutiny.
Building where land is cheap
Cheap land can improve the development feasibility.
It cannot convince a participant to move away from their family, healthcare and existing support network.
A cheap site can become an expensive problem if the finished property remains vacant.
Treating NDIS numbers as SDA demand
Only a relatively small proportion of NDIS participants use SDA.
General NDIS participant numbers therefore tell us very little about demand for a particular SDA dwelling.
Choosing the design category because of the income
Selecting High Physical Support or another category because its pricing appears attractive reverses the research process.
We want to establish the housing need first.
Then design the property around it.
Believing occupancy will happen immediately
A participant expressing interest before construction is useful evidence.
It is not guaranteed future occupancy.
Circumstances change during a long development period.
That possibility needs to appear in the financial modelling.
Designing only to compliance
Meeting the SDA standard is necessary.
Participant usability still deserves further thought.
The home needs to work for somebody living there every day.
Assuming government funding removes risk
The NDIA does not guarantee SDA investment returns or occupancy.
Participants choose where they live.
Those two facts should sit near the beginning of every investor’s SDA research.
