Video summary

Webinar - Calculating SDA R.O.I.

Main summary

Key takeaways

Finance

Summary (finance/ROI-focused)

The webinar explains how to model SDA (Specialist Disability Accommodation) property ROI using the NDIS SDA Price Calculator while accounting for real-world uncertainties such as:

  • Tenanting uncertainty
  • Construction and holding costs
  • SDA funding rules, especially the “Lesser of rule”, which can reduce expected income when tenant funding levels do not match the enrolled dwelling’s funding enrollment

It also covers how dwelling type (houses, villas/duplexes, apartments, group homes) and design category (e.g., HPS/fully accessible/improved livability/robust and OA/on-site overnight support setup) affect:

  • Maximum Reasonable Rent Contribution (MRRC)
  • Likely tenant mix
  • Resulting gross and net yield outcomes

No specific market tickers are discussed—this is Australia-specific SDA property ROI modeling.

Disclosures / cautions

  • Explicit disclaimer: “does not constitute financial advice”; does not consider individual objectives/financial situation. Consult qualified financial/legal/tax/lending professionals.

  • Requires financial pre-approval before proceeding with an SDA investment.

  • Repeated caution against assuming marketing claims like “massive 25% return”. Investors should be conservative and include risk and costs.

Instruments / assets / sectors mentioned

SDA and Australian dwelling categories

  • SDA property in Australia (Specialist Disability Accommodation)
  • Dwelling categories:
    • Houses
    • Villas / duplexes / townhouses (often referred to collectively as “villas and duplexes”)
    • Apartments
    • Group homes

Funding/design categories (NDIS/SDA terminology)

  • Mentions of:
    • High Physical Support (HPS)
    • Fully Accessible
    • Improved Livability (IL)
    • Robust
    • OA room (Onsite Overnight Assistance room)

NDIS SDA Price Calculator inputs

  • Location factor by SA4 (ABS)
  • MRRC / Maximum Reasonable Rent Contribution
  • Options include inputs such as:
    • Sprinklers
    • GST input tax credits
    • (and other calculator-specific levers)

Key finance/ROI methodology & step-by-step framework (as described)

1) Use the NDIS SDA Price Calculator (Excel download)

The calculator (updated periodically) is used to:

  • Select dwelling/design category inputs (e.g., HPS/IL/FA/Robust, with/without OA, with/without sprinklers, etc.)
  • Set a location factor using ABS SA4 regions (via ABS Maps)
  • Compute tenant income via MRRC, where the example presents MRRC as primarily:

Disability Support Pension + Commonwealth Rent Assistance (presented as a fixed amount in the example)

2) Model tenant mixes under funding-level uncertainty

The tenant mix is modeled based on funding patterns such as 1:1, 1:2, 1:3 (resident counts).

  • “Default” suggested behavior: housing often defaults to 1:3
  • Compatibility constraints may apply:
    • Anchor tenant + matched personalities/supports
    • Often the same care provider

3) Apply the “Lesser of rule”

Income projections must apply the “Lesser of rule”:

  • Tenant funding income can be capped by the enrolled dwelling’s funding enrollment
  • If tenant funding exceeds the enrolled value, the investor cannot assume the higher figure

4) Build feasibility using full acquisition and post-settlement costs

Don’t model only build/purchase price. Include:

  • Deposit/LMI/cash buffers
  • Legal and stamp duty (noted as higher in some Victoria examples)
  • Provider fees/engagement/procurement fees
  • Furniture package
  • Interest-only holding costs during construction
  • Vacancy/holding costs after settlement, with guidance of:
    • ~5–10+ months to fill (empty period risk)
  • House-and-land ongoing costs and drawdown/payment schedules

5) Run ROI calculations conservatively

  • Compare gross yield vs net yield
  • Note: some example spreadsheet columns were stated to be miscomputed and should be corrected, but the overall takeaway remained to be conservative.

Key numbers & explicit points (as stated)

SDA pricing & updates

The SDA Price Calculator notes:

  • Income updated twice a year
  • SDA amount updated once every year
  • Example shown: 2024–2025 updated June 24
  • A new calculator expected “imminently” with new MRC

Vacancy & tenanting

  • Rough vacancy rate claimed:

    • ~8% vacancy in SDA context (clarified as availability of rooms/places rather than total dwelling vacancy)

  • Tenanting speed:

    • Can be quick in high-demand areas, but may still take time to fill—and refill subsequent rooms
    • Over-supplied regions expected to have longer vacancy periods

Dwelling type income expectations (qualitative + ranges)

  • Build mix estimate:
    • ~50/50 houses vs apartments (roughly cited)
  • Apartment participant funding example:
    • ~$70,000 to $110,000 per participant (described as a “normal setup” for one participant)
  • Villas/duplexes vs houses:
    • Income reduction stated as about 20–25% lower for villas/duplex/townhouse versus house
  • Group homes:
    • Said to be phased out due to reviews, though still operating and increasingly replaced by SDA builds

Tenant mix and expected funding default behavior

  • Default tenant funding behavior commonly 1:3
  • “Majority” expectation:
    • Most HPS tenants expected to be 1:3
    • Getting multiple max-funded HPS tenants together in one property described as unlikely in many areas
  • Approval difficulty:
    • For higher privacy/funding (e.g., 1:1 funding in apartments), approval is harder and requires “reasonable and necessary” justification
    • Example justifications referenced: family/children circumstances and disability needs

“Lesser of rule” (core rule impacting ROI) — examples

  • Example 1:
    • Enrolled as carer + 3 (1:3), each tenant enrolled at $50,000
    • Later a participant requiring 1:2 funding enters at $90,000
    • Investor income is capped by the “lesser overall” (effectively $50,000, not $90,000)
  • Example 2:
    • If a villa enrolled as a single level of IL and a participant comes in with higher category funding, the investor receives only the lower “lesser” amount rather than the higher one

Location factor examples (SA4-based)

  • General range mentioned:
    • ~0.92 to 1.03, and “to 1.3-ish” (with contextual explanation that values can also be higher, with ~1.8 referenced as existing in some cases)
  • Concrete examples:
    • Gold Coast: location factor around 0.9 (described as counterintuitive due to supply constraints)
    • Sydney/Bondi: ~1.9 (Sydney Eastern Suburbs ~1.8–1.9)
    • Melbourne West:
      • Apartments 0.98
      • Villas 0.97
    • Western Australia (wheat belt):
      • Apartments ~1.18 and ~1.2 (for some subregions)
      • Houses/villas/group homes stated as near or under 1.0 (e.g., “virtually on the mark”)

MRRC example (income floor component)

  • Example fixed component:
    • ~$12,838
  • MRRC described as:
    • MRRC = SDA-related number + $12,838 (calculator handles conversion/formatting in the example)

ROI/yields shown (example ranges)

  • Example teaser feasibility matrix yields:
    • ~4.6% to 10.5% return yields

Financing/holding cost example

  • House-and-land example:
    • Build contract example around $650,000
    • Total cost estimated as ~$745,000 after adding holding costs/other assumptions during an interest-only period
  • Another illustrative construction timeline:
    • Drawdown/payment schedule over ~7–8 months

Time horizons for funding changes

  • Next major SDA price review expected:
    • Around mid-2028 (framed as “every five years”)
  • Past review:
    • 2023 SDA price review had significant changes for post-2023 enrolled properties
    • Pre-2023 properties were not affected in the same way

Costs for SDA supply/demand report

  • Example cost:
    • $440 including GST for an SDA supply/demand report (6–7 pages) used for lender due diligence

Key recommendations / cautions (explicit)

  • Be conservative: don’t base feasibility purely on “maximum returns” or optimistic tenanting.
  • Include all relevant costs:
    • Acquisition + post-settlement costs (not just build price)
    • Interest-only holding costs
    • Vacancy risk (possibly 5–10+ months to fill)
    • Cash buffers to avoid being underfunded
  • Validate tenant matching assumptions:
    • Expect difficulty finding:
      • compatible anchor tenant
      • compatible second/third tenant
      • possibly the same care provider
  • Require credibility in tenant enquiries:
    • SDA providers should disclose participant funding levels (described as a red flag if they won’t)
  • Use supply/demand analysis by location (SA4/SA3) to avoid oversupplied areas

Disclosures / sources of rules and references (as implied)

  • NDIS SDA Price Calculator (from NDIS website; PDF + Excel download)
  • ABS Maps for SA4/SA3 regions
  • NDIS terminology like “reasonable and necessary” applied to funding approvals
  • NDIS SDA pricing guideline / location factors referenced via NDIS documentation

Presenters / sources mentioned (end of transcript)

  • Debbie — “Debbie from Ndis property Australia”
  • Denise — referred to as Denise / “Denise Harding”; created the summary/feasibility matrix
  • Min — mentioned as Min; joined for sections on dwelling types/finance
  • Organization:
    • NDIS Property Australia
  • Tools/external sources:
    • NDIS SDA Price Calculator
    • ABS (Australian Bureau of Statistics)
    • Australian Government / NDIS SDA pricing documentation and location factor guidance

Original video