How do we sell an NDIS property in the long run? What would be the exit strategy?

These properties can be sold in the long run are commercial investments. You can also ask the SDA provider to help find a buyer. Kenekt would also be delighted to help you sell these properties on our platform. Here's a general guide on how to approach selling an NDIS property:

1. Understand NDIS Guidelines: Familiarise yourself with the guidelines and regulations for selling NDIS properties in your region. These guidelines might vary based on the property’s location and the specific NDIS funding arrangement and from time to time.
2. Consult with NDIS Authorities: It's advisable to contact relevant NDIS authorities or organisations to understand any restrictions, approvals, or paperwork required before selling the property.
3. Property Valuation: Like any other property sale, getting the property professionally valued is important. Note that bank valuations for NDIS can come out to be lower than what you would expect. The bank does look at these properties differently, but the valuation could still come out short.
4. Legal and Financial Considerations: Consult with legal and financial experts knowledgeable about NDIS property sales. They can guide you through the legal obligations, contracts, and any financial implications of the sale.
5. Marketing and Listings: When listing the property for sale, highlight its NDIS-related features and any benefits for potential buyers. You can use REA, Domain or Kenekt, and real estate agents experienced in NDIS property sales.
6. Transfer of NDIS Funding Arrangements: Depending on the situation, the NDIS funding arrangements for the property might need to be transferred to the new owner. This process should be coordinated with NDIS authorities to ensure a smooth transition.

Below mentioned is a real-life example of the kind of difficulties you could face transferring ownership:

A buyer bought an SDA property that had SDA funding for 20 years from the date of enrolment as an SDA property. The property was exchanged on April 2023 and settled 15th May 2023. On settlement, an SDA provider applied on the PORTAL to change the provider. He was advised that since the seller, who was the SDA provider, had not cancelled his registration. The new provider could not be enrolled. The seller cancelled the registration on 31 May 2023.

NDIS then advised that they could not find the property as an SDA-enrolled property. After around four weeks, they advised that they had located the property, which was unenrolled on June 1st. This after he provided the details of the PWD (persons with disability) occupying the property.

NDIS then told him that he needed to reassess the property as suitable for SDA enrolment and had to engage an expert.

The buyer provided evidence, such as receipts and payments made by the previous owner seven years ago when enrolling that property. NDIS agreed that it is ridiculous for the buyer to have that evidence from 7 years ago, but the evidence that they have made payments till June 1 is insufficient proof. They said enrolling authority seven years ago was different, and they can not be sure.

Their assistant Director had confirmed that in the absence of payment evidence, they could not re-enrol the property. When the fact that PWDs were still occupying the property was brought to their attention, they mentioned that it could not be considered in the equation.

The SDA payment drawn by the previous owner was around $200K per year.

What is the capital gains that I can expect to make with these properties?

It is hard to say what kind of capital gains you would make in 10 years. The capital gains expectedcan be slightly higher than regular properties. That depends on how many of these properties the council lets investors build in a suburb. The land value would have improved in ten years. This, together with high income from these properties in the ten years, could cover the property’s $500K odd build costs.

Can FIRB investments happen in these properties?

There are no restrictions to FIRB investments. However, because they are high-involvement buys, there is not much precedence for smaller individual FIRB investments in these properties.