When it comes to property investment, one fundamental principle stands tall: you are
rewarded for the risks you take. However, it’s vital to recognise the difference between taking calculated risks and being reckless. Risk vs reward doesn’t mean you get rewarded for unnecessary risks. Our role is to help you navigate this balance.
Many people approach us with a contradictory mindset. If you ask about their risk appetite, they’ll often claim it’s “very low.” Yet, they’re chasing investments like Specialist Disability Accommodation (SDA) under the NDIS with 15% or higher yields. Here’s the truth: you cannot get both Northern Lights and Midnight Sun at the same time. Higher rewards inherently come with higher risks, and understanding this relationship is key to making the right investment decisions.
The Flawed Mindset Around Risk
The idea that you can achieve high returns with minimal risk is fundamentally flawed. If you aren’t willing to take risks, you should adjust your expectations. Similarly, buying an NDIS property in a saturated or low-demand area with promises of “guaranteed tenants” is reckless. These guarantees often come at a cost—developers or providers may pocket up to 50-60% of your income to offer that “guarantee.” If you’re okay with that, why choose a high-risk investment in the first place?
Instead of chasing false guarantees or magic bargains, focus on understanding and
mitigating risk. For example, in NDIS properties, we ensure the areas we recommend have a strong likelihood of tenancy. But even with all the due diligence in the world, risks still exist. If you want a guaranteed investment with no risks, the simple truth is: it doesn’t exist.
NDIS Investments: Risks vs Rewards
NDIS properties offer some of the highest yields in property investment, but they’re not without challenges. One of the biggest hurdles is financing. NDIS lending is becoming increasingly difficult, with stricter restrictions, pauses on loans, and reluctance to lend to individuals. While we know ways to navigate this, success requires following a carefully tailored approach.
Another key risk is tenancy. Buyers often assume they must purchase a fully tenanted
NDIS property. However, these properties tend to cost significantly more because the
seller has already taken on the risk of securing participants. If you want the highest
returns, you must be willing to take the risks associated with untenanted properties.
Rooming Houses: A Safer, Scalable Alternative
For those with the capital to invest, rooming houses offer a balanced and reliable option:
• Yields of 10-11%
• Lower tenant risk due to multiple income streams (e.g., 4-5 tenants in one property)
• Strong demand, as tenants see rooming houses as affordable housing solutions
While rooming houses require a larger initial investment—often starting around $1.2 million—the returns are stable and scalable. For instance, if one tenant moves out, only a fraction of your income is affected. Compare this to an NDIS property, where losing a single participant could halt income entirely until a replacement is found.
Rooming houses are ideal for investors with larger budgets who want strong yields without the complexities of NDIS properties. They’re not “cheap,” but they offer scalability and consistency for those willing to invest in a premium product.
SIL Properties: A Lower-Risk, High-Yield Option
Supported Independent Living (SIL) properties provide another alternative, offering yields similar to rooming houses while balancing risk. Unlike SDA properties, where income is tied to participants, SIL providers lease the property directly, paying rent regardless of whether participants occupy the property or not. This makes SIL properties a lower-risk option. As long as you’ve secured a SIL provider as
the tenant, you don’t have to worry about participant turnover. Yields are still attractive—often double that of traditional residential properties—and make SIL an appealing choice for risk-conscious investors.
Choosing the Right Investment for You
Ultimately, choosing the right investment depends on your risk appetite, financial capacity,
and investment goals. Here’s a simplified breakdown:
1. NDIS/SDA Properties: Highest yield, highest risk. Ideal for investors willing to navigate financing challenges and participant risks.
2. Rooming Houses: Strong yields, moderate risk. Suitable for those with larger budgets seeking steady income and scalability.
3. SIL Properties: High yields, lower risk. A dependable option for investors looking for
steady returns with less volatility.
If your appetite for risk is low, a rooming house or SIL property might be the better fit.
However, if you’re aiming for the high rewards of SDA, you must be prepared to accept the corresponding risks.
A Tailored Approach to Investment Success
At the end of the day, your goal should be to invest in quality properties that suit your financial situation and goals. Whether it’s an SDA property, a rooming house, or a SIL
property, our expertise ensures you assess the risks, maximise returns, and make
informed decisions. If you are unsure where you stand financially a financial planner can help you assess your financial health.
If you’re ready to explore your options and tailor a strategy that aligns with your
preferences, let’s discuss how we can help you build your portfolio.
