If you’re looking to start a property investment portfolio, you should follow some fundamental principles and steps. It pays to get things right from the get-go, particularly if you’re looking to use NDIS housing investment.
We explore the basics of setting up a good property investment portfolio below!
The importance of diversification
We probably don’t need to remind you of the analogy of ‘putting all of your eggs in one basket’, but when it comes to building any investment portfolio, this analogy perfectly describes diversification. Diversification is arguably the most fundamental risk management technique. As you start building your portfolio, it will become increasingly important to consider diversifying the properties you hold.
Ways that you can achieve a diversified portfolio include:
Buying properties that are characteristically different from one another, such as SDA property
For example, different types of residential properties (freestanding houses, apartments or townhouses), commercial (business properties) and NDIS properties (also called specialist disability accommodation) versus traditional properties.
Buying properties in different locations
Some locations will have better capital growth and rental income potential than others. Property markets in large cities will operate differently and be influenced by different economic factors than those in more regional Australia, for example.
Steps to setting up a property investment portfolio
Step 1: Work out your property investment goals
Working out your short (less than 12 months), medium (one year to five years) and long-term (greater than five years) property investment goals will help you to put an appropriate strategy in place to achieve them.
You must determine your capital growth and income needs from any property investment portfolio. These will differ depending on your current financial circumstances and needs. For example, you may prioritise capital growth over income (or vice versa).
Step 2: Develop a property investment strategy
Your property investment strategy should be targeted toward achieving your short, medium and long-term financial goals. It may be worthwhile getting professional advice to develop an appropriate plan.
Step 3: Figure out your finances
Any property you purchase will be a significant investment, so it’s essential to work out your finances. One of the ways to build a property investment portfolio is to use the equity you hold in your current home. For example, if your home is worth $700,000 and you owe $300,000 on your home loan, you have roughly $400,000 worth of equity.
Your equity can help secure the deposit you need for an investment property. You can then use your tenant’s rental income to help you make some (or all) of your investment property loan repayments.
Step 4: Do your research
Research properties that match your investment portfolio goals and strategies. If you’re looking for properties with both high capital growth and high income-producing potential, then an NDIS property is well worth considering.
There is currently a shortage of NDIS properties in many locations across Australia, and the Federal Government also guarantees long-term tenant income, typically above market rates.
If you are considering investing in NDIS property, talk to a specialist in this type of property investment (like us at Apollo Investment!).
Step 5: Take a long-term view
Property generally delivers the best return on investment when it is held long-term. This gives you the maximum time to capitalise on market cycles.
National Disability Insurance Scheme (NDIS) property investment
Property has proven to be an excellent long-term investment for Australians over several decades. It can be a great way to secure your financial future. When you consider an NDIS property as your next investment, you secure an Australian living with a disability’s future, too!
The NDIS has introduced Specialist Disability Accommodation (SDA) to provide purpose-built, suitable accommodation for NDIS participants. The Australian Government has also backed the scheme with SDA funding for up to twenty years, making an NDIS investment property an unprecedented investment opportunity with exceptionally high rental yields.
SDA housing investment has been made open to private investors, with SDA homes offering more socially focussed investment options than a standard investment property.
More on Specialist Disability Accommodation
SDA housing provides suitable housing for Australians living with disability. The four main categories for an NDIS SDA home are:
- High physical support
- Improved livability
- Fully Accessible
Property investors looking to make a difference in the lives of a fellow Australian are turning to SDA property. These specialist dwellings are built to stringent design standards by SDA builders. Eligible NDIS participants can then occupy the SDA dwelling, often turning it into their forever home. Especially for Australians with extreme functional impairment, significant physical impairment, or who require high support levels, SDA housing helps achieve the independence that the NDIS participant would not have been able to previously.
Building an NDIS housing investment portfolio with Apollo Investment
The process to purchase approved SDA housing can be more complex, as SDA-compliant properties don’t typically form the housing stock available for private investment in Australia. An NDIS SDA property also requires a specialist property management firm — we can help take care of this.
If you’re ready to start or add to your property portfolio with an NDIS property that comes with a government guarantee, 10-15% rental yields and that is placed for maximum capital growth, let Apollo Investment show you how.