Is Multi-Income Housing a Good Investment

When weighing up your property investment options, it pays to consider how each different property type will work to meet your financial goals and objectives. If the income yield of a property is what you’re most concerned with, then multi-income housing could be a viable option for you.

Specialist Disability Accommodation (SDA) is a range of housing specially designed for Australians with disability. Not only does it provide exceptional income yield, but it’s a form of multi-income housing. We discuss below what makes SDA and mixed-income housing a potentially good investment.

What is multi-income housing?

Put simply, multi income housing is housing that is designed to attract more than one rental income from the one property. A block of rental units or flats is a really clear example of a multi-income housing arrangement or mixed-income development.

Dual income property

Some property investors look to develop a block of land into a duplex, which is typically a dual income property. Duplexes and other dual income properties work under two separate lease agreements.

Granny flat

There are generally some pretty strict council conditions around granny flats, however, in the recent rental affordability and availability crisis, some homeowners have turned to renting out their granny flats. For a property investor, a residential investment property with a granny flat attached could potentially draw two incomes.

Specialist Disability Accommodation

Specialist Disability Accommodation was introduced under the National Disability Insurance Scheme (NDIS) to provide adequate housing for Australians with disability. Under the four SDA design categories, most SDA dwellings are built to accommodate multiple tenants. Equipped with their own ensuite bathroom and living area, each tenant is on an individual lease agreement.

What is mixed-income housing?

Mixed-income housing is an initiative that is strongly adopted abroad, in a deliberate effort to address the need for affordable housing. Mixed-income housing offers residency in urban developments to potential tenants across a range of income levels through diverse types of property. There may be a unit mix with some units to suit higher-income residents while others are developed for those with welfare dependency or low-income residents.

Why establish mixed-income housing developments?

A mixed-income housing development helps to alleviate poverty (and in particular, concentrated poverty). They also provide economic integration, better access to schools, can promote economic investment and potentially lower crime rates.

Mixed-income communities help to take the pressure off the distressed public housing market while providing lower-income residents better quality housing that is more sustainable.

Multi-income properties as an investment in Australia

Property investors are typically looking for two things when investing in property of any kind — rental income and capital growth potential. The benefit of multi-income properties is that, if selected well, the property values appreciate over time with the market, and they can draw in a much higher income yield than a property with only one tenant.

Financial stability

If you have a property with separate lease agreements, it provides better financial stability in terms of cash flow, because if one tenant happens to vacate, you still retain the inflow of income from the remaining tenants.

Capital growth

The urban development or existing property that you purchase (even if a commercial property) needs to be carefully selected, but if so, it has the potential for capital growth over the long term.

Social outcomes

Many of the properties that are designed for multiple incomes are such that they have positive outcomes for the tenants that reside in them. Particularly for SDA properties, the NDIS participants that occupy them usually have no other alternative that supports their extreme functional impairment, meaning they end up in nursing homes prematurely.

Investing in SDA properties

As far as strong income yield investment properties go, SDA properties are some of the highest-yield multi-income properties available on the Australian market. Not only does NDIS property investment attract strong income yields between 10-15% pa, but by investing in an NDIS SDA property, you help to keep Australians with disability needlessly going into aged care facilities.

To access the best financial and social outcomes for your next property investment endeavour, reach out to the team at Apollo Investment.