The National Disability Insurance Scheme (NDIS) is Australia’s first national Scheme for people with disability. It provides funding directly to individuals.
There are around 4.3 million Australian’s who have a disability. Within the next 5 years the NDIS will provide an estimated 500,000 Australians who have permanent and significant disability with funding for supports and services.
Specialist disability accommodation (SDA) is a range of housing designed for people with extreme functional impairment or very high support needs. SDA dwellings have accessible features to help residents live more independently and allow other supports to be delivered better or more safely.
SDA helps to stimulate the market to produce high quality, contemporary, accessible, well-designed housing for participants with SDA funding in their plan. SDA funding is paid directly to SDA providers to cover the building and maintenance costs. Participants pay a reasonable rent contribution and other day to day living costs such as electricity bills.
The roll-out of Specialist Disability Accommodation in Western Australia is still in its infancy and well behind other States. As at 30th June 2021 there was calculated to be a shortage of fit-for-purpose homes suitable for NDIS participants of around 2,332 in WA.
The Shoreline development is a NDIS and Affordable Housing development project in North Coogee, WA, which is an established residential suburb 19km south-west of Perth. When complete, the property will consist of 21 residences across 1 bed, 1 bath and 2 bed, 1 bath apartments. These apartments will be a combination of furnished and unfurnished fixed term rental and NDIS Specialist Disability Accommodation.
As an investor, this project can be seen as a one or two-stage option with the first being the development of the property in question offering potential capital upside for investors and then the second stage would involve the holding of the properties as predominantly an income opportunity. For those investors only wanting to participate in the development stage, the DomaCom secondary market may provide a mechanism to exit their investment once the property is complete and sell to an investor seeking income.
The funding is expected to be completed via a combination of a loan from a major Australian bank and equity of $3.5m to be provided via fractional investment on the DomaCom platform.
The property mix between Affordable Housing and NDIS SDA will determine the ongoing returns for this project however the indicative range for investors in this project via the DomaCom Fund is expected to be between 15% and 19% and would be made up from a combination of capital upside and income.
On completion, the project sponsor, Beacon of Hope Foundation will receive 40% of both the capital uplift (after initial capital is repaid to DomaCom investors) and also 40% of net income. Agreement has also been reached with the project sponsor that if the proposed capital uplift target (based on the projects feasibility study) is not met, then the sponsor will supplement DomaCom investors from their share of the ongoing income until the proposed capital uplift returns are met.
The DomaCom Fund ARSN 167 020 626 is an investment vehicle managed by DomaCom and is an ASIC registered managed investment scheme which issues units in the sub-fund that holds the property. The issuer of this product is Melbourne Securities Corporation Limited AFSL No. 428289. DomaCom Limited holds No. 444365 and as the Manager, is responsible for all due diligence.
The properties will be professionally managed to ensure maximum tenancy at all times.
The Shoreline, North Coogee, WA project is presented by DomaCom Limited (ACN 604 384 885). The developer for this project is Yaran Group and DomaCom manages a fractional investment platform enabling investors to participate without the need to purchase a whole property. DomaCom may arrange leverage no higher than 60% eliminating the need for investors to satisfy income and serviceability tests that normally apply to individual loans.
If you would like to invest in Sydney Rental Property Accelerator, you can join this crowdfunding campaign by completing the application and lodging your investment funds through this General Advice page. Please ensure that you first read the DomaCom Fund’s Product Disclosure Statement (PDS). For a copy of the current PDS, please click here or call your financial adviser.
When you have lodged your bid and the campaign is filled, you will also receive a Supplementary Product Disclosure Statement (SPDS) outlining the specific offer to invest in the Sydney Rental Property Accelerator project which will contain all the information required for you to make a decision. You are not bound to proceed with your bid amount for this Rental Property Accelerator project crowdfunding campaign until you accept the offer contained in the SPDS (which will include the specific details for the property you have selected).
If you are new to DomaCom, click on the Apply button to begin your application. If you are an existing DomaCom Fund investor, you can log in to access your account and all the other public crowdfunding campaigns by clicking the Investor Login button.
Risks for Property Sub-Funds
Refer to Section 7 of the Risk section of the PDS for an explanation of the risks involved in an investment in the DomaCom Fund and the general risks associated with property markets.
Specific risks of this investment:
Property not acquired – If there is insufficient investor interest the property will not be acquired however Investors with an Active Bid will all be proportionately liable for the Campaign Costs. A list of approximate campaign costs is set out below.
Value changes – The value of an Investor’s investment will go up and down in accordance with the value of the Underlying Property. There is no guarantee that the value of the investment will increase, and it may in fact decline in value.
No guarantee – Returns are not guaranteed, and Investors may lose some or all of their capital. The nature of this investment is to expect an appreciation in the value of the units, with little to no income to be paid to investors during the term of the investment. There is no guarantee that this expectation will be fulfilled.
Past performance – While this area in which the underlying property is based has experienced capital growth in the land value in the past, this is no indication it will increase in value in the future.
Liquidity risk – An Investor cannot withdraw from the Sub-Fund until the Sub-Fund is terminated, and the Underlying Property is sold. DomaCom does intend to offer a facility through which Investors can seek to sell their Units to another party, however there is no guarantee of this.
Damage or loss – There are a range of events that can damage the Underlying Property including acts of God (fire, flood, earth quake and other natural disasters) through to accidents, negligence, and failures of maintenance. While insurances will be in place it may not cover or may not fully cover such losses.
Insufficient income – The costs associated with Underlying Property may exceed its income, however if there is a shortfall Investors will be given an opportunity to subscribe for additional Units in the Sub-Fund to meet those expenses pro rata to their Unit holding in the Sub-Fund. Investors who don’t subscribe for further units will have their investment in the Sub-Fund diluted.
Vacancy risk – a property manager will be appointed to manager the property and secure tenants to tenant the property and derive income from the underlying property. If tenants are not secured there is a risk that the property will not generate the income that has been budgeted for. If this were to occur the investors may be required to raise further funds to offset the expenses of running the property.
Unexpected property event – The risk that the Underlying Property may be negatively impacted due to a property specific event, for example, a change could occur to local zoning rules, development of competing and other events that were not anticipated at the time of acquisition.
Economic risk – There is a risk that the general economic conditions in Australia may change in relation to interest rates, employment rate and economic growth that could in turn have an impact on the Property market and specifically the value of the Underlying Property.
Fees and Costs
Refer to section 13 of the PDS for Fees and Other Costs
The Management Fees for managing your investment
- The annual MER fee will be 0.66%
- There will be a 1% Platform Syndication Fee
- There will be a 1% Adviser Syndication Fee
Set out in the table below is illustration of the campaign costs that are likely to be incurred. An Investor who participates in a Campaign and has had an Active Bid which fails to result in the formation of a Sub-Fund will be liable (in a proportion that is equal to the amount of their bid divided by the sum of all Active Bids at the time the Campaign costs were incurred) for the Campaign costs incurred by DomaCom. The investors will be only liable for Campaign costs and Acquisition costs that are set out below if the Sub-Fund was not created, as these costs have been incurred prior to the acquisition of the property.
The settlement costs set out below are only incurred and payable if the Sub-Fund is created and the property acquired.
If the Sub-Fund is established, these costs will be deducted from the Sub-Fund and only those investors that accept the SPDS will incur the on boarding costs – Campaign, Acquisition and Settlement costs.
The costs below are an example of the campaign costs, the actual costs may differ and will be set out in the SPDS.
|Contract review and title search||$500-$1000+GST|
|Building inspection and pest report||$500-$1500+GST|
|Property valuation report||$500-$5,000+GST|
The following costs will be incurred, whether or not the property is purchased.
|Legal costs (if contracts require further amendments||$2,000-$2,500+GST|
Below is an estimate of the following Settlement costs if the purchase is successful and a Sub-Fund is created. These costs will only be incurred if the Property is purchased and will be paid from the capital raised on the acceptance of the SPDS.
|Estimated Settlement Costs||Estimates|
|Conveyancing costs||$1000 – $2,500+GST|
|Stamp Duty||Varies based on state and Property Value|