Disability housing offers high return – Michael Knights

A Federal Government established initiative to assist people with disabilities into high-quality housing has created an opportunity for investors to earn excellent returns while positively reshaping communities.  Michael Knights lays out the detail of what he says is a win/win.
Kevin:   Well, no doubt you will have heard of the federal government’s disabilities scheme, the NDIS, the National Disability Insurance Scheme. Now there’s an opportunity for investors, through a company we’re going to tell you about right now, to get a really good return if you want to become involved in this type of programme. My next guest is Michael Knights. Michael is from a company called Horizon Property Alliance, and they deal directly with builders. Actually, I’ll get Michael to explain it, because he is so good at explaining it. Michael, hello and welcome to the show.
Michael:   Oh, good day, Kevin, how you going?
Kevin:   Yeah. Good. It’s a good opportunity here for investors but I think there’s a number of hoops you need to go through first. As I understand it, your company will go out, source some land, work with the builder to get the building constructed to meet the proper standards. And then there’s a fairly good return for investors. Walk me through the process, then we’ll talk about the return.
Michael:   The investor that’s invited to the programme is obviously looking for a higher than normal return. So the returns on offer are extraordinary, but we build houses to spec the government NDIS criteria, and it’s all about demand for looking after the disabled people. So the government’s trying to help out as many disabled people as possible and there’s 60,000 disabled people Australia-wide waiting to get into these custom built homes. They’re called participants.
Kevin:   These are severely disabled people, aren’t they?
Michael:   Well, there’s a variety of all different sorts of disabilities, but we’re focusing on the severely disabled that need 24-hour care.
Kevin:   Okay. Yep.
Michael:   So the government pays two trenches of payment. One for the accommodation and one for the care. We work with the provider who will work out of the investor’s house and profit share with the investor. And that’s basically how … there’s three or four different levels of payment on offer, but typically most investors will work into a profit share with the registered provider.
Kevin:   Okay. So it’s not like a normal return on investment. There is a business being run out of it which is endorsed or supported by the government and that business is to care for the severely disabled person. So that carer lives in the house.
Michael:   Well, the carers, these people who are disabled, they need 24-hour care. So the carers work on 8-hours shift, so there are three 8-hour shifts a day. It’s obviously ongoing 24-hour care on offer for all these severely disabled people.
Kevin:   Now, I imagine, too, these properties will have to be specially built to accommodate for this. Are there many special needs that go into these houses?
Michael:   Yeah, there’s a livable housing guide specification where these houses are built to what’s called a platinum finish, but they look like a five-star house. So what they’re trying to do is integrate the disabled people into the community, so they’ll feel like they’re normal, take them out of the nursing home and the churches and all these old houses where they’re feeling just a bit neglected, and the government is to try and get them into the community. And help their families out with putting them into nice five-star type houses. So even though the houses are specked up and there’s things in the property that are needed for the care, they’re still really nicely decked out with the five-star finish.
Kevin:   Okay, so I imagine these are not going to be cheap properties. Can you give me some numbers of what we’re looking at?
Michael:   We’re working on a model with five bedrooms, four or five en suites and so they average construction’s probably around the 450 to 500, just for the build. And they’re specked up really, really nicely, so the average person would go through and think they’re a normal house, with wider doorways and bigger bathrooms and those sort of things. But they’re just designed with five-star finish.
Kevin:   Okay. Give me the return on this. I mean, I understand that it’s a business return, but tell me, how does that work?
Michael:   Well, there’s a few different options there, but say the property with the land was, say, $250,000 and the house is 500. So it’s a 750 full turnkey, where you’ll completely own the property investment. And the provider will split his return in the business. Now the business could bring in 1.15 million and the net return on that business could be 460,000. He’ll split that with you on a 40%. So, effectively, you could get 180-odd thousand dollars return on your investment per year on a 10-year agreement, ongoing.
Kevin:   Who is the lease with? Is the lease with the government or is it with the carer?
Michael:   You have an agreement with the carer. The carer’s not particularly on a lease, I’m sorry, the provider’s not on the lease. You’re on a partnership agreement and it’s a profit share. The biggest risk obviously is making sure that your provider’s really good at his job and keeps the rooms full and attracts really good, long-term tenants which, they’re called participants. They’re the disabled. And he has to run a really good business and hire really good carers to look after the people in the house. And that’s how the business is, you share the profits.
Kevin:   Your commission? Where does that come from? Who pays you?
Michael:   We get paid like a normal builder’s broker type thing, so our job is to find the land at the right price where the most demand is for disabled people. And the builder pays us a split to build the property. So we get like a builder’s fee to put these properties together.
Kevin:   Who provides the carers? Is that something you get involved in?
Michael:   No. The provider who runs the business out of the investor’s house, he’s paid to run the business by the government. The two trenches of payment. There’s an accommodation payment and then there’s the carer payment. And that’s how the provider gets paid and he shares that profit for running that business out of the investor’s house, with the investor.
Kevin:   Yeah. Wow. Really interesting and it’s great. We’ve only skimmed across the surface there. There’s so much more detail you can get into. Horizon Property Alliance is the name of the company, and my guest has been Michael Knights. The website, I’m just quickly looking here to find your website. Is it …
Michael:   Horizonpropertyalliance.com.au
Michael:   It’s a relatively new programme, so if they want a feasibility and all the returns on investment, just contact us on our website there and we can give an update on what options are available. It’s absolutely outstanding. The returns that are on offer and the amount of participants ready and waiting to move into these houses is just unbelievable. Very exciting government initiative, that’s for sure.
Kevin:   Michael Knights, thank you so much for your time and the website again is horizonpropertyalliance.com.au
Kevin:   Michael, thanks for your time.
Michael:   Thanks for your time. Thank you.

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