EPISODE 248 - AFR article: 'Investors hung out to dry'

Show Notes

In this episode, Minh & Debbie discuss an article published in the Australian Financial Review on 8th July regarding a fund manager platform + wealth manager's joint partnership with numerous failed SDA funds with 14 different 'SDA house investments' in the Melbourne west region. Below are the links to the articles released this week online.

[LINK] AFR Article: 'Investors hung out to dry' as NDIS housing schemes fail

[LINK] AFR Article: NDIS housing scheme firm forced to refund fees for 'lack of service'

About 1.5 years ago, we published a podcast on our concerns on the aggressive 'spruiking' of SDA property capital raising in particular, at the time, by financial advisors who were trying to "get in on the action" so to speak. Now that this new article is public knowledge, we can shout their names - DOMACOM & ASR WEALTH (grrrrr).

We raised some red flags at the time, and hence why today in this article, we are doing a follow up on the fallout of these 14 managed funds which raised money to invest into SDA housing within "one suburb" (YEP, YOU HEARD IT RIGHT!) LOL

It didnt help that these investments occurred about 4 years ago, and that the titles of the land lots took 2 years delay. With these now for sale, distressed sales we should say, we have to wonder how these 4B/2B/2C SDA floor plans (which assumes one bathroom to share with 3 HPS/FA participants) will even attract SDA participants to live in these dwellings. Such poorly designed layouts will not be able to lease out to properly, and SIL and SDA providers will be rejecting these designs as they are not fit for purpose. We fear that the realistic outcome will be only one participant SDA homes, or leased out to the normal residential market.

Forget diversification, & forget the old saying "don't put all your eggs in one basket". Gee Whiz, for a bunch of suits in Sydney who work in wealth management, they sure did drop the ball big time, and did not follow the SDA advice given at the time from the experts. As we keep saying in many episodes, one cannot create SDA homes "off a spreadsheet" and then expect it to work, or achieve maximum yield. This is a high risk proposal, if one does not follow the rules set out in the playing field i.e have one ensuite per bedroom. D'OH!!!

Anyway, please listen to 'Part 1' of this topic, as we will be doing another follow up to this episode in due course.

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