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

The SDA HOUSING Podcast

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 homes' in the Melbourne west region. Below are the links to the articles released this week online.
AFR Article: 'Investors hung out to dry' as NDIS housing schemes fail
AFR Article: NDIS housing scheme firm forced to refund fees for 'lack of service'
About 18 months ago, we published a podcast on our concerns on the aggressive 'spruiking' of SDA capital raising by financial advisor stockbrokers 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 managed funds which raised money to invest into 14 SDA homes within "one suburb" (YEP, YOU HEARD IT RIGHT!) LOL
It didn't help that these investments occurred about 4 years ago, and that the land title registration were delayed by 2 years. With these houses now for sale (aka distressed sales) we have to wonder how on earth these 4B/2B/2C SDA homes (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 lease properly, plus SIL and SDA providers will reject these designs as they are not fit for purpose. We fear that the realistic outcome will be only one participant SDA homes (at best), or leased out to the normal residential market at $600 to $700 per week in rent (at worst). Whoever comes along next swooping in to buy, remember these words "BUYER BEWARE".
Now, back to DOMACOM and ASR ... did they just forget the fundamentals of "diversification" & forget the old saying "don't put all your eggs in one basket". Damn, 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 suceed in SDA investing "off a spreadsheet" and then expect it to work. Also do not expect to achieve maximum yields. This is a high risk proposal if one does not follow the rules of engagement on the playing field i.e have one ensuite per bedroom. DOH!!!
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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