A care home investment can be a stable way of earning a monthly rental income through a property investment. It is a long-term investment has great potential for high returns as well as providing the elderly who need specialist care with a luxurious place to stay.
What Is Care Home Investment?
Care home investments are a bit different to other mainstream types of property investment. This is because it is considered to be a commercial property, however it is used as domestic residences for private individuals. Therefore, these investments benefit from the currently high demand for UK residential property.
An investor will purchase a unit in a care home. This usually consists of a en-suite type of room like a hotel. Care home units on average range from £60,000 to £90,000 each. The care home will find elderly tenants to occupy the unit and the tenant will pay rent like a traditional buy-to-let. The NET yields for care homes are 10%, which is one of the highest yields out there on the property market. They are also long-term, and the contract can last up to 10 years.
The Advantages of Care Home Investments
Care homes have several benefits over other more traditional types of property investments. If you have a portfolio full of residential buy-to-lets and you want to diversify your portfolio to spread your risks, then a care home property can do that for you. Even if you are a new investor and are looking for a long-term investment, or a place to live in retirement, then a care home investment could be for you.
Long-term investment – Care home investments last up to 10 years. After the 10-year mark, you have an optional buy-back option to sell the property back to the care home. Additionally, you can renew your contract with the care home company if you wish to keep investing for a monthly rental income.
The high demand – The number of over 65’s in the UK is increasing. The ageing population is creating a higher demand for privately funded care home properties. These numbers are forecast to grow in the years to come, making care homes a low risk investment.
Diversify your portfolio – You can spread your risks by investing outside of buy-to-lets.
Less risky than relying on the property market – The fluctuating and volatile property market can have bad effects on residential properties, but care homes don’t rely on the property market, allowing buffer time during property market dips.
Low maintenance – The care home will be managed by the staff hired by the care home company. The residents in the care home will also be taken care of by trained carers who are qualified in health and social care. You won’t need to get involved with the maintenance or patient care or the costs involved.
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