Across the globe, care home investment has emerged as one of the most preferred property investment vehicles among new and experienced investors alike. In the UK, the population of senior citizens is increasing steadily, and that’s the key reason why this investment option has a significant growth opportunity.
According to the ONS (Office of National Statistics), 20.7% of the UK population will be aged 65 years or more by 2027. As a result, there will be a significant inconsistency between the present capacity of care homes and what’ll be required within the next 5 to 10 years. To fulfil the lack of care homes and meet senior care needs efficiently, there’ll be a massive demand for care homes in many areas of our country.
Additionally, life expectancies are growing steadily, thanks to the increased awareness of the benefits of adopting healthy lifestyle habits as well as the advancements in modern medicine. The increase in life expectancies is also giving a sharp rise in the demand for care homes where highly-dependent elderly people can spend the rest of their lives.
From an investor’s perspective, care home investment brings a hands-off yet highly attractive option to build a healthy property portfolio while ensuring a good rental income.
Key advantages of care home investment
If you’re thinking about investing in care homes but feeling a little hesitant, the following should help make up your mind.
- Assured rental income: Rental income is one of the most important reasons many investors opt for property investment. By investing in care homes, you can not only ensure regular income but that it flows for a longer tenure than traditional rental properties as well.
- Fewer maintenance costs: This is one of the major benefits of investing in care homes than investing in a traditional residential property. In case of the latter, at some point in time, you’d need to bear various maintenance charges even if there’re void periods. But care homes belong to the category of fully-managed structures which means the management company will be responsible for taking care of the entire maintenance aspect. As an investor, all you’ll need to do is enjoy the rental yields because the tenanting process will also be handled by the care home administration.
- Buyback options: When it comes to care homes, the resale ability is lower than what is offered by the traditional residential property market. You can sell a residential property to different buyers – from traditional buyers and cash investors to mortgage investors. But since care homes are niche properties, they have a limited resale market. However, many developers offer buyback options to help care home investors overcome this issue. Here, the developers guarantee, through the sale agreements, that they’ll buy the property back from the investor at a pre-agreed timeframe/price in the future. This option essentially makes the exit strategy secure and effortless.
In addition to these, if you belong to the league of investors who want to make positive contributions to society, investing in care homes is one of the best ethical investments for you to consider.
Investing in care homes can bring above-average returns your way while providing you with the much-needed funding to help build your property portfolio. To benefit from this investment strategy, make sure that the property you want to invest in is located in an area popular with retirees or has a significant elderly population. You can also keep an eye on the areas where new care homes are being built to minimize the gap between high demand and lack of supply. Remember that demand in this sector will most likely outstrip supply always. This means if you can do it right, care home investment could become your most effective and stable source of regular income.