Care home investment straddles the bridge between commercial-property investment and buy-to-let property investment. While the care homes themselves are classed as commercial property, they are used as domestic residences for private individuals and hence benefit from the high demand for residential property in the UK. Compared with mainstream buy-to-let, however, care home investment has three key, compelling benefits for investors.
Firstly, investors can manage their portfolio on the basis of how they wish to spread their investment funds rather than forcing them to navigate the residential property market and negotiate purchases on a case-by-case basis. Secondly, it frees investors from the practical commitment involved with standard buy-to-let, using lettings agencies can minimize this (at a cost) but is unlikely to eliminate it completely. Thirdly, it provides a buffer to fluctuations in property prices, since care home investment focuses on income rather than capital gains or losses.
Even though care homes themselves have been around for many years now, care home investment is currently very much a growing trend since changing demographics over the last thirty years or so have led to a substantial increase in the percentage of the UK population, which is aged over 65. At present this is almost a fifth of the total population and it is predicted to increase to around a quarter over the course of the next thirty years. In the simplest of terms, the laws of supply and demand very much favour this market sector.
Investing in care homes offers the best advantages of commercial property investment and residential property investment, while minimizing the potential downsides of both.
Other types of commercial property such as retail or office space can be affected by the same sorts of issues as faced by residential landlords. These include vacant periods, unrecoverable rent and changes in circumstances which negatively affect the property, such as changes to the employment landscape or to transport links.
The nature of care homes is such that these issues are generally of negligible to no concern. The simple fact of the matter is that the UK population has been growing older for three decades now and is set to keep on growing older for at least the next three decades. Older people require homes which are suitable for their needs in the later stages of their life and care homes provide an effective way of catering for this significant demand.
It should, however, be noted that there is one area of investment risk, which is very specific to care homes and that is the risk of reputational damage, which, in a worst-case scenario can lead to a care home being closed and its staff subjected to legal proceedings. It is therefore vital for investors to undertake thorough research before parting with their money and ensure that they are dealing with a company which manages its care homes in an ethical manner as well as an efficient one.
Published: 18 May 2017Park Avenue is our latest care home investment opportunity to add to our ever-growing portfolio. Generate a guaranteed 10% net for 10 years, with monthly rental incomes and a hands free fully managed investment.
Published: 18 April 2017Earn up to 10% net per annum at the new Shanklin care home investment in the Isle of Wight. Designed to offer the investor an increased choose, investors can now choose from three separate investment return structures.