Investing in care homes is something that very few property investors think about doing. But are they missing out on a good opportunity? If you do it right then investing in care homes can be a very good idea because you can make higher yields and the demand is growing all of the time.
Care Home Sector has High Demand
The ageing population of the United Kingdom is growing at an ever increasing rate. At the time of writing this post there were over 11.5 million people living in the UK who are 65 and over. Over the next decade this figure is going to rise by nearly 2.5%.
The government is finding it very difficult to cope with the increasing ageing population with health services creaking at the seams. The care home industry can’t keep up with the demand either which is where you come in.
The Office for National Statistics (ONS) estimates that by 2027 around 21% of the UK population will be older than 65. This is not good news for the UK government as the ageing population is already testing them to the limit when it comes to providing accommodation and care for the elderly.
There is a high demand for specialised housing in the UK to provide care for older people that need it. Also there is a shortage of specialised staff that have the skills to look after elderly people.
People are Living Longer
With the progress made in medical science, higher fertility rates and advances in healthcare practices people are living longer. This is a real problem for the healthcare sector and they cannot cope with the increase demand for services. There are just not enough care homes to satisfy the demand.
There is undersupply in many areas of the country for care home spaces and the problem is getting worse all the time. Experts believe that the demand for care home space will rise by 150% over the next 5 years.
So there is a need for investment in this area. As an investor you could choose to invest your money into the local authority funded care home sector or go for the luxury care home sector. Either way there are very good opportunities here.
The ageing population now has more wealth than it used to have. So the luxury care home market is particularly appealing. A lot of people are retiring at a later age now and as a result they have more wealth.
How do you Invest in Care Homes?
It is not as difficult as you may think to invest in care homes. You can choose between local authority funded or go down the self funded route. It is possible to find care homes that are already operating and creating profits and then purchase the freehold of the property for example.
You can find suitable properties to purchase and then change them into luxury care homes. This will require extensive renovation and the installation of safety features to comply with the law but the returns on this kind of project can be very high.
With the right care home project you can expect yields of 10% or higher which is better than the buy to let market. You also have a choice of exit strategies and your capital growth is assured. The care home manager will take care of the day to day running so it is truly a hands off investment.