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Care property as an investment: Nursing Home as Real Estate

Care properties have really come into fashion in recent years. But why are more and more people investing in this type of property as an investment? One of the main reasons: The capital investment risk is relatively low with care properties. It is also a growth market.

A secure rental yield meets high inflation protection, little effort and, if the worst comes to the worst in the future and with wise foresight: priority occupancy for yourself. Let’s take a closer look at this type of investment to find out exactly how it works and what it offers.

What is a care property

A care property as an investment is not necessarily about acquiring a complete care or retirement home. This would make you think of a major investor. Rather, this concept is aimed at buying individual apartments in a care facility. This also includes assisted living facilities, for example.

Buying a nursing home – a good idea?

Buying a nursing home – a good idea?

The big difference to conventional residential properties lies in the contractual partner. In the case of care properties, a rental agreement is concluded with the operator of the facility and not with the resident of the apartment.

A care property as a capital investment is therefore perfect for investors who want to have little hassle with their property. This is because the operator of the care facility usually takes care of the tasks involved.

Why invest in care properties

Buying care property – a good idea? There are many good reasons for investing in care properties. We would like to focus on one reason in particular at this point: Statistically speaking, people are getting older and older and the number of people in need of care is expected to rise significantly over the next few decades.

Investing in care properties will therefore continue to increase in the future and can therefore be a smart investment. However, there are of course risks involved in investing in care properties and you must decide for yourself whether it is better to buy an apartment or a care property as an investment.

Care property investment: Example calculation for a property in Bavaria

Purchase price € 300,000.00
Ground acquisition tax (3.5%) € 10,500.00
Notary and land registry costs (2%) € 6,000.00
Total investment € 316,500.00
Net rental income per month € 1,000.00
Total rental income per year € 12,000.00
Loan interest rate (at 4.50%) € 13,437.34
Maintenance reserve (p.a.) € 210.00
Rent management (p.a.) € 300.00
Surplus before repayment and tax € -2,821.78
Repayment (=asset accumulation) (1%) € 3,062.66
Income after repayment (p.a.) € -301.62
Monthly expenses after property ownership and asset accumulation € -280.36

The example property shown here is for illustrative purposes. Please contact us for similar properties.

Crisis-proof investment in care property: protection against inflation

Care property and inflation

Care property and inflation

Why is a care property crisis-proof? Well, as we have already explained above, the number of people in need of care will continue to rise. And this will happen regardless of how the economy develops and how the stock market performs. Care properties will always be needed and thus defy any crisis. Furthermore, care properties offer good protection against inflation.

And this is important right now. The Covid-19 pandemic has triggered a global crisis, the effects of which are still being felt. The European Central Bank (ECB) responded with extensive financial injections for countries and companies. The inflationary situation has also worsened considerably. This in turn means that the purchasing power of money is decreasing and your money is therefore worth less and less. A good reason for investing in tangible assets. This is precisely when tangible assets are in high demand, as they have “built-in” inflation protection.

What forms of care property are there at all

The first thing that comes to mind is probably retirement and nursing homes. These provide all-round (medical) care for older people who can no longer live alone. There are different levels of care, depending on the individual needs of the residents. However, assisted living, senior residences, care apartments or special residential communities for senior citizens are also forms of care property that may be of interest as an investment.

The latter differ from traditional retirement and nursing homes in that residents can still live independently, but in a supportive and assisted environment. Of course, there are also palliative and hospice facilities and homes for the disabled. However, the decisive factor for success is whether the facility is state-funded or not.

This factor can have an impact on the profitability and risk profile of the investment. Care properties that are state-subsidized are considered even safer, as the operator’s financial health is more secure. On the other hand, non-subsidized properties may have more attractive returns but at the same time a higher risk. At the end of the day, nothing can be generalized and it remains an individual and supply-dependent decision.

Buying a care property – makes sense?

Investing in care properties – for many, this sounds strange at first. Are investments in care properties serious? Of course, as with any investment, this depends on the general conditions under which the property is purchased. Ultimately, you decide for yourself whether investing in care properties is advisable. We would like to show you the most important advantages and disadvantages here.

Care property: advantages

  • If you rent out your care property, you do not conclude the rental agreement with the resident, but with the operator of the care facility. The operator pays the rent, regardless of whether the apartment is occupied or not. This minimizes your risk of loss of rent. It is also minimized by the fact that the operation of a care facility is not dependent on the economic situation. Nursing home places will always be in demand.
  • By purchasing a care property, your own care place is secured for the future, as you as the buyer have the right to move in yourself. And you don’t have to be put on a waiting list first.
  • As the operator of the facility usually takes care of maintenance, letting and management itself, you have little to do.
  • Care property tax deductible: A care property is also worthwhile from a tax perspective. You can deduct the financing costs from your taxes and write off both the property and the inventory.

Care property: disadvantages

  • Even though the demand for care places will continue to rise and such a facility is considered crisis-proof, you must not forget the human factor. Therefore, a care property naturally also offers risks. If the care facility is poorly managed, the operator may become insolvent.
  • As with any other property, the economic success of a care property also depends heavily on the location. So here, too, you need to do your research well and you should not do without professional advice.

Care property as an investment – experience

We have more and more customers who choose care properties as an investment and are very satisfied with them. The most important factors here are the operator and location. If you don’t carefully separate the wheat from the chaff here, your investment in retirement/nursing care properties or care apartments will fall flat on its face.

Would you like to read the testimonials of our customers? Then please contact us directly. Understandably, our customers do not want reviews to be available to everyone online. However, we are happy to send them to you confidentially with the customer’s consent.

Care property: listed building

A listed property offers many advantages. Listed properties must be depreciated over the first twelve years, which has a very positive tax effect. As a rule, such properties require renovation work, which is subsidized by the state, whereby you receive more favorable loans and grants. If you purchase a care property that is a listed building, you can benefit greatly from this.

Financing a care property

As with any real estate investment, there are decisive factors that determine the profitability of a care property as a capital investment. We are talking about the location, condition, quality of the property, demand and, of course, the financing conditions. When a care property is worthwhile for private investors also depends on the financing conditions.

To ensure that your return is not eaten up by the financing costs, it is important to get a promising interest rate. The average care property yield is around 4%. We will be happy to help you find suitable financing.

We cooperate with more than 500 banks and can obtain the best possible conditions for you. Of course, we carry out the financing comparison for you completely independently so that you really do get the best loan for your care property.