How to Invest in Retirement Homes to Make the Biggest Profits

how to invest in retirement homes

The median age of populations globally is rising steadily. This means that the percentage of people of working age and those who retire financially independent is generally around only 5% of the population. According to Age UK, 14% of retirees in the UK are living in poverty. The number of people in the UK over 65 years of age is 17% and estimated to reach 23% by 2025. This means that the proportion of the ageing population in the UK has been increasing since the 1980’s and by 2040 one in every 7 is projected to be aged 75. The projected number of over-85’s is 1.5 million estimated to grow to 3.6 million by the year 2039.

The above figures translate into an expensive demand for care in the UK and the opportunity for investors to invest in retirement-homes to profits. A person living in the UK who needs nursing care but has less than £23,250 in personal assets, the full cost of care will be covered by the government. This policy applies to care of the infirm and elderly as well as specialist dementia care. As an investment class UK retirement homes provide a good investment opportunity because those who can afford it will pay, and those who cannot, are subsidised by the government.

How to make Direct Investments into the Retirement Home Market

There are two ways to invest – purchase a retirement home suite in a luxury complex for over 65’s; or a retirement home in a home that caters for dementia patients. The retirement home operator will lease the property from the investor on a long lease of 10 years, giving a 10% per annum net yield. These hands-off, high-yielding care home investments have become very popular because they are fully managed by a care-home operator while paying a regular income to investors. This type of specialist sector is what can offer diversity to the income of investors.

Another element to this is the luxury retirement home sector. Luxury retirement homes generally attract more paying residents aged 65 and over who wish to downsize from larger homes and live in a community environment. There is a high demand for these luxury suites in the more affluent parts of south-western England, like Somerset, where more than 26% of the population is 65 years of age and over.

So the opportunity to invest in retirement-homes to profits in the luxury sector could prove to be a lucrative one, especially since weekly fees have increased by over 50% over the past 10 years.

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