Investment property in nursing homes

We are all getting older. This demographic trend logically leads to a steadily increasing need for care facilities. As a result, care properties are becoming an increasingly attractive investment opportunity for investors.

The layperson might wonder: how can one invest in care properties and ultimately use them as an investment? As with other investments, one benefits from the rental yield. Since care properties also include apartments located in nursing homes, retirement residences, or assisted living facilities, they are rented out in the usual way.

Private care facilities: a large market

The market for private nursing home providers continues to grow. The reason for this is that many municipalities lack the necessary expertise to determine long-term demand. Private providers typically consist of project companies and developers who then construct the nursing facilities together with or for the future operators.

Once the property is completed, it will be leased to the operator for at least 20 years. This is a major advantage for the investor: they don't have to worry about lost rental income, even if an apartment is vacant.

This investment is also attractive for tax calculations – not only can the property itself be depreciated, but the furnishings in the apartments also contribute to tax benefits – movable inventory can be depreciated over 10 years. Furthermore, selected care facilities such as inpatient care homes, hospices, homes for people with disabilities, and psychiatric facilities are eligible for government subsidies.

What happens when a property is vacant?

If a resident becomes insolvent or the apartment remains vacant for a period of time, this does not mean that the rent will be lost. In such cases, the state steps in. This means that the property manager faces a lower risk of insolvency thanks to this subsidy. Returns are promising thanks to rental income and property appreciation: they range from four to six percent, and in exceptionally good situations, can even reach eight percent.

Care home properties are therefore a worthwhile investment. However, all opportunities and risks should be carefully weighed before investing. A professional real estate agent can advise you on this and work with you to determine what you need to consider.

Are you looking for an investment that suits you and your budget? Ask us! We're happy to advise and assist you.

Notes

For the sake of readability, this text uses the generic masculine form. Female and other gender identities are explicitly included where relevant to the statement.

Legal notice: This article does not constitute tax or legal advice for any specific case. Please consult a lawyer and/or tax advisor to clarify the facts of your individual situation.

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