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  • FIRST POST
    • sanfairyanne
    • By sanfairyanne 15th May 18, 4:30 PM
    • 39Posts
    • 4Thanks
    sanfairyanne
    Care Home Investments....Good Idea ?
    • #1
    • 15th May 18, 4:30 PM
    Care Home Investments....Good Idea ? 15th May 18 at 4:30 PM
    Someone I know has become interested in investing in a care home scheme, if I'm honest I'm also curious. As I understand it you buy a room in a care home. The company that sells the rooms guarantees rent from the room for a period of 5, 10 or 15 years. They guaranteed the rent even if the room is empty. Once the term is up (5,10 or 15yrs) the company will buy it back, their buyback price is fixed. It works out around £23,000 on a £90,000 investment (over 10 years). This isn't so great, but the guaranteed rental income at 10% seems attractive.
    I'm told the buyer would get their name on the deeds of the room. So my question is:

    Has anyone got any negative thoughts regarding this scheme?
    For instance how on earth would you get your money back if the company went bankrupt?

    Many thanks in advance
Page 2
    • AnotherJoe
    • By AnotherJoe 15th May 18, 8:16 PM
    • 11,402 Posts
    • 13,167 Thanks
    AnotherJoe
    Or another way of looking at it is, you give me £90k and every year I'll give you 10% of your own money back and after the ten years I'll return another quarter of it as a miserable Return you've had to wait ten years for.
    I could make a nice living from a deal like that without the hassle and expense of running care homes either.
    Ask your friend to PM me.
    • xylophone
    • By xylophone 16th May 18, 3:07 PM
    • 27,231 Posts
    • 16,297 Thanks
    xylophone
    I have held the Target REIT as part of an income portfolio for a couple of years.

    It has paid a regular quarterly income and shown a modest capital gain.
    • Mutton Geoff
    • By Mutton Geoff 17th May 18, 7:04 PM
    • 1,215 Posts
    • 1,340 Thanks
    Mutton Geoff
    I would say this area is a lousy investment though, for the simple reason that although the demand for these homes is growing, they are inherently expensive to run, which mean so most people can not afford them which means that inevitably government gets involved which means high costs and poor returns, by definition.
    Originally posted by AnotherJoe
    My own experience shows this too. I bought £1,000 of Southern Cross shares as they fell to a fraction of their normal price. The owners had already asset stripped the business but I was convinced they would be bailed out or taken over since they had a fair share of the market.

    Two weeks later they went bust and I lost my money (it was a gamble I was prepared for at the time but I won’t poke my nose in that industry again).
    Compensation/Refunds - £4,165 | Stooz Profits - £7,636 | Quidco - £4,060 | Tax Avoidance - £107,000
    All with a big thank you to Martin and MSE.com from Mutton Geoff!
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