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Investment opportunities in the Care Home sector at Park Avenue, Durham

27th June 2017 Print

Investment opportunities come in all shapes and sizes, and whilst a care home may not be the first thought that springs to mind, it can still be an interesting and profitable prospect.

Park Avenue Care Home is a Grade II listed Victorian terrace in the beautiful city of Durham. This care home is set to be refurbished to create a 27 bed luxury care community that will offer a unique living space designed for later life. 

Care Home Refurbishment

The site enjoys fabulous views across the green and leafy Ward Jackson Park and will boast a vibrant interior design. The care home will also include spacious communal areas on the ground floor to allow for social activities. Each property will be relaunched with regional marketing campaigns both online and offline, and will be operated by 5 Star Care Home Management, an experienced care services business.

This luxury care home will command premium-level fees and is targeted at self-funding, high net worth individuals and couples who can lease or buy their studio.

Care Home Investments

If a care home is not something you have previously considered as an investment opportunity, it is worth remembering the whilst the sector is worth £15.9 billion, it cannot keep up with demand from those needing care due to the number of people in the over-60 age group now being larger than those in the under-16 category, and those likely to need a care home in the next 15 years is set to increase by 60%. This massive growth in the older population means there is a growing and increasingly urgent demand for modern care home investments funded by private investors.

Park Avenue Investments

The leaseholds of individual care studios within Park Avenue can now be purchased by investors at a discount on their full retail price. There is an option for 10% rental returns guaranteed for 10 years, and a fully managed, hands free investment takes the headaches out of the process. There is a 125 year lease and investors have the opportunity of a 110% buy back guarantee from exchange or a 125% buy back guarantee in year 10 if the studio has not already been sold to an end user.

With a 30% discount of their full market price, these care studios will be snapped up quickly. On completion, investors can receive their income in one of three ways.

1. You can receive a rental income as a landlord based on the studio’s market rate, with a developer’s cash back, which is 3% of the purchase price, to cover the period of refurbishment. Rental income will be paid on occupancy.

2. The managed service offers a 10% fixed monthly income thanks to a lease management company to safeguard income irrespective of occupancy. The developer’s cash back arrangement is on offer and the investor will be required to pay a 25% fee of the total annual rent to cover legal, admin and maintenance fees. 

3. It is possible for an investor to pay the full market price should they wish to use it for themselves or a family member. An eligibility criteria and terms and conditions may apply.

Exit Strategy

Investment in the Park Avenue Care Home gives you a clear exit strategy whereby investors can leave with a guaranteed increase of 10% on top of the original unit purchase price. From year 10 the buy back option increases to 125%.

A 38 square metre Deluxe Care Studio in Park Avenue will cost £85,400, whilst a Care Home Studio of 28 square metres will cost £69,950.

For more information on the Park Avenue Care Home in Durham, please contact Hopwood House