The market for care homes has been holding up quite well given the current restrictions on credit for buying businesses. Banks have been willing to lend money for purchases of care homes on a 70/30 percent debt for equity split.
These are better terms than in other industries where the minimum split has been as much as 50/50 for deals to be approved. Whilst valuations have slipped from up to 9 times the operating profit to no more than 7 times, this does represent a good return on your money of 14.3% with a good prospect of capital growth. The population is not getting any younger!
However, it is important to realise that running and owning a care home is a time consuming task and you will also need to be qualified by the National Care Standards Commission.
The requirements are that any owner must have a level 4 NVQ in care management and have at least two years senior care management experience. There are a myriad of regulations that must be adhered to and a bad inspection of the care home can be very damaging to the long term value.
So, if you are still interested, then where do you look to buy a care home? At the Business Sale Report we have a dedicated section on care homes for sale plus medical and healthcare businesses for sale.
We also write specialist articles and provide advice to subscribers on how to buy certain types of businesses. In the latest issue of the Business Sale Report, we take an in-depth look at the care homes market.
Excerpts of the care home article can be viewed here.
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