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Case Study

Buying Your First Care Home

A care home can be a great investment, but you may require specialist finance. Learn more about buying your first care home and how to secure funding with Rangewell.

Purchasing a care home requires specialist finance, particularly when the investor lacks the necessary experience to lend a large sum. Here’s how Rangewell helped a client to secure finance for their first care home purchase.

Many ambitious care workers grow in their careers until they reach a supervisory or management position. From here, they build knowledge of the operational aspect of running a care home and perhaps begin to dream of owning their own. 

However, the gap between care home management and ownership is a difficult financial one to solve - as the purchase of a care home isn’t just a matter of cost but also a matter of specialised funding options which have specific criteria when offered by lenders. 

Many lenders in the UK who finance first-time homebuyers have caveats and criteria around the number of bedrooms, CQC ratings and general state of the property - but they also assess the borrower as an individual to ascertain if they are competent enough to make the investment successful. 

After working as a care manager for 12 years, our client approached us intending to purchase her first care home and bring her expertise in the sector to her own business. However, she faced some challenges that are common in the care home purchasing sector. 

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Why was there a problem? 

The first problem was encountered by virtually any ex-care manager looking to buy their first care home - that of being a first-time buyer in a market that prefers to lend to experienced developers who have multiple care homes. 

Lenders are generally hesitant to finance a first-time care home buyer as they have to weigh up the risks of any investment they make without any reference to your success as an owner. Those who have no prior successful care home purchase history can struggle to attract the right funding packages - which is the problem our client was facing. 

Another issue was that of the cost. For residential mortgages, deposit amounts are far lower when compared to buying a care home. Lenders expect around 30-35% of the cost of the property as a deposit. This made it a prohibitively expensive outlay for the client, and she was keen on finding solutions to this issue. With £100,000 of her own savings, there was a significant gap between the asking price of the property and what the client could afford in terms of deposit. 

The final issue that she faced was that she wanted to purchase a smaller care property with only 15 beds. Lenders favour properties with higher bed numbers to help maximise the value of their investments. 

Why we were able to help

Rangewell is a team of dedicated professionals who can help you find finance for care homes. We know each lender, their preferences and criteria, which allows us to level the playing field for you and cut out many of the issues you would face if you approached a lender alone. 

As part of our free guidance, we’ll help maximise any perceived value that can add to a lender’s decision. For example, in this instance, we presented the client’s CV and prior experience as a mitigating factor in the risk of investment. Her career as a care manager meant she had a strong history of excellence in the care sector, but her CV needed to be amended to reflect her experience in a stronger way - which we are always happy to do. If there’s an opportunity to help strengthen your application, we will identify it and work to maximise your chance of success. 

Our experience in the market also meant we could help guide the client through the care properties available to her and advise on the most suitable solution that would enable her to achieve her goal. This meant finding a property within the client’s budget that would be favourable to lenders. 

The property selected was valued at £650,000. As care homes typically demand 40-50% of the price as a deposit, the client’s own £100,000 savings fell short of the required amount. However, we are experts in helping clients identify funding sources they may never have considered. Here, we were able to leverage her personal home and two buy-to-let properties to help secure funding from investors. 

Ultimately, we could navigate the client’s own financial situation, alleviate the lender’s hesitations about her lack of prior ownership and secure the full funding amount that meant the client could buy her first care home and achieve her dream. 

About care home finance

Helping you finance your first care home is a great privilege for us. We’re passionate about helping those who have experience in the care sector lead by example and buy their own property - growing the standard of care through the type of hard-won passion and knowledge you can’t learn elsewhere. 

This case study serves as a clear example of how Rangewell should be your first choice when buying your first care home. In addition, we understand lenders and have existing relationships with all of them - so we can not only select the right lender for your specific budget and experience, but we can have conversations with them that you, as a lender, cannot. 

We’ll help guide you through the financing process and will make your case far stronger for lenders who may have reservations around property history, bed size or care quality ratings. By choosing Rangewell, you’re giving your first care home project the best chance of success. 

Care home finance costs less with Rangewell

With just £100,000 savings, we were able to secure full funding for our client’s project for a £690,000 property with 15 beds. This smaller bed allocation and the relatively low deposit would ordinarily limit the borrower’s chance of success for risk-averse lenders. 

Work with Rangewell to secure funding for your first care home. We’ll help you understand the financial requirements of the project and the property options, and how your prior experience can make you more favourable in the eyes of a lender. We’ll also audit your existing assets and financial situation to see opportunities to increase your chances of success. 

Speak to our business finance team today. We’re specialists in care home financing and help support clients who create better care homes that help the ageing population of Britain benefit from added safety and the highest care standards. Together, we’ll discuss your ownership ambitions, financial situation and background to build a funding application with up to 80% Loan to Value for first-time lenders.

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