Assisted Living Property Investment Buyback Option

One key feature of investing in assisted living properties is the buyback option. This allows the developer to repurchase the property at the three-year mark of ownership. If exercised, the buyback ensures you receive at least 130% of the original purchase price.

As highlighted in our previous post, well-funded institutions like investment and insurance companies are drawn to this sector for the same reasons as individual investors: long-term, passive returns from an asset-backed investment in a market with significant demand and limited supply.

While the buyback option is not guaranteed, there are ways to improve the likelihood of it being exercised. Prioritise the following as a guide when selecting the right development and location, as the criteria differ from typical property investments:

1. Overall Return on Investment (ROI): Assisted living properties are best viewed as long-term investments. Assuming a 4% annual increase in rental income, your investment would be recouped through rental yield in 6-8 years, depending on the yield (e.g., 10% or 12%). Prioritise properties offering higher yields. Our online calculator details the returns for different amounts and different yields over the whole term.

2. Location: Institutions such as Canada Life favour large, easily managed blocks (100+ units) in densely populated urban areas. These meet their financial viability standards and ensure high occupancy levels, supported by a robust local workforce. Rural or smaller developments, regardless of aesthetic appeal, are less likely to attract institutional buybacks.

3. Unit Size: For future resale or independent rental purposes, property type matters. Two-bedroom apartments are generally more attractive on the resale market than one-bedroom units, which in turn outperform studios. Additionally, capital growth in assisted living properties aligns with traditional property value appreciation.

It’s worth noting that institutions prioritise operational simplicity and sustained returns over aesthetics. The buyback option reflects their aim to minimise effort while maximising profitability.

If you’d like to explore assisted living property investment opportunities further, feel free to connect using our chat feature (bottom-right corner) or schedule a call (bottom-left corner).