Buy to Let or Assisted Living: Which is the better property investment?

If you’ve got money to invest in property, you have a number of different options. One of the most popular ways in which individual investors go about investing into properties is to become landlords, essentially investing in buy-to-let properties and they rent out to tenants.
However, an emerging area of property investment is that of assisted living investments. So in this short, concise, plain English guide.
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Buy to Let vs Assisted Living – The Key Facts

Let’s take a look at what we mean by both of these things first.

  • Buy-to-let investment, for this guide, is buying a property with the specific purpose of renting it out to tenants
  • Assisted living investments is where you invest in property in assisted living facilities. Such facilities often have self-contained flats or apartments so residents can live independently, but certain support is available on-site to ensure that those (such as elderly people or those with physical or mental disabilities) can access support based on their needs

Each has its pros and cons.

Pros and Cons of Buy to Let

The core pros of buy-to-let are:

  • Property has been a good investment historically and over long periods, properties often gain in value
  • You can earn income from the tenants in the form of rent
  • A rental yield of 7% is considered reasonable and that’s by no means a terrible yield at all
  • If you buy a house to rent it out, you can generally sell it when you like without restriction
  • In the event that you needed to, you could live in the property (subject to serving appropriate notice on tenants)

The cons, however:

  • Mortgage rates are high at present and therefore buy to let mortgages (if indeed you are looking for a mortgage to support your investment) are expensive
  • Unless you have a guaranteed deal with a lettings manager, you only get rent when you are tenanted
  • You need to find tenants yourself or pay someone to do it on your behalf
  • In November 2023, house prices actually fell. Looking over a longer period, house prices have been rising astronomically, but it’s worth noting that the value of your investment can fluctuate
  • Unless you pay someone to manage it, you will also need to be on hand in the role of landlord

Pros and Cons of Assisted Living Investments

The main benefits of assisted living investments are:

  • A typical rental yield of between 9 and 10%
  • Surging demand owing to an ageing population
  • Demand outstrips supply, meaning these properties are very, very rarely untenanted
  • It’s a completely hands-off investment (you don’t need to manage anything)
  • Many tenants are supported by government funding
  • Of course, there are cons here, too (as with any investment):
  • You can only resell after three years, typically
  • You cannot use the property yourself
  • If Government funding around assisted living were to change in the future, this may affect tenanting

So Which is the Best Investment?

Well, that depends on what you want.

For higher rental yields assisted living is typically performing better. That’s also likely to be a better investment for those who want a hands-off portfolio with no hassle!

However, for people who want the flexibility to sell any time they like or who may choose to use their own property in the future, buy-to-let could be the better bet.

As ever, before making any investment, always speak to experts and get professional advice. No investment is without its risks.