The business of buying housing for the elderly has reached the Stock Exchange. Investors are made with flats at a lower price than the market in exchange for the owner, normally octogenarian, living at home until his death is not new. What is new is that the first and only one has been created real estate investment company (socimi) specialized in this niche and that, in addition, Alternative Stock Market (MAB).
Almagro Capital, that currently has 72 investors and 14 homes owned within the M-30 of Madrid, has a vast potential market of more than 8.5 million homes inhabited by elderly people. A sector that, according to its founders, "is unattended and inefficient."
The socimi's business model consists of acquiring housing for the elderly to rent to them. The purchase of the houses, whose average price is 600,000 euros, is made with a discount of 25% in relation to its appraisal value with the objective of maximizing the profitability of the investors, which moves between 8% and 12%. %. "A part of the benefit is constant and derives from the rent, and another part will take place with the sale of the asset, which will happen when the tenant leaves the house, either by his own decision or by death," says Luis Ulíbarri, partner of Almagro Capital.
The fact of participating in a socimi does not only have important tax advantages For investors, they also benefit from better purchasing and rental conditions and the diversification and volume of the portfolio. The average amount they invest buying shares of the socimi is 130,000 euros, although the most common ticket is 50,000. The novelty is that "investors participate in the entire stock and this is what allows investing in a sector where, if not, the risk-coupled barriers would be almost insurmountable," says Ulibarri.
With the elderly person, who receives income and capital in the proportion negotiated, a guaranteed rental contract is signed for life. The average age is 86 years, so society estimates that in a period of seven years most of the houses will be empty and ready to sell. In the event that the life expectancy of the tenant is greater than estimated, you can minimize the risk by selling the assets at a discount to a buyer who accepts the same conditions, as stated in your MAB exit brochure.
Socimi says offering older people more money than they give the traditional solutions of the reverse mortgage, the naked property or the life annuity because, for example, in case of premature death or abandonment of the house, it would deliver to the tenant or his heirs the part of the rent not consumed.
The pillars that sustain the business are deep. The Spanish population is and will be increasingly older: in 2068, almost seven million people will have reached or exceeded 80 years, a figure that doubles the current almost three million, according to the INE. In addition, this type of transactions is possible because most have property. And, finally, "older people and their family environments (children, nephews …) begin to understand that real estate, which is where Spaniards over 65 have 85% of their savings, is to make use of During the retirement phase, and with this, improve their quality of life and life expectancy, let's say that in Spain the so-called inheritance culture is emerging, "says Mar Villa Pérez, Retiro's Customer Service Director. pioneer for 23 years in the management of mediation of products to monetize real estate, either with life annuities, reverse mortgages, no property and buying and selling with guaranteed rent. In fact, the first property acquired by Almagro has been through this group.
The operations that Retiro manages offer the investor between 6% and 8% of annual return and have some 50 homes in portfolio in the main capitals and some coastal towns, such as Marbella or Benidorm. The owners of the apartments, whose average value is 350,000 euros, usually have more than 75 years and the term of an operation is between 10 and 15 years (until the floor remains empty).
They gain confidence
The elderly population is increasingly aware of these products that serve to monetize their home and look at them with less suspicion, something that has not always been so despite being legal products and some regulated in the Civil Code since 1889. The need It leads to them because the pension is insufficient for them, either because it is low or because they do not pay to cover unforeseen expenses. This is what happened to Ángeles Plaza, a 73-year-old woman who lives in her apartment of a lifetime in a Madrid neighborhood. She says she is distrustful and does not hide that before going into the operation she was informed in case it was a scam. Now she is delighted: "My life has changed." Less than two years ago, Ángeles, who has no children, had a liquidity problem. The operation of his dog cost 10,000 euros, a money he did not have even though he does not complain about his pension. "I asked the bank for a loan and the ball got bigger," he says.
He sold the bare property of his 115 square meter apartment and four rooms to an investor through Eduardo Molet, owner of the Real Estate Experts Network (Rei), for just over half of what it was worth in the market. "It was valued at 320,000 euros and they gave me 160,000 euros in a check at the notary, I wanted all the money at one time," he says. The discounts are obtained because what the investor acquires is the naked property -not the possession of the house-.
For a couple of years the real estate consultant Eduardo Molet has focused on the sale of the bare property of houses seeing the pull of this market. And it's not the only one. This type of ads covers the real estate portals. Last year Molet organized in Madrid the first specialized fair in which 500 houses were offered with an average price of 150,000 euros. In their transactions, the profile of the investor is always the same: Spanish buyers who have savings that they do not rent in the bank. This is the case of Javier, a retiree who prefers not to say his age or his last name. He has bought a house with a couple, about 78 years old, who will live there for life. It is in the area of Vicálvaro, in Madrid, and for it has paid between 35% and 40% less than its market price. "That floor will be for my son."