If you have a new account but are having problems posting or verifying your account, please email us on hello@boards.ie for help. Thanks :)
Hello all! Please ensure that you are posting a new thread or question in the appropriate forum. The Feedback forum is overwhelmed with questions that are having to be moved elsewhere. If you need help to verify your account contact hello@boards.ie
Hi all! We have been experiencing an issue on site where threads have been missing the latest postings. The platform host Vanilla are working on this issue. A workaround that has been used by some is to navigate back a page or two to re-sync the thread and this will then show latest posts. Thanks, Mike.

# Nursing home project

• 11-04-2013 2:10pm
Registered Users Posts: 16

Hi, I'm hoping somebody can help me out here. I am doing a project for college which is a residual valuation for the purchase of a site in navan and construct a 72 bed nursing home on it, to let it for 10 years when complete.

I am stuck on the rate for leasing the property, there is very vague information about this. A rough rate would do me, maybe per m2 or per bed.

Also what is the average construction cost of a nursing home? Bruce shaw report 2012 says €1659/m2 but this seems very high.

Hope somebody can help.
Tagged:

• Closed Accounts Posts: 2,091 ✭✭✭

Bruce Shaw number looks about right for greenfield build to me. After that it is simple maths!!

• Registered Users Posts: 16

Cool thanks, I was hoping it was wrong because the residual value just ain't working out for me, key figures I have are: yield 10.5%, rent €90/m2 , interest rate 10% and construction costs €1650/m2. The size of the home is 4,800m2 gross. The site costs €850,000 but the residual value comes out at around minus 6 million. Not a clue what I'm doing wrong.

GDV= 3,591,771
Cost plus profit= 11,105,977
Site value= 6,169,040

Any idea what I'm doing wrong?

• Closed Accounts Posts: 2,091 ✭✭✭

of course the residual is going to be above 6Million, you are only collecting just over 4M in ten years in rent and Cap ex is the bones of 9M!! excluding VAT, prof fees etc etc.

• Registered Users Posts: 16

So does that mean a nursing home is not a viable business ? If you exclude the current economic situation I heard that nursing homes are a lucrative business. I need to show a profit for my project. Putting the rent to €255/m2 is the only way to show profit and reduce the building rate.

• Closed Accounts Posts: 2,091 ✭✭✭

So does that mean a nursing home is not a viable business ? If you exclude the current economic situation I heard that nursing homes are a lucrative business. I need to show a profit for my project. Putting the rent to €255/m2 is the only way to show profit and reduce the building rate.

In the boom they were very attractive but only to investors due to the huge capital allowances on new builds!! It is a very tough business indeed and quite a number of them have gone bust including some of the big groups. You cabn buy then for less than 50% of the cost of construction and still no takers!!

• Closed Accounts Posts: 2,091 ✭✭✭

• Registered Users Posts: 16

Ok thanks for that info, might show how nursing homes are not a good investment so!

• Registered Users, Registered Users 2 Posts: 436 ✭✭

Cool thanks, I was hoping it was wrong because the residual value just ain't working out for me, key figures I have are: yield 10.5%, rent €90/m2 , interest rate 10% and construction costs €1650/m2. The size of the home is 4,800m2 gross. The site costs €850,000 but the residual value comes out at around minus 6 million. Not a clue what I'm doing wrong.

GDV= 3,591,771
Cost plus profit= 11,105,977
Site value= 6,169,040

Any idea what I'm doing wrong?

In your example, the home is approximately 50,000 square feet for 72 beds. I don't have the HIQA guidelines to hand to check but I think the size is too large by a significant factor. This impacts on rent and running costs. You should check this with an operator as to whether or not it's a good design or and if there is excessive common areas.

• Registered Users Posts: 10

i have dealt with NHI (nursing homes Ireland) in the past and found them great to deal with, im sure if you emailed them a question they would get back to you or at least point you in the right direction! A cheaper novel alternative you could look at is leasing a hotel then was closed due to the recession, they have practically all the facilities required and leases may be cheap!

• Registered Users Posts: 1

Hi Paulbut,

I am wondering how you are getting on with your project in relation to the nursing home research.