Real estate investment trusts (REITs) allow you to invest in virtually any type of commercial real estate asset. Like most REITs, healthcare REITs purchase or develop properties and lease them to tenants. Healthcare REITs often involve investing in assets like hospitals, wellness centers, medical offices and assisted living facilities.
Growing Demand in Healthcare Real Estate
Several trends indicate the potential for tremendous growth in healthcare REITs. First, older segments of the population are growing quickly, with all members of the baby-boom generation reaching age 65 by 2030. The U.S. Census Bureau predicts that children under 18 will be outnumbered by older adults for the first time in American history by 2034. Thanks to modern medical advancements, this generation will outlive previous ones.
Generally speaking, the longer people live, the more medical assistance they’ll require to maintain a good quality of life. The healthcare industry will need more nursing homes, assisted living facilities and other elder care services to meet this growing demand. Stand-alone properties, such as dialysis centers or urgent care locations, are also included in this sector.
The transition to outpatient facilities is an ongoing trend accelerated by the COVID-19 pandemic. Outpatient care can be a convenient alternative to a hospital stay, helping to reduce the burden on hospitals. As a result, outpatient facilities present a potentially lucrative opportunity for real estate investors.
Lastly, an increased focus on behavioral health means more healthcare real estate opportunities. With nearly one in five adults living with a mental illness in the United States, the need for facilities dedicated to mental healthcare and treatment is paramount.
Why Invest in Healthcare Real Estate?
Meeting this increasing need and demand for healthcare services requires more healthcare facilities. As a result, the healthcare real estate market offers huge potential to investors. Healthcare REITs present a significant growth opportunity in the market.
What’s more, healthcare real estate is generally a lower-risk investment than other types of real estate for several reasons. First, people need healthcare services regardless of economic trends. Hospitals, primary care practices and other healthcare businesses typically succeed in even the most challenging economies.
Most REIT-owned healthcare properties are also leased on a long-term basis. Many tenants sign leases for 10 years or more, and renewal rates are usually excellent. Long-term leases provide investors with stability and decrease potential risk.
Healthcare REITs may not be for everyone. Potential drawbacks include high operating and compliance costs, a fragmented market and reliance on excellent location and management for a high return on investment (ROI).
Get Started with 1031 Crowdfunding Today
Healthcare real estate is an expanding market that can present various opportunities for investors. 1031 Crowdfunding can help you explore your healthcare real estate investment options. Create an investor account with us today to access our top-rated real estate marketplace. Our real estate investment experts are here to help you navigate your options and the investment process.
