Tips on Investing in Healthcare Real Estate


Healthcare and senior housing developments are some of the most solid investments for long term equity growth. The ever growing baby boom generation can only grow and the real estate equity in senior housing and healthcare centers has a large projection all over America. You need to be aware that like any real estate transaction the location will play a big role in the long term profits within a specified area.

Example: Purchasing a real estate healthcare center in Southern California would seem foolproof, but what about the real earthquake situation. Investing in a “set it and forget it” scenario get more problematic in terms of risk factors. But then again you have the reality that many seniors would prefer to live in California and pay a higher cost for housing. Add to this the tax incentives for buildings housing over 65s and there is a formula for success.

 

Probably the main caveat is again, your personal knowledge of an area and its viability in terms of long range quality living for elder care and senior living. below are some of the financing options for buying a healthcare facility including real estate crowdfunding, private commercial loans and REITs

Crowd-funding, REITs, Private Equity Funds, and ETFs are all great options for healthcare investment.

Investing in healthcare real estate is one of the smartest moves investors can make today. Not only is healthcare a service everyone needs, it’s also a sector backed by demographic growth. Every day, 10,000 Americans turn 65. In the next 20+ years, our aging Baby Boomers will need increasing medical services and specialty housing. That means even despite the pending bubble burst due for our economy, the healthcare real estate sector is likely to remain strong.

Still, for many investors, it’s simply not practical to invest directly into a senior housing facility, hospital, or medical office building. That’s why you’ll find an increasing number of investment opportunities outside of direct real estate investment popping up in the healthcare market. The following are the top four ways to make an easy—and promising—investment in this consistently high-performing field.

Private equity funds work similarly to crowd-funding, but with higher investment minimums and an off-line investment platform. Just like crowdfunding, private equity funds use capital from many people to invest in various projects—including both renovations and new ground-up developments. You may find private equity funds devoted solely to investing in senior housing, medical office buildings, or a mixture of any number of different real estate types.

 

Generally, fund managers seek to diversify the funds (for instance, some may invest in a mix of senior housing types in different geographic locations) to ensure the highest possible returns. Because they are generally smaller and managed offline, you may find more personal involvement from the fund manager, and greater communication about specific project development throughout your investment.

The right healthcare investment opportunity will vary by individual and their specific comfort level with risk or interest in the industry. However, demographics hold that investments emphasizing senior housing may offer a more consistent outlook, especially as the healthcare market continues to find its legs in terms of profitability in the modern era. Indeed, in its Q1 2017 report, NCREIF showed that on a 10-year basis, senior housing outperformed many other sectors of commercial real estate at 11.13 percent vs. apartments (6.42 percent), hotels (4.38 percent) and retail (8.16 percent). Senior housing performance is only likely to increase as the aging population continues to grow—regardless which investment option—crowdfunding, private equity, REITs or ETFs—Read more on the article originally posted at Seeking Alpha.

 

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