I've been a real estate investor for years, even though I don't own a single income property. Instead, I opt to hold REITs, or real estate investment trusts.
What I love about REITs is that they make it possible to invest in real estate without taking on the risks of owning physical properties. They're also a less time-consuming investment. With REITs, I simply dig into a company's financials and prospects and decide how many shares to buy. And since REITs tend to pay above-average dividends, they're a great source of income in my portfolio.
Meanwhile, there are a few specific REIT sectors I have my eyes on for 2022. Here are a few worth keeping tabs on due to solid growth potential.
1. Industrial REITs
Industrial REITs are companies that own and operate warehouses, fulfillment centers, and other such facilities. The main reason I think industrial REITs could soar in 2022 boils down to a major shift in consumer behavior.
Since the start of the pandemic, consumers have taken to ordering goods online. At first, that shift may have stemmed from fear, whereas at this point, that habit may be more about convenience. But either way, a boom in digital sales has created a major need for warehousing and distribution center space. And so tenants may be eager to scoop up that space as it becomes available -- and also pay a premium for it.
2. Data center REITs
A shift to digital sales has also propelled the need for data storage. So has the adoption of remote work. And that's why I can see data centers growing in the coming year. Furthermore, as workplaces get increasingly flexible, the need to safety store and share data is only apt to increase.
It's not just that working from home has been normalized in the course of the pandemic. Companies are also letting employees work from anywhere, whether that means logging in from another country or upholding hybrid arrangements that involve splitting time between home and an office. All of this will only make data centers all the more necessary and relevant.
3. Healthcare REITs
Before the pandemic, urgent care centers were something patients may have resorted to in a pinch. During the pandemic, they became a go-to option when regular doctor offices were shuttered and the emergency room wasn't a desirable option.
This year, we could see an explosion in urgent care facilities as providers recognize the importance of providing flexible, immediate care. And so that makes the case to invest in healthcare REITs.
To be clear, though, healthcare REITs go beyond urgent care facilities. Rather, they run the gamut from senior living communities to hospitals to nursing centers. But what makes them attractive in the near term is a potential uptick in urgent care facilities now that a clear need for them has been established.
Are REITs the right choice for you?
There are plenty of benefits to putting your money in REITs, especially if you're eager to dabble in real estate without assuming the risks of owning actual property. And while there are many REIT sectors to choose from, there's reason to believe that industrial, data center, and healthcare REITs could really take off in the course of the year.