If you're interested in investing in real estate, there are different sectors you can look at. Industrial real estate is huge right now, for example, due to an uptick in digital sales fueled by the pandemic. And in the coming years, as the world goes increasingly digital, data center demand could soar.
But if you're looking for a solid real estate investment, it pays to look at healthcare REITs, or real estate investment trusts. Here are a few reasons why.
1. Americans are getting older
Americans are living longer these days, which means seniors will soon start to make up a larger portion of the population. According to the Urban Institute, the number of Americans aged 65 and older will more than double over the next four decades, reaching 80 million in 2040. And while many older Americans prefer to age in place, that's not always feasible.
That's where senior living facilities come in. In the coming years, there could be a massive uptick in demand for skilled nursing centers, nursing homes, and assisted living communities, all of which fall under the healthcare umbrella. If you invest now, ahead of that boom, you might really set yourself up to profit nicely.
2. Americans are more health-focused in light of the pandemic
The pandemic taught many people not to take their health for granted. In the coming years, we could see an uptick in patients seeking out care not just for serious matters but also for minor issues.
Plus, there could be an uptick in patients prioritizing preventive care. As a result, we could see increased demand for urgent care and wellness centers, as well as diagnostic centers.
3. The industry is pretty much recession-proof
Different real estate sectors carry varying levels of risk. When economic conditions take a turn for the worse, travel and leisure spending can taper off. That could really hurt hospitality and retail REITs.
Healthcare, on the other hand, is pretty much a recession-proof industry. Even if economic conditions sour, people will still have medical needs to tend to. And many will no doubt prioritize medical spending over leisure spending. That makes healthcare a more solid bet if you're looking to invest in real estate but want to minimize your risks.
Get ready to grow wealth
Investing in healthcare REITs may not make you rich overnight -- and you shouldn't expect it to. But in time, you could end up growing a lot of wealth by investing in healthcare real estate.
Of course, you should know that there are risks associated with healthcare REITs. For one thing, there's oversupply to think about. If the market gets too saturated with healthcare facilities, some of those properties could end up sitting vacant for extended periods of time. Furthermore, regulatory changes could make different healthcare facilities more costly to operate, thereby eating into profits.
But ultimately, when it comes to healthcare REITs, the upside really does outweigh the downside. And so, it pays to think about adding healthcare real estate to your portfolio.