With proper research and planning, real estate provides a steady stream of cash flow with relatively little day-to-day management required. One sector of real estate that is often overlooked by passive income seekers is healthcare real estate. Investing in properties like medical office buildings, urgent care clinics, and assisted living facilities offers many benefits over traditional residential or commercial real estate.
Why invest in healthcare real estate?
- Stability – Healthcare is a recession-resistant industry, so properties tend to maintain high occupancy rates even during economic downturns. Patients don’t stop seeking medical care just because the economy is weak.
- Specialized properties – Medical properties are purpose-built for healthcare tenants, featuring features like wider halls, accessibility standards, and specialized MEP systems. This makes them difficult to convert to other uses, so tenancy remains stable.
- Long leases – Healthcare tenants often sign longer leases of 10+ years to accommodate their substantial upfront investment in specialized improvements. It provides reliable long-term cash flow.
- High credit tenants – Healthcare providers generally have strong financials and excellent credit, making them desirable tenants. Reimbursement from Medicare and private insurance provides reliable income streams.
Tips for investing in healthcare real estate
Greg Appelt, CEO of Appelt Properties, has over 25 years of experience developing and acquiring healthcare real estate across some States. He provides these tips for investors interested in this sector.
- Focus on necessity-based properties like medical office buildings, dialysis clinics, and urgent care centers. Patients will keep frequenting these despite economic conditions.
- Look for properties affiliated with or catering to a major health system. Large systems have the financial resources to support their facilities.
- Markets with rapidly growing populations due to in-migration are ideal locations. More people means more demand for healthcare.
- Properties near hospitals or medical campuses enjoy referral traffic and convenience for patients and doctors alike.
- Building aesthetics and amenities adds value by enhancing patient and physician experiences. Think of abundant parking, creative wayfinding signage, relaxing common areas, and health-oriented design.
- Partnering with an experienced developer like Appelt Properties provides access to deals and expert guidance from start to finish.
Appelt utilizes his decades of specialized experience to identify healthcare real estate investment opportunities offering optimal stability and cash flow for passive investors. By implementing a value-added program that enhances efficiency and aesthetics, Appelt boosts investor returns upon disposition. Healthcare real estate requires an intimate understanding of highly complex compliance, design, and financing parameters. Partnering with a seasoned specialist provides access to thoroughly vetted properties as well as expert acquisition and management.
Demand outlook remains strong
Demand for healthcare services will continue expanding with the aging population, advancements in medical technology, and healthcare’s largely recession-resistant nature. Well-located medical properties leased to financially sound providers will remain a smart choice for investors seeking reliable passive income for many years to come. By focusing on necessity-based healthcare properties affiliated with leading health systems, investors build a low-maintenance real estate portfolio offering stability and favorable returns. Partnering with an experienced developer like greg appelt and his team at Appelt Properties removes the guesswork by providing access to thoroughly vetted healthcare real estate investments.