Investing in Medical Real Estate in the USA
In Mundo we love one thing: to make our readers happy, and that means keeping money flowing into their pockets. That’s why we created “The Money Machine”, a section designed for family offices looking for new ways of doing business.
In this edition we will talk about a specific investment that has yielded great results in recent years: medical real estate in the USA.
One should keep an eye on this market for a pretty simple reason. In the last few decades, life expectancy in the United States has lengthened remarkably.
This means that hundreds of millions of people will live longer, so the world will need more healthcare when they reach the Third Age.
The Healthcare Real Estate Market: Refuge from the Pandemic
The COVID-19 pandemic shook many types of assets to their foundations. From oil to tourism, millions of investors have suffered incalculable losses because of lockdowns and travel bans.
The commercial real estate market was no exception, as many commercial tenants missed rental payments for months, causing considerable losses for investors.
However, this was not the case for commercial medical buildings. Their tenants remained solvent. In the United States, over 95% of due rentals continued to be collected regarding medical office buildings.
With on-site checkups having become less frequent, how have they achieved this? Because of telemedicine's soaring popularity, many people opted to remain home and receive assistance remotely. Even though this is not an ideal approach, lockdowns made it necessary.
Even if routine checkups can be performed on a video call, procedures such as surgeries or scans must be done on-site, and that will be the case for a long time.
According to Colliers International, the U.S. medical office market reacted quickly to the 2020 challenges and adjusted to them quite fast, demonstrating another reason why it has become such a strong sector in commercial real estate. The specialists expect that prices in medical real estate, after the recovery, will show a steady gradual growth in the coming years.
For anybody looking for a passive investment, this is an opportunity. Building owners can sign long-term leases and retain their tenants, as medical professionals running their practices from the building are less likely to move in a hurry.
Why the Medical Real Estate Market?
There are dozens of reasons why one should invest in this field. However, we will outline some of them in a nutshell:
-This market is so low-risk that, in the event of a crash, healthcare facilities are a top priority for relief packages released to stimulate the economy, as seen during the Covid-19 pandemic.
-They qualify for every tax benefit that accompanies ownership of any real estate, such as deductions in interest, depreciation, pass-through deduction, etc.
-An average American aged 65+ spends five times as much on healthcare as a youngster.
-In the USA, up to 10,000 individuals turn 65+ every day. This means that this market will keep growing.
-Tenants are unlikely to move because of their client base and the costs associated with relocation.
However, medical building ownership has some challenges. The United States is a notoriously difficult jurisdiction to invest in, and it is quite difficult for those living outside the country to maintain relations with managers and tenants remotely. Furthermore, the market and the number of available buildings is limited, and good buildings sell rapidly, making it essential to have local contacts and knowledge.
Medical Real Estate Trends
As previously mentioned, telemedicine is still not a replacement for on-site consultations, but out-of-hospital medical services are expanding. With specialized facilities set to enter the market in the next few years, it is important to know exactly what to look for in a property.
The best properties will always have certain features, but a big plus for medical property is location. Being near a hospital or a clinic will make the property more valuable, as it will attract more patients.
High-quality healthcare providers look for populated areas, particularly sites where the population has a large percentage of elderly people, as it gives them more exposure to potential patients.
Solutions for Small and Large Investors
Accessing these assets is difficult both in and out of the United States. One important thing to understand is that medical buildings are limited and difficult to track, and as soon as a good one comes onto the market, it gets immediately picked up, as the field is very competitive.
For non-US citizens, there are even more barriers, including tax compliance. Also, maintaining a good relationship with the management and tenants is difficult if you are not nearby.
With a focus on wealth preservation, this real estate company has managed to generate total returns of between 10% and 17% in a low-risk market, generating dividends every quarter of up to 8% per annum.
All you need is an initial investment as low as 5000 USD and you can access low-risk commercial assets that will protect your capital. Close attention to the US medical real estate trends and constant communication with their clients provide a world class advice that will allow you to make intelligent investment decisions.
Why buy medical real estate?
This real estate company specializes in medical infrastructure, with active investors in over 10 countries, including Brazil, China, South Africa and Israel.
They stand out for many reasons:
Performance. Through very strict selection criteria when choosing a project, this company has managed to outperform other real estate options.
They remove barriers to entering the US market, using a small equities exchange in a zero-tax environment to provide a compliant, efficient and transparent way for investors around the globe to buy a share in a medical office building.
Proven excellence. Within six years they have built up a portfolio of >340 million USD in real estate under management (REUM) and a 65% reinvestment rate.
Their investment strategy is limited to the states that have both strong GDP and population growth, variables that will ensure rising demand.
There may be some real estate sectors out there that can deliver better returns than this one, but very few, if any, would offer the same long leases and stable income.
The company's focus is on investing specifically in Medical Office Blocks, or MOBs. By offering one building at a time, disclosing every bit of information found, assessing risks, and communicating them to their investors, they achieve an unusual level of transparency. The products offered are either stand-alone buildings or OrbVest Diversified Holdings (ODH) – a portfolio of 8 or more medical assts, in 4 or more states.
Getting into the Medical Real Estate market can be difficult because it is a very specialized niche and there are various hurdles to accessing the United States market. However, with proper advice, it is possible to get a foot in the door.
Disclaimer: The information contained in this article is for informational purposes only and does not constitute financial advice or recommendations. Investing in financial products or cryptocurrencies involves risks, and you should be aware of the potential risks involved before investing. The content on this website is not intended to be a solicitation or offer to buy or sell any financial products or services. The information provided does not take into account your specific investment objectives, financial situation, or needs, and should not be relied upon as a substitute for professional financial advice. You should seek independent advice from a financial advisor or other professionals before making any investment decisions. Please be aware that the legal status of cryptocurrencies and other financial products may vary in different jurisdictions and may be subject to regulation. It is your responsibility to ensure compliance with any relevant laws and regulations governing the sale and marketing of financial products and services in your jurisdiction.
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