A good way to make money off the health care sector is by investing in health care real estate investment trusts, also called health care REITs. Health care REITs are companies which buy, sell, manage and develop properties. A health care REIT can be bought or sold on the New York Stock Exchange or through any equity brokerage.
On the National Association of Real Estate Investment Trust list of equities, there are 11 REITs considered part of the health care sector. In addition to publicly traded REITs, there are also privately-held REITs, which are traded through insider connections or specialty brokerages, not through the open market similar to stocks.
Typically, the property types involved in a health care REIT are:
1. Continuing care retirement communities, independent living, assisted living and skilled nursing homes.
2. Hospitals and long-term acute care hospitals.
3. Medical office buildings or MOBs.
Action Steps
The best contacts and resources to help you get it done
How to trade health care real estate investment trusts
You can acquire a health care REIT through any number of ways including investment advisers and online brokerages.
I recommend: Fidelity or E*Trade Financial offer low-cost trades with an online account. You can search for a specific Healthcare REIT through the database hosted by the
National Association of Real Estate Investment Trusts.
Do your homework on health care REITs
The best health care REITs are those that have been generating returns for a long period of time and have a smart portfolio.
I recommend: Rating services such as
Morningstar can help you pick the top REITs, but you can also look at the performance of specific equities with
Yahoo Finance or other tools.
Ventas Inc.,
Medical Properties Trust and
Nationwide Health Properties have been top performers.
Know the risk in health REITs
As with any investment, health care real estate investment trusts involve risk. In 2007, the 11 health care equities brought an average one-year return of 3.28%, compared to 20.47% for a 5-year return and 13.38% for a 10-year return. The one-year return fared well compared to the overall NAREIT REIT index, which produced a negative 17.83% return for the year. By comparison, the S&P index was up 5.49% for the year and the Dow Jones Industrial Average was up 9.81%.
I recommend: Compare performance of health care REITs at
Yahoo Finance or
Google,
Tips & Tactics
Helpful advice for making the most of this Guide
- Keep a close eye on your investment to make sure it's generating enough dividends or growing enough to justify keeping it. You should be checking on your investment every day to monitor the stock price and keep up-to-speed on any significant news events that could change the value of your investment.
- Buy in the right cycle; the value of health reits will vary with the market.
The official source of Health Care REITs is the Health Care REITs page at Business.com
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