How to Invest in Assisted Living

by Tim Begany ; Updated July 27, 2017
The assisted living industry is a source of many investment opportunities.

Assisted living is big business. The industry boasts tens of thousands of residential facilities with combined annual revenue of many billions of dollars. The facilities earn revenue by providing seniors comfortable housing, professional healthcare and help with dressing, bathing and other daily self-care tasks. Because assisted living is so lucrative an industry, you may wonder how you can profit from it. The answer is simple: Buy the stock of assisted living companies or healthcare real estate investment trusts (REITs) that own assisted living companies.

Buy Stock in Assisted Living Companies

Step 1

Identify the best names in the field. Just plug a phrase like "invest in assisted living" into an Internet search engine.

Step 2

Scan some of the articles you get from your search. They should mention a slew of top players.

Step 3

Do good homework on a bunch of those companies. That can include viewing company websites, consulting investment pros and reading independent company analysis.

Step 4

Make your picks, remembering any potential risks and not just the possible reward.

Step 5

Purchase the assisted living stocks you have chosen in brokerage accounts or IRAs.

Step 6

Maintain diversification. Don't put too much money in any single assisted living company and avoid making assisted living too large a part of your overall investment portfolio.

Buy Stock in Healthcare REITs

Step 1

Heed the advice of renowned investor Warren Buffett: "If you don’t understand it, don’t do it." That means learning about healthcare REITs before you invest.

Step 2

Start your research knowing this basic fact: Healthcare REITs increase diversification by owning a portfolio of properties such as assisted living facilities, nursing homes and hospitals.

Step 3

Do the research and make your picks with the same six-step process for investing in the stocks of assisted living companies. Identify the key players by searching on "healthcare REITs."

Tips

  • To diversify even further, consider buying shares of a REIT mutual fund--an investment containing stock in all kinds of REITs, including healthcare REITs.

Warnings

  • Watch out for healthcare REITs with a lot of debt. Debt, also known as leverage, magnifies investment losses and makes for extremely wild fluctuations in a stock's price.

About the Author

Tim Begany, a resident of central New York, has been a freelance personal finance and medical writer since 1990. He has written and edited for print publications such as "Medical Economics," "RN," "Patient Care" and "Business & Health" and the websites Investopedia, InvestingAnswers, Quadrant HealthCom and Mometrix Media. He holds a Bachelor of Science in business administration from Ramapo College of New Jersey.

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