Discussing the possibilities and future at the intersection of healthcare and commercial real estate
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On today’s podcast episode I interview Eric Tait, MD/MBA. He is an internal medicine physician that started investing in healthcare properties, in partnerships with his physician friends. Now, he operates an asset management firm that invests in a variety of commercial properties. In this interview, we hear his thoughts on how he approaches evaluating healthcare real estate investments.
[2:24] Dr. Tait’s background in real estate investment
Eric got started with real estate after graduating from Morehouse College with a dual MD/MBA degree. He realized that the two paths to quickly reach financial independence were through real estate or a non service based business. Since Dr. Tait was practicing medicine, he knew he needed to pursue real estate to meet his financial independence goals sooner rather than later.
[3:56] What attracted Dr. Tait to healthcare real estate
Dr. Tait gravitated towards healthcare real estate because he wanted vertical integration of his labor. The hospital he was practicing at was getting sold so the whole medical staff formed an LLC and went to the group that was selling the hospital and requested to be a part of the transaction. This allowed for Dr. Tait to dip into other revenue streams in healthcare that he was already doing.
[6:43] Developing partnerships with other real estate investors
After getting out of residency, Dr. Tait started buying single family homes and small apartments. Some of his physician peers began to take interest in what he was doing and wanted to get in on the deals. After speaking with a securities attorney and getting the green light, Dr. Tait and his colleagues began to invest in different types of real estate together.
[7:57] Lessons learned: Going after bigger projects versus smaller projects
After investing in a few properties, Dr. Tait realized that it’s almost the same amount of work to invest in a single family home as it is in a multimillion dollar commercial real estate property. While the due diligence may take longer, Dr. Tait says it’s easier to get a commercial loan than it is to get a residential loan. He also shares that there are a lot more leverage points when you move versus residential.
[9:34] The decision to start Vernonville Asset Management
Dr. Tait started Vernonville Asset Management initially as his own management company for his personal investments. When he started bringing on outside investors, Vernonville became the managing committee for all properties, not just Dr. Tait’s personal investments. All of the properties are still put into individual LLCs and those individual partnerships are where any employees sit.
[10:53] Real estate management as a practicing physician
Dr. Tait still has over a dozen single family homes that he manages himself but since he has good systems in place, it takes him less than three hours a month to handle it all. He does not manage any projects that he has brought outside investors in for. Dr. Tait wanted to maintain professionalism with the fiduciary responsibilities so he hired on property managers to take care of any properties acquired with joint investor relationships.
Dr. Tait believes that we should let people do what they love to do and what they’re good at so if you don’t love managing properties, it is okay to hire it out to someone who does. He recommends that when it comes to investing, almost everybody can do it better than you so just find the people who can and partner with them to make the process easier.
[15:07] Understanding healthcare real estate investments as a physician
When it comes to understanding healthcare real estate investments, Dr. Tait recommends hiring a professional who has experience. It is important to see who is occupying the buildings you are interested in purchasing to make sure that it will be a good investment on your end.
Dr. Tait shares that it’s really not about your tenant today, it’s about how many tenants are lined up behind today’s tenant to keep you occupied over the life of your ownership of that particular property.
[20:03] Investing in real estate as a physician in private practice
Dr. Tait believes that if you’re going to be in practice for 20 to 30 years and practicing privately, you need to buy your own building because there are many benefits like getting to control your expense line and income shifting.
Dr. Tait expresses that getting your income through rent is more tax efficient than getting your income directly through your medical practice. He shares that it is important to consult with your tax accountant regarding this to make sure that you are in compliance with the IRS.
He mentions that one of the key benefits of owning your own practice building are having other physicians come in and rent from you. You can also have someone completely buy your practice out and rent from you.
[22:37] Dr. Tait’s first job
Dr. Tait’s first job was being the neighborhood handyman. He shoveled snow and took care of yard work for his neighbors. He also did custodial work for an art gallery that his mother was on the board of as he wanted to be able to splurge on the brand name items that he wanted.
[23:17] What Dr. Tait would want to do for a living if he wasn’t in healthcare real estate investment
Dr. Tait shares that he is doing what he loves and doesn’t have another job in mind that he would be doing if he wasn’t practicing medicine or in real estate.
[23:39] What Dr. Tait is reading for news, information, or inspiration
Dr. Tait has been really into Twitter lately. He typically just observes and does not engage much but on occasion he will give his input on bad mistakes in real estate. He also checks out Drudge Report to get his news from the right and HuffPost for news from the left in addition to BBC and Guardian but Dr. Tait is pretty selective about the news he consumes.
[24:45] What Dr. Tait does for self-care
Dr. Tait is a big proponent of listening to his body. Some days he may stay in bed until 11 o’clock without doing anything and others he is an earlier riser. He mentions he is wildly conscious of how he is feeling at all times and adjusts accordingly.
[25:33] Whether leaders are born or trained
He believes that everyone can be trained as a leader but some people are just naturally assertive and that almost everything outside of raw athletic talent can be trained if you are willing to put the work in.
[25:56] Whether the desire to heal is born or trained
Dr. Tait has wanted to become a physician since he was six years old so he believes that some people have a natural calling towards helping people and others pursue medical school solely because they are intellectually curious and end up fascinated by the science behind medicine and just need to be trained in bedside manner.
Links to resources:
Eric Tait, MD, MBA
Internal Medicine Physician
Vernonville Asset Management
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