Discussing the possibilities and future at the intersection of healthcare and commercial real estate
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Today’s episode, I am welcomed by the Medical Group Management Association’s podcast and we discuss the advantages of investing in healthcare real estate, as well as the best practices that should be taken into account by investors who wish to sell, build, buy, own, and operate their own medical facility.
In this episode, we talk about…
[2:26] How Trisha landed in healthcare real estate
Trisha started in commercial real estate while in school. She then accepted a market research opportunity for a developer of a medical office building. A new medical building was going up on the campus and they needed a market analysis. Once she completed that, the leasing department hired her. Working in commercial real estate and getting to know the industry, she had realized healthcare real estate was mission critical and demand driven.
[4:37] Who are the primary clients when you’re working in healthcare real estate, and who is the main point of contact
Dealing with a position for a couple of reasons. Sometimes clients are purchasing real estate through their personal funds, so we are dealing with them personally. If it’s through a healthcare expert health care company, usually you want to start by talking to the physician. If there’s several physicians, you would have to present to the entire partnership. Others you might be involved with are the company at large, legal and the CFO.
[6:36] Deciding regarding an exit strategy
Exit strategies are different for each client. If they want to expand and want to use it as an income stream in order to sell leaseback. When a sale is on a leaseback, it’s a single tenant that wants to sell and buy another property. Reason being is to use it to expand their operation. Another reason they use an exit strategy is they see it as an opportunity to monetize it and take the proceeds.
[10:27] Explains how one owns medical facilities and can still practice medicine
We encourage investors to hire professional property management companies. There are several who specialize in healthcare facilities. Having those who specialize in the healthcare setting will be of benefit. Also, it would be great for those wanting to invest in going with a partnership. Physicians work all hours, but typically vendors or anyone taking care of the building is operating during normal business hours.
[17:14] How to investors go about understanding the value of their medical facility, what are the steps to take and what should they look at
Conversation with a person who is actively engaged in business dealings is essential for investors. That would be considered part of the real estate brokerage community. Consult with a finance or capital market professional since you need to determine the value of your property in relation to the market rental rate and the capitalization rate.
[19:28] Steps to take when wanting to sell their medical office
When investors are thinking about selling, they will wait until the market is at its highest point before doing so. In addition to this, you need to think about the relevant tax regulations and interest rates.
[21:06] Steps to evaluate when you’re going through the purchase of a medical office
It is recommended that one should not simply purchase medical office space because it is available; rather, one should do so only after taking into consideration the various elements that are involved. Take a look at your finances, including your budget, how much money you want to spend, how you intend to pay for it, and whether or not you can acquire a small business loan as a physician.
[22:46] Shares case studies of a successful real estate transaction in the healthcare space
Physician owners surround most Trisha’s case studies. Its physician investors and owners sought to make real estate investments and enjoy the economic benefits of assembling various properties occupied by a diverse group of tenants. Their goal was to put together a real estate portfolio. They were eventually able to derive monetary value from all of their assets.
Links to resources:
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