Discussing the possibilities and future at the intersection of healthcare and commercial real estate

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EP126- Physician Goals for Healthcare Property Ownership

Have you ever wondered how your investment strategies can make a social impact? Today’s podcast episode is my interview on the Money with Mission podcast with Dr. Felicia Froe. Not only do we discuss goals of physician ownership of healthcare properties, considerations for owning and operating a property, and exit strategies, but also how you can help to build up underserviced communities.

Money with Mission is a social impact focused investment show that prioritizes neighborhood transformations and profit generation for mission-minded investors.


Schedule a healthcare real estate investment strategy call with Trisha

In this episode, we talk about:

[01:46] My journey to real estate

I was introduced to real estate through my mother and my aunt, who had a residential real estate company together, as well as some rental properties. Witnessing their negotiations over things like appliances made me realize that residential real estate was not for me. When I did decide to enter into real estate, I was drawn to commercial real estate. I was finishing up my MBA, completing a market research paper on a new medical office building for a medical office developer, and when I finished the research, they had an opening in their leasing department. So I worked there for a couple of years and then went into third party brokerage, still all focused on healthcare real estate. I worked with a lot of leasing early on in my career and then moved into investment sales. I had created strong relationships with a variety of physicians and began to work closely with them and receive referrals. Now, I work in a lot of physician-owned real estate.

[04:05] How your investments and processes should be influenced by your lifestyle

One of the most important things you can do if you’re interested in real estate investing is to clarify your goals for your life and investments. You’ll need to think about how much time you have to invest and set up standard processes to streamline inevitable things like collecting rent from multi-family homes, servicing equipment in medical facilities, and other building needs that would benefit from hiring real estate vendors. A physician’s job is typically intense and scheduled, and real estate investing can become like a second job, even for the experienced. Regardless of what type of real estate you decide to invest in, really think about how involved you want to be and consider hiring a professional that can see to your tenants needs, at least during the hours you practice.

[09:05] How DOCPROPERTIES can help you make informed investments

I sell a lot of physician-owned real estate, so I’ve seen properties and investing structures in a variety of conditions. I’ve worked with physicians who have 10 or more years left to practice, who want to know the value of their property and what they need to fix it.  A lot of the real estate investments I’ve worked with don’t start out with a lot of structure. They may have leases in place, or the leases may have expired, and sometimes there are tenants that aren’t paying market rent. There are cases where a few partners will get together and decide they don’t want to pay the management fee, or they want to know how to have their properties taken care of without exhausting themselves by running their practice and being on call for their buildings. Whatever the case is, we get all the information and we take a close look at everything. We then give them options based on the type of leases they have in place. Sometimes it’s a short term fix, sometimes it’s long term while they wait for tenant leases to expire, but the goal is always to put the building on the market at maximum value. That’s what DOCPROPERTIES can help with.

[11:29] Ways to get maximum value for your building

Medical buildings are always interesting because the value of the building is really based on the tenants inside of it. The investors that are looking at this asset class are typically searching for something with around 10 years left in the lease. If you’re a physician and you have 12 years left in your lease, and you’re looking to pull out your capital, you can use those funds to then invest in other asset classes, passive investments in other real estate funds, and private or public REITs. When you sign a 10 year lease and you’ve used the capital for other investments, you’ll have less to worry about when you’re ready to stop practicing. You won’t have to worry about selling the building or finding new tenants in it in order to get the maximum value. That’s a sale leaseback opportunity that a lot of physicians like to utilize.

[15:07] Tips for transitioning from renting to ownership

If you’re tired of renting and are looking for ways to move into ownership, I always suggest building a runway. Building a runway essentially means giving yourself at least three years to gauge where you are and plan your steps to your goal. If you’re considering developing, or aren’t sure what the inventory is, giving yourself this time will allow you to take a closer look at what’s involved with building versus buying outright, plus getting clear on what you’re looking for will help you figure out how much capital you have to work with, because you need to have some sort of budget.

The worst thing you can do with any real estate, especially commercial, is to be forced into a reactive decision based on a proactive one, because you’re not going to get what you want and it typically costs you a lot more money.  Giving yourself time to plan and take the proactive route will give you the negotiating ability to walk away from deals if they don’t end up going the way you want.

{17:46] My specialties, who we work with, and what is happening in the market right now

I typically work with properties such as medical office buildings, urgent care centers, and surgery centers. I represent owners and clients that have properties across the country, and I have an amazing and competent broker network for the local municipalities that I complete deals with. So, I help create a strategy, and then I work with local brokers to transact.

 A lot of people are selling right now, so there’s a lot of private equity money in the market. Everyone seems to be expecting a recession in the near future, and even though healthcare real estate is recession resistant, it will definitely be affected. We are at the top of the market right now, so if you’ve ever considered selling, now would be a good time to consider getting your property evaluated and finding how much it’s worth.

[23:04] Mission-driven real estate investing

Money with Mission is always focused on how to make a social impact, and there are absolutely impact opportunities in real estate investing. A doctor can buy a building or a medical practice and intentionally choose a location in an underserved community. This would be a win for the physician, as they now own property and also a win for the community because they can get the medical care they need on a regular basis instead of only coming in to the emergency room for urgent care.

[25:18] How to stay connected and up to date on the market

Whether you want to start investing, become a passive investor, or are looking to stay up to date on the market, you can send your contact information to us at docproperties.com. You can also continue to tune into the Providers, Properties, & Performance podcast and listen as I interview physician owners, so you can hear and learn from their successful (and sometimes not so successful) real estate stories. 

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