Commercial Real Estate Purchases
The demand for healthcare services is consistently high, making real estate a solid long-term investment. With this opportunity in mind, purchasing real estate for your practice location could offer several advantages over leasing. If you’re a healthcare provider looking to invest in real estate, here’s everything you need to know.
Benefits of Owning
While leasing is often the more cost-effective option when establishing or relocating your practice, owning your practice location could offer greater long-term financial benefits.
Increase Your Net Worth
Owning real estate can enhance your assets and create potential revenue streams by leasing out any vacant space in your building.
Save on Taxes
Healthcare practices are often advised to form an LLC when purchasing real estate. The LLC can write off expenses to reduce its tax liability, and the entity for the practice can pay the LLC rent and operating expenses, further saving on taxes, a strategy worth discussing with your CPA.
Provides an Exit Plan
If you decide to retire early, owning the property gives you the option to sell it or lease it to other tenants, providing additional retirement income.
Offset Income Losses
Losses generated from real estate can be used to offset your income for tax purposes, potentially reducing your overall tax burden.
Cost Segregation Benefits
The items inside the building you purchase can be depreciated quickly, allowing you to write them off sooner. This helps defer your federal tax liability to later years and increases your cash flow following the property purchase.
*Everyone’s situation is unique; we recommend discussing tax strategies with a tax professional. We are not providing tax or financial advice.
Development
When supply doesn’t exist, sometimes the supply must be created. Going “ground-up” requires a multi-tiered process that includes the right team and relationships to deliver the right product. If owning and developing your own real estate is your dream, let ALLY provide the playbook to make it a reality.
Key Considerations When Purchasing Your Practice’s Location
When it comes to purchasing a location for your healthcare practice, several critical factors must be taken into account to ensure a sound financial decision. Below are the primary considerations to keep in mind:
Financial Stability
Your financial health is paramount. The decision to own real estate hinges on your net worth, the cash flow generated by your practice, and your ability to secure a long-term commercial loan. Additionally, you must be prepared to cover the ongoing occupancy costs, which include maintenance, potential vacancies, and any necessary structural repairs or updates.
Timing of Your Practice
Consider the longevity of your practice. If you and your physician group plan to continue practicing for at least the next ten years, purchasing real estate becomes a more viable option. This timeframe allows you to pay off the loan and build substantial equity in the property.
Location
The location of your practice is crucial. Should you opt for a property closer to your existing patient base, or should you invest in an area with a robust real estate market? Accessibility for your patients is a significant factor, as is the presence of commercial infrastructure in the surrounding area. These elements can greatly influence the success and convenience of your practice.
By carefully evaluating these considerations, you can make a well-informed decision that supports the long-term success and stability of your healthcare practice.
Expert Guidance for Purchasing Your Practice Location
Acquiring a location for your healthcare practice can be a beneficial investment, but it demands thorough site evaluations and extensive negotiations with property owners. At ALLY Healthcare Real Estate, we specialize in guiding you through the complexities of purchasing medical buildings or office spaces.
If you’re considering any form of real estate for your business, our team will conduct an in-depth economic analysis showing how the potential cashflow stacks against all options. This analysis will assist you in making the right decision for your practice. We have seen healthcare professionals have success with purchasing condos, office buildings, retail buildings, and acquiring land to develop a building from the ground up.
Contact ALLY today to explore whether a real estate purchase is the right decision for your practice.