We can all agree that now is the best time to invest in medical real estate. In the last few years, the demand for MOB or medical office buildings increased by sixteen percent.
At the same time, the pandemic has increased the awareness that we need more medical space than before, which is another vital consideration to remember.
The requirement for physicians is enormous for both specialized care and primary care doctors. Based on the reports, we will enter the point of shortage of doctors. The same as the demand for medical care, the need for medical real estate is increasing.
Another important consideration is that healthcare spending in the next ten years will increase by two trillion dollars. Therefore, buyers and investors of MOB can take advantage of this market to boost their revenue and profits.
Even though this is a significant investment and market, you should understand a few things before starting with the process.
Owning vs. Leasing Medical Real Estate
The main decision you should make is whether you should purchase or lease a MOB. In case you decide to rent, you will reduce the risks that come with ownership.
Therefore, you do not have to think about building maintenance, and you can move to another location if something happens or you wish to expand your practice.
On the other hand, if you decide to purchase MOBs, you will get additional advantages to provide you with peace of mind. For instance, you do not have to think about annual and inevitable rent while leasing, which is an essential consideration to remember.
If you are a physician and own your building, you will stay in the exact location for an extended period. At the same time, you can sell it to other physicians or partners when you decide to end your career.
Finally, you can choose a sale-leaseback as the option of owning a MOB, and you need cash to cover the balance sheet and other debts. You should check here to learn more about healthcare real estate.
In the case of this particular transaction, you can sell your property to receive direct capital and lease property to new owners when you do not need it anymore.
These agreements last approximately ten to twenty years, which means you can treat patients at a preferred location. Some physicians and specialists affected by pandemics should consider this option to prevent potential shutdowns.
At the same time, if you wish to purchase space with tenants, you will get various benefits from this agreement. However, before you decide to lease everything or find a sale-leaseback negotiation, you should determine your long-term goals.
When Should You Invest in Medical Real Estate?
Similarly, timing is an essential factor you should consider before deciding to purchase any other investments. According to experts, you should consider buying only if you wish to stay in the same place for at least ten years.
The timing is also important because it depends and relies on the readiness of your practice. It would be best to think about overall financial stability before you decide to make up your mind.
Besides, it would be best if you analyzed your practice’s financial status and net worth before choosing to get a long-term commercial loan for a particular building.
By speaking with a professional broker and analyzing the area you wish to purchase, you should determine the proper timing for buying.
Remember that owning a building is not a single expense you will handle once. Instead, you should keep its aesthetic and structural updates and maintain it properly to ensure stability and appeal.
The medical group should consider the practice as tenants because this factor will help you determine overall occupancy expenses. We are talking about fees such as real estate tax reimbursements, rent, and maintenance, which fit into an occupancy cost.
It would help if you considered other factors when you are buying a medical space for your practice. For instance, large systems will require rooms that come with quarantine units and negative pressure areas.
Besides, some practices will have to review overall square footage to ensure the doctors will make telehealth appointments onsite. Finally, some practices will require flex spaces that will provide you various needs in a single setting.
Watch this video: https://www.youtube.com/watch?v=p_9y81u83WY to learn more about healthcare real estate strategies you should implement.
Find Medical Real Estate Advisor
Finally, it would help if you remembered that medical real estate is a complex field for leasers, buyers, and investors. The process of searching properties, location, and market reviews will affect the way you should handle this process.
In most cases, medical professionals do not have enough expertise, experience, and knowledge to handle everything and deal with negotiations. Therefore, you should find CRE advisors to offer you a skillset you can use to your advantage.
We are discussing finding a team that will help you with transactions, negotiations, and research based on unique features your medical sector requires.