How to Own Your Own Building
Today we address a question we hear frequently from dentists: If you are at a point in your career where you have paid off your school and initial practice loans, and are tired of paying your landlord’s mortgage payments for him or her, then now is one of the best times to purchase real estate as an owner-user.
As everyone knows, we are in the midst of a good economy. Commercial real estate interest rates are still very low compared to prior years. We are seeing interest rates in the 4.25% to 5.25% range. In year’s past, we typically see them at 5.5% to 7%. The low-interest rates often times make your potential mortgage note payment lower than what you’re currently paying for your lease. Also, the Small Business Administration (SBA) has loans where if you occupy more than 50% of the building, they have lower down payments and other requirements on the loans.
The real estate market is also at an interesting point in time. Baby boomer building owners (try saying that three times fast) are divesting their real estate portfolios in order to get their equity out to fund their retirement. This makes it an opportune time to acquire a building – the building where your practice is located or another one in your neighborhood. Or, possibly an investment property.
In times like these, there are winners and losers in the investment and real estate world. If you are sitting on real estate and need to move it, you are at quite an advantage. If you are in the market for buying real estate, however, now is also a golden opportunity. Dentists looking to purchase their own buildings have three options. One is to look for an existing building that can be converted over to dental use. The second option is to find vacant land on which a dental office can be built. The third option is to approach the landlord who owns the building you currently occupy and see if they would be willing to sell. There are advantages and disadvantage to each. Of course, if you are currently in a nice building, purchasing the building you are already in, makes the most sense. The main advantage of buying an existing building and converting it is time. It takes considerably less time to convert an existing building into a dental office than to start from the ground up. The largest disadvantage is the commitment to the basic structure of the building and the existing lot. The main advantage of starting from the ground up is that the building can be designed and built to exactly meet the dentist’s needs. The disadvantage is that it takes much more time to find the land, to have the building designed and permitted, and to construct the building.
As commercial real estate brokers, we can help you with the process of purchasing an existing building or land on which to build your ideal dental building. We can also assist in speaking with your current building owner to see if they would be willing to sell their building. The biggest mistake a dentist can make is to start the process with time running out on his/her lease. The process should be started at least 18 to 24 months before the end of your lease. It can take up to 6 months or more to find the ideal building or land and then an additional 1 to 2 years to convert an existing building or build from the ground up. It is also important to assemble a team that can support you throughout the entire process. We can act as a resource in helping you assemble your team. Your team should include people experienced in the dental field, who are familiar with the dentist’s wants and needs. Your team should include a general contractor, and may or may not include an architect, depending on the scale of the project. Your team should also include an attorney and a lender. The key to any successful venture is planning. Picking an experienced team of experts and working closely with them is critical to making a successful transition to owning your own office building.
If you think this might be the time for you to start looking for that ideal dental building, you can begin by calling the best dental real estate broker in the Northwest – Omni’s own, Steve Kikikis. Steve can sit down with you to start the process and lay out a plan for owning your own building. Steve can be reached at firstname.lastname@example.org, or you can call him at 425-905-6920.