Commercial real estate is one of the more significant investments someone can make in their lifetime, especially in the case of healthcare real estate. But in the long run, building owners can incur a substantial return on their investment. Buyers just need to have some key details in place before they commit to a new healthcare property.
Our article, 5 Tips to Consider Before Purchasing Medical Real Estate, explains several salient aspects of the buying process. We also provided an overview of new development and build-to-suit deals in our article How to Build a Medical Facility from the Ground Up. But the tips below offer a few other notable factors regarding purchasing existing healthcare real estate spaces.
Decide Which Type of Healthcare Property You Should Own
There are four main types of healthcare properties: hospitals, office buildings, medical offices, and retail-medical offices (medtail). Traditionally speaking, hospitals and office buildings are necessary for large health systems. Medical offices and medtail facilities can serve as referral sources for health systems, but a private practice or an individual physician may be the sole owner.
The first step is to identify the purpose of the healthcare facility. Will the space need to house a specialty clinic? Will the owners need to add upgrades, such as hood vents for laboratory ventilation or lead lining to abide by building guidelines for medical facilities? Would a medtail facility have enough square footage for the practice’s patient base or the right ceiling height for necessary equipment? The answers to these questions can help the prospective owner identify what types of spaces would be conducive to their specific needs.
Hire a Property Inspector
Like any other real estate transaction, healthcare properties should undergo a property inspection before the sale of the property. Inspectors review elements such as:
- Interior spaces, doors, and windows
- Exterior building elements
- Basements, foundations, and crawl spaces
- Electrical and mechanical systems
- Parking areas and sidewalks
Buyers who would like to purchase a new medical property should anticipate spending anywhere from a couple hundred to a few thousand dollars on an inspection. The cost is dependent upon the size of the property. But while an inspection may be expensive, it could spare a prospective buyer from purchasing a property that needs major, costly repairs and upgrades.
Choose the Type of Purchase Agreement
Prospective buyers can purchase a property outright or engage in a sale-leaseback deal. In a sale-leaseback deal, the seller remains in the space as a tenant. A sale-leaseback deal is less risky because the buyer doesn’t have to adopt existing leases. They also immediately avoid having to find a tenant to fill vacant space. Instead, their new facility already comes with the guarantee of a tenant and monthly income. Typically, these deals come with terms of 10-15 years. Some agreements even have lease terms of more than 20 years. That means a sale-leaseback deal is a win-win for both the tenant and the new property owner.
Hire Two Specific Business Partners
Healthcare real estate often requires several partnerships, such as developers, contractors, property managers, etc. But two specific business partnerships are vital to healthcare real estate owners: healthcare real estate brokers and commercial property lawyers. Both of these business partners assist with details pertaining to contracts, existing lease agreements, sale-leasebacks, and other important components of healthcare real estate.
Understanding Healthcare Real Estate
Healthcare real estate encompasses specialty medical practices, corporate health systems, and unique legal requirements. Physicians do not have the time to handle both the needs of their practices and the ongoing requirements of their real estate deals. This is where HBRE excels.
HBRE is a full-service healthcare real estate practice. Our team partners with physicians and health systems to handle all facets of healthcare real estate needs. We serve both landlords and tenants to ensure lease agreements are accurate and provide the best possible terms for both parties. Medical professionals seeking to purchase a new healthcare property can trust HBRE to provide maximum value throughout the purchasing process.
