1.1 Are Medical Office Buildings a Good Investment?
Real estate investing is a valuable tool for wealth-building, and medical office buildings are an excellent niche to explore. Medical real estate ticks all the boxes when it comes to investment. This asset class is lower in risk, with the potential for a high return on investment over the long term.
Why is it such a good investment?
The AARP states that adults over 65 are the fastest-growing population group today. Around 10,000 people turn 65 daily in the United States, and experts forecast that seniors will make up 20% of the population by 2050.
As we tend to need more medical attention as we age, this bodes well for those who own medical real estate. People may cut back their spending in many areas, but they generally prioritize their health.
Americans today also have more health insurance than before, allowing them to access better treatment options.
1.2 Medical Office Building Real Estate – An Overview
Medical real estate is an attractive investment because there is something to fit every need and budget. You might, for example, start with a standalone property and rent it to a small doctor’s practice. You could also go the other way and rent out a building the size of a hospital, subdivided into space for several tenants.
The key to making money with such an investment is understanding the market well or partnering with a reputable team that can assist you. Read on to learn a little more about what to consider when you begin.
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1.3 How to Invest in Medical Office Buildings
There are many ways in which you can invest in medical properties. Here are the top choices:
- Healthcare Real Estate Investment Trusts: REITs, for short, allow investors to pool their money and buy a share in a building. This is a good beginner option and will enable you to diversify your portfolio more, but you share the profits.
- Joint Ventures: Here, the investors are more limited and are more hands-on with managing the property. You still have to split the profit, but you can control who joins you more easily.
- Sole Ownership: The potential profit is higher than with the other two. So is the risk factor. Still, it is an excellent option because you are solely responsible for the upkeep and any income that you receive.
1.3.1 How to Source Medical Office Buildings to Invest in
Finding the right property will involve some careful research. There are many opportunities out there, but it’s important not to rush and to consider your target market carefully before buying.
For example, it may prove prudent to invest in offices affiliated with a hospital or an on-campus facility, as doctors are willing to pay a premium for prime locations like these. Here are some other things to consider before signing on the dotted line.
1.3.2 Medical Office Building Requirements
Consider these four components if you are ready to start looking for medical real estate.
Location
Finding the right location is crucial in real estate. When purchasing a property, consider:
- How big is the area that it serves? Is the population large enough to support another medical center?
- How simple is it to access the building? If the building is far away from the main road in an area with little traffic, clients may view it as inaccessible.
- Who makes up the surrounding community? Are these people likely to need a medical professional, and do they have the funds to pay them?
- Is this a convenient location for clients? Will they face traffic jams or difficulty entering and leaving the property? Which place will your target market find most suitable?
- How exposed is the property? Is this a prime property that will attract many visitors? You can charge more in rent for properties in highly sought-after areas.
The Building’s Size
Find out the following before you sign up:
- How big is each office?
- Will a doctor’s room with diagnostic equipment fit in well?
- How big are the parking lot and waiting area?
- What upgrades are possible? For example, can the client install lab facilities?
Also, consider your plans going forward. Will you expand the building to incorporate more tenants? Even if you plan to do so at a much later date, you should consider the size of the facility and whether you have space to expand it if you want.
The Design of the Medical Real Estate
Also, consider the current state of the building and the equipment therein. With medical technology advancing quickly, buying old equipment may not be worthwhile.
It’s also prudent to establish if you can upgrade the building and bring it back up to date. Updating a medical facility can prove expensive, so prepare yourself by looking into renovation costs upfront.
Incorporating technology such as automated systems and other smart energy-saving features may give your clients the business edge they need. Not doing so could create the impression that your building is outdated.
How Versatile is the Building?
The healthcare industry is dynamic, making it imperative to own a versatile property. If COVID-19 taught us anything, it is that we need to be able to adapt quickly. Here are some things to think about here:
- What generic spaces are there? Can you use these rooms as multi-purpose offices?
- Is it possible to subdivide the area at a later stage?
- Can you use a modular, replicable design that is easy to scale up or down?
- What technology should you install to give you an edge?
Is medical real estate a suitable investment for you? Would you like to explore your options and find the best property for your money? Call Daniels Greer Properties in Tulsa, OK, at (918)-740-1015 to schedule an appointment with one of our experienced business real estate experts.