Physician interested in CRE. Do you have any tips or experience working with this sort of population?
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[{"id": "i2q5uk6", "text": "A lot of doctors usually own office/medical office buildings for their own use as well as for investment. I also work with several doctors who purchase retail centers and net lease deals because they are not too difficult to own and manage. You should reach out to a commercial advisor in your area that has plenty experience and can help you with your goals.", "replies": [], "depth": 1}, {"id": "i2q7l1q", "text": "So, I dealt with a lot of doctors when I was a medical office broker. The single biggest piece of advice I can give you is that you are a doctor, not a CRE professional. Engage CRE professionals to help you in your projects and TRUST WHAT THEY ARE TELLING YOU. Physicians tend to have a god complex where they believe they are always the smartest person in the room. I cannot tell you how many times I sat in a meeting with a doctor where they tried to tell me something about their building and were completely and absolutely dead wrong. Yet, despite being provided evidence to the contrary, they would refuse to accept that their conclusion was incorrect. The biggest disconnect I see is in docs not understanding that their PSF all in cost will be capped on resale - if you spend $550/sf on construction and build out you won't get that amount when you sell the building if your rents don't back up your sales price. The most successful physician CRE investors I have met put together a group of physician limited partners to work with a CRE/construction general partner to make deals happen. Let the GP do the work and be the expert, you just contribute those doctor dollars and get the check on the back end.", "replies": [{"id": "i2q8q4h", "text": "I've run into this mentality as well when dealing with doctors in CRE. Spending unnecessary amounts of money on things and lack of proper due diligence cost them a lot.  Like  the one that tried to spend $3.2 million building a medical office building when it valued at best $2.6 upon stabilization.", "replies": [{"id": "i2r767d", "text": "That actually sounds like one of the better physician deals I've ever seen to be honest.\n\nMy last two involved a sand mine purchased for $3mm ten years ago that might be worth $300m, and a $2mm addition to a $750m house.", "replies": [{"id": "i2rsopl", "text": "LOL I met a physician once who bought a flooded gold mine somewhere around Utah I think? Was trying to tell us how it would be worth hundreds of millions. Cool dude, I'm just here to talk about your building.", "replies": [], "depth": 4}], "depth": 3}], "depth": 2}, {"id": "i2qimes", "text": "SOOOOOO god damn true.\n\nSo educated and yet so dumb in the real world.", "replies": [], "depth": 2}, {"id": "i2r6e19", "text": "This.\n\nOf the dumbest deals I've ever seen, physicians were on the losing side of most of them. \n\nEngage experts, trust them.", "replies": [], "depth": 2}, {"id": "i2rid6l", "text": "@Ragnaroq314, You are correct. OP, please heed this advice and you will do well.", "replies": [], "depth": 2}, {"id": "i2u6yfh", "text": "Ha this is so true", "replies": [], "depth": 2}], "depth": 1}, {"id": "i2qbq97", "text": "What are your goals? Do you want big growth equity returns or cash flow? Personally, I love putting high income earners into development deals, because you\u2019re typically going negative cash flow on the deal (losing money) which offsets income, then picking up big equity returns on the sale which you can 1031 (avoid taxes) defer into new real estate opportunities. You\u2019re basically converting income into capital which you can defer gains on until you die, or even after.", "replies": [], "depth": 1}, {"id": "i2qdjn4", "text": "Figure out your goals. \n\nBest physician clients of mine know exactly one asset type and market. You don\u2019t have a lot of spare time to be researching more than that. \n\nhttps://youtu.be/1ihU5gOEFvw", "replies": [], "depth": 1}, {"id": "i2qgddl", "text": "There are capital allocator companies that create lists of doctors interested in investing in cre deals and pick projects to pitch to them as LPs. Access to accredited investors has a lot of value for syndicators so these companies are made of people who understand both worlds. They have the CRE chops to analyze deals and then cre people who have deals under contract bring them to these companies who have big networks of investors. The capital allocators evaluate if the deal would be good for their investors and then go pitch the deal to their investors. The benefit to the physicians is you get access to deal flow vetted by the capital allocator and sourced by experienced CRE professionals whose specialty is CRE. For a slightly smaller chunk of the profits you get to keep doing what you are good at and get the benefits of investing in CRE. \n\nYou can also skip the capital allocator altogether to save a few fees and register directly with the syndicator companies and they will send you deals when they have them.", "replies": [], "depth": 1}, {"id": "i2qigw0", "text": "Know that doctors, generally ..... are the worst RE investors in society !!!\n\nGet rid of your god complex and trust the guys who are in the industry.", "replies": [{"id": "i2si8eo", "text": "That\u2019s helpful mafia. Way to promote our peers and those aspiring to invest in our industry as a whole.", "replies": [{"id": "i2sjbd4", "text": "Have you ever dealt with doctors ?", "replies": [{"id": "i2z2qsx", "text": "Yeah best clients ever. They know their lane. If you know how to control them.", "replies": [{"id": "i30aqb0", "text": "Those are the best .... but they're not the ones with god complex.", "replies": [], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "i2ql6ki", "text": "I\u2019ve seen doctors do good deals and bad deals.\n\nUse your income and covenant to your advantage - you can get great financing and rates. Tell your broker you are conservative and start small. \n\nDon\u2019t overpay because money is less of an issue. Dont be afraid to negotiate. Ask questions. \n\nPut your own office and facilities in a building you own. As said above the losses from development can offset income, BUT budgets change and it can be risky. Also takes a while to see gains.\n\nDo not self manage. Hire experts. Get multiple opinions. \n\nYou\u2019re obviously a smart individual, and real estate is not rocket science (don\u2019t tell them that, ha).  It\u2019s fun! Good luck.", "replies": [], "depth": 1}, {"id": "i2qm3k4", "text": "Rule #1: you are an excellent doctor, but you are almost certainly a god damned idiot when it comes to real estate. You\u2019re smarter than we are \u2014 but we are better at making money in CRE than you are. Listen to us when we tell you \u201cthat\u2019s asinine.\u201d\n\nRule #2: I don\u2019t care how nice your real estate looks. It is worth what SOMEONE ELSE will pay for it. No more, no less.\n\nRule #3: Your real estate is worth your net operating income after replacement reserves divided by a market driven cap rate. That\u2019s it. That\u2019s really it. Again \u2014 I don\u2019t care how nice it is. I care what my cash on cash return is going to be.\n\nRule #4: What you do is complicated, so you assume that what we do is complicated. That is false \u2014 we do the same thing, over and over and over again \u2014 and we have hundreds or even thousands of reps doing this one thing. Trust me \u2014 just like you\u2019re better at surgery than we are, we are better at real estate than you are.\n\nForgive the harsh language, but doctors in particular make the most difficult relationships in the industry. I\u2019m painting you with a broad brush, you might be different. But more likely, you\u2019re not. Best course of action is to hire an experienced real estate professional and work with them.", "replies": [{"id": "i2qojj5", "text": "No offense taken. Appreciate the insight.", "replies": [], "depth": 2}], "depth": 1}, {"id": "i2qqg6v", "text": "Buy a multi-tenant medical office building and occupy a part of it. You will get good tax advantages and will be able to cover your operating costs. The only downsize is that MOBs are either cheap and empty or expensive but quality. So you either shell out a lot of cash for a good one or spend a lot of time/unrealized money making one good.", "replies": [], "depth": 1}, {"id": "i2r72wm", "text": "I\u2019ve seen a lot of success where a group of doctors will get together to pool equity for a build-to-suit medical office. They own it, pay a developer a fee to build it, and they pay someone to manage it. This usually works because they have many contacts in the industry that need to space and new medical space is a great thing.", "replies": [], "depth": 1}, {"id": "i2r7302", "text": "I'm a mid-career surgical subspecialist. \n\nMy wife and I own 2 commercial buildings (her business is in these), a 16 unit class A apartment building (mixed use with 2 commercial spaces), and an assortment of 1-5 family homes in B and C areas. We accumulated most of this in the last 10 years.\n\nThe best lessons were learned with the single tenant commercial spaces that we renovated. We learned how to manage a project, hire contractors, deal with zoning changes, and after the buildouts were done, we were in and out of the building every day to see how things are going. \n\nWhen we got the apartment building, we learned more about managing more complicated systems like alarm monitoring, elevator maintenance, and tenant management. \n\nThere is a very significant learning curve. I remain convinced that the owner occupied single tenant commercial building is the best way to get your feet wet and learn about how property is managed.", "replies": [], "depth": 1}, {"id": "i2rkk0t", "text": "Invest as a passive LP. Do your DD and make sure the deal makes sense, sponsor has a good record. Then go back to helping people.", "replies": [], "depth": 1}, {"id": "i2rnktz", "text": "what are you trying to do?  invest?  what class?  or are you talking your personal offices?  \n\nMy advice is to be more specific :)  We see a lot of docs pop up with no idea what they want or what they are trying to achieve and they just keep telling us they are docs and worth a shit ton of money and expect us to be impressed.  The truth is everyone we work with is generally high net worth, and we will be less impressed than most other folks you come into contact with in your general life.  \n\nA few docs are my favorite clients too, I really dig how they tend to actually care about their work and take it personal which many of my other clients really don't honestly care about anything outside of making money.\n\nMy advice is for you to forget your a doc and share what you want to accomplish in CRE.  Posting for advice specific to you that doesn't even ask a question outside of \"well I'm a doc, what should I know specifically that wouldn't apply to anyone else\" is kind of the issue with docs most in this thread are referring to.  My richest clients aren't actually doctors.  We aren't impressed, we want to do our jobs.  Unless I'm trying to locate a clinic it isn't really relevant.  If I am trying to locate a clinic it becomes super relevant and you should be asking questions about that as you'd get much better answers.\n\ntldr- no one cares that you are a doc unless its relevant to the project.  We don't treat you differently than a trust fund kid, a ceo, a bank, a reit, or a anyone else with money asking us to help you invest in CRE.  If you are telling us you are a doc because you have a business owner occupied issue you want help on, then it is relevant but you haven't given any details on how to even assess that", "replies": [], "depth": 1}, {"id": "i2rsymd", "text": "Single tenant, net leased retail. DM me if you want help. I've help a lot of first time buyers acquire some quality properties with headache free tenants/lease structures.", "replies": [], "depth": 1}, {"id": "i2sxbyg", "text": "Many physicians that i assist with financing buy properties that house their practice but also will have additional rental space for other physicians.", "replies": [], "depth": 1}]