Medical Office Investments

2 Replies

Hey folks

relatively new to commercial investing.   getting started and would appreciate help, insights.   Dallas corporate growth is booming especially north DFW.   

There are office medical buildings for sale.   These are large buildings a developer has built and chunked up into 1000 to 4000 sq feet spaces.  They are brand new built in 2018 or to be built in 2019.     Facts below--

- Near highway access and very close to two major hospitals

- In one of fastest growing cities in DFW

- selling for 215-350 a sq foot.  

I'm looking at buying a smaller space.    

2000 sq feet @ 225 sq feet-  total purchase price - 450k.    Lease to dr at 25 sq feet?   50k annual?   what other costs are there? seem like good return

Questions- 

is medical a good investment in a hot market.  I feel its recession proof and tenants are longer term?

do the economics above make sense and does it seem like a decent deal? 

If renting it, will it rent for 25/sq feet?  to a dr?     

I want low maintenance as well so can we do NNN deal?

How long does it take generally to lease a space like this to a dr?

What is the playbook to make money on these types of deal?   is it the income or flipping it?

anything else I need to know

thanks

mark

Sounds like you are trying to buy a medical condo space and rent to a doctor. Main thing is you do not have full control of the building or association.

Getting doctors into spaces the TI is expensive. You have to structure the lease in your favor.

I help clients buy medical office NNN but it is more corporate tenants single user building with 15 year primary lease where you do nothing. They purchase at 7 caps and debt at 5.0 rate with about 30% down for 3 to 6 million in price typically.

I assume you're in Frisco or Collin county?

Lots of competition for Dr. space. If you have connections to tenants, you can make this work all day.

That said, TI buildout (as mentioned) is pricey and holding costs for a vacant unit can be high. deep reserves are needed for vacant commercial.