Hi all! I own multiple dermatology practices and I have the opportunity to buy the land/building of a practice I’m currently looking at. It’s a $1700 sq ft building in a super hot market, (only 7 parking spots though, but I’m working on an access agreement for the neighboring landlord). Seller is asking 2.5 mil for the property.
At the same time, my family has grown and we REALLY want a new/nicer home for our family. Likely in the range of 4mil. but it would be in an area that is basically guaranteed to appreciate.
We can stay in our house for another 2 years max, but of course we want to get out asap.
What information is needed to determine if it’s smarter to buy this business property or upgrade our house first? Unfortunately I can’t do both. I know the real estate market is at a high right now, does that also pertain to commercial buildings? Also, need to factor in interest rates rising..
Real Estate Consultant · Denver, CO · Member since 2021 · 666 posts · 389 votes
4y
@Timothy Solomon From what you have told us, I would recommend buying the commercial building and continuing negotiations on access to the neighboring landlord's space. Personally, I would use the fact that there is limited parking to your advantage when making an offer.
Also, there is something you may not have considered. If you own the practice that is operating out of that location and the property, it can be an active investment and you can use the excess depreciation available with cost segregation against your income from the practice as well. This grouping of business and property can only be done in the first year of building ownership. And, there are other lucrative and very substantial tax benefits available to you as well that you and your tax professional are not likely considering. This is a specialty tax area. With the taxes you save and the additional benefits, you can buy that new house as well.