Building Purchase Conundrum

During the course of our consultations regarding properties, we get the question, " Would it better for me to purchase the building (or land) or merely lease?"

It is a difficult question to answer ONLY on the basis of demographics and market trends. The Client's economic situation, credit, and myriad other factors have to be considered FIRST. But with that taken into account and all other factors being equal, we say that the time to consider purchase of real estate (either an existing building or land for construction) is looking good.

Here is our reasoning based upon the numbes we see coming through:

1. Real estate (both commercial and residential) is at a low-point right now. Obviously, when the market is down, there is money to be made by those who have income and credit.

2. The cost of borrowing money is going down. Recent interest rate cuts are not the sole indicator of the price of money, however. Lenders WANT to lend as the way for them to shore-up their portfolios (some of which are looking less than stellar), to keep relevant in the marketplace, and to continue cash flow. True, State and Federal regulators are trying to fix what they had caused earlier by making loan qualifations more restrictive. But we believe this is only giving better leverage to those who CAN borrow.

3. If well selected, real estate is the safest investment in the world IF IT IS AN INCOME PRODUCING PROPERTY. Now, here is where the rubber meets the road: No favorable market can overcome "stupid." You have to do your homework (and consider purchasing a demographic report to help) to determine the best sites.

So, given the current market and all other factors being equal, we believe that an investment in real estate to support your practice could put your well beyond your financial goals in a short time, keep your overhead low (or controllable), and vastly benefit your retirment using a tried-and-true method of investing for doctors.