At some point, you may decide to purchase a building for your office. You may be looking at a building purchase for one of several reasons:
• You are buying a practice and the building is part of the purchase;
• You can’t find anything to rent in the area where you want to set up; or
• A great building is located right where you wanted to set up practice.
The buying process might begin with a doctor or someone else who is selling directly, or it might begin with a conversation with a commercial real estate broker. Be aware that a commercial real estate person is representing the seller, not you. You may want to get your own broker to help you with the negotiations.
The negotiation process is tricky, because the owner may have an inflated idea of the building’s worth, and you don’t want to pay any more than its market value. Your bank will also not want to loan you more than the building is actually worth. The best way to settle this difference is to get a property appraisal.
You will need to get an approval for the bank to lend you the money. This is called “qualifying,” and most sellers won’t proceed with a sale until they are sure the buyer is qualified.
If you are buying a practice as a “package” – patient roster, equipment, and building – the owner may likely try to bundle the selling price into one sum, but you will need to separate the building purchase since you will have a mortgage on the property. The bank is giving you this mortgage for a building with a specific appraised value.
After you have negotiated the purchase price, you will work with the bank to close the purchase agreement, sign the mortgage and loan papers, and take possession of the building.
As a final note, consider establishing a separate company (an LLC or corporation) to buy the building. Your chiropractic practice can then lease office space from the building owner. This separation protects your building from being part of a lawsuit against the practice. It also enables you to have an asset that can continue to increase in value and provide income even if you decide to move the practice.
If you visit an established DC who has purchased his own building, ask him about his experiences in the financing and negotiating stages. Use our Practice Visit Checklists to guide your conversations, studentDC.com/checklists.
When you are ready to plan the design of your office, check out studentDC.com/designyouroffice.
Buying your first practice? Use this road map to find opportunities and avoid pitfalls: studentDC.com/roadmap