In this episode, Founder and CEO of CARR, Colin Carr, talks about commercial real estate for healthcare professionals.
Today, Colin talks about the top mistakes healthcare providers make with their office leasing, the financial side of real estate transactions, and important considerations when making decisions on lease agreements. Should business owners buy their space or lease their space?
Hear about how and when to negotiate, the importance of having representation, and hear Colin’s advice to his younger self, all on today’s episode of The Healthy, Wealthy & Smart Podcast.
Key Takeaways
- The best time to negotiate the lease is typically 12 months before it’s going to expire.
- “If you were serious about capitalising, you would’ve engaged an expert.”
- “You should not be telling the landlord anything that hurts your posture or position.”
- “When it comes to real estate, talk to real estate professionals. Don’t talk to other doctors about that stuff if they don’t know what they’re doing.”
- “Realise what’s on the line. If you make a mistake in it, the world’s not going to end, but it will cost you hundreds of thousands of dollars in additional payments that you could have avoided.”
- “Surround yourself with the most successful people that’s you can get around.”
- “There’s no substitute for hard work.”
- “Work it as hard as you can and then learn from your mistakes.”
More about Colin Carr
Colin Carr is the founder and CEO of CARR, the nation’s leading provider of commercial real estate services for healthcare tenants and buyers. Every year, thousands of healthcare practices trust CARR to help them achieve the most favorable terms on their lease and purchase negotiations.
Colin has been involved in commercial real estate for over two decades and has personally completed over 1,000 transactions. Colin educates thousands of healthcare professionals, administrators, business owners and students on an annual basis through national meetings, conventions, study clubs, associations, universities, and webinars.
Suggested Keywords
Healthy, Wealthy, Smart, Healthcare, Commercial, Real Estate, Negotiations, Representation, Leasing, Finance, Business,
To learn more, follow Colin at:
Website: https://carr.us
LinkedIn: Carr Healthcare
Facebook: CARR
Instagram: @carrhealthcare
Subscribe to Healthy, Wealthy & Smart:
Website: https://podcast.healthywealthysmart.com
Apple Podcasts: https://podcasts.apple.com/us/podcast/healthy-wealthy-smart/id532717264
Spotify: https://open.spotify.com/show/6ELmKwE4mSZXBB8TiQvp73
SoundCloud: https://soundcloud.com/healthywealthysmart
Stitcher: https://www.stitcher.com/show/healthy-wealthy-smart
iHeart Radio: https://www.iheart.com/podcast/263-healthy-wealthy-smart-27628927
Read The Full Transcript Here:
00:02
Hey Collin, welcome to the podcast. I'm happy to have you on today.
00:06
Glad to be here.
00:08
And so today we're going to be talking all about commercial real estate for healthcare, healthcare practitioners. So this is something that you've been doing for quite some time now since 2009. So before we get into the top mistakes healthcare practitioners make when it comes to their office space, can you give us the quick version of how you got into this space working particularly with health care professionals when it comes to their commercial real estate and office needs?
00:38
Yeah, absolutely. So started in 19, Managing apartment complexes back in East Lansing, Michigan, little bit away from where I grew up, moved to Colorado, my early 20s started managing some mid rise, high rise complexes, downtown Denver, and I got into brokerage about 23. And I worked for a gentleman that did a lot of large national retailer. So Walmart's Wendy's blockbuster. And that's how I got into brokerage over the years, I started doing more industrial, more office. And a couple years in, I started doing medical office buildings and working on hospital campuses, Class A medical buildings, and just fell in love with working with healthcare providers. And after a number of years of doing that, I realized that the healthcare industry was one of the largest, most unrepresented segments and all of all of real estate, you know, every time there was a listing, there'd be four or five brokers trying to get that listing, whether it was office or medical. But when it came to actual doctors running around town trying to find space or trying to negotiate, I didn't see anyone doing it. So I've made a focus made an intentional effort to start helping more healthcare providers, and then in 2009, launched our company.
01:47
That's excellent. And as most health care providers can say, we did not go to school for any of this stuff. I can say, as a physical therapist, I didn't go to school to understand how to negotiate commercial leases, and office space and things like that. So having professionals with the best interest of the healthcare provider in mind is so incredibly helpful. And I'm sure you're quite busy. But now let's get to what are the top mistakes healthcare providers make with their office space and their leasing needs, so I will hand it over to you.
02:20
Okay, so we'll have a couple there's, there's more than a few. The first mistake that healthcare providers make is they don't know when to start the negotiation. You've got healthcare providers that are trying to negotiate with two, three years left on their lease, and there's no leverage, there's no incentive for the landlord to do anything for them, the landlord knows they're locked, and they're on the hook in that lease contract for another two or three years. And so they have no posture, they have no leverage. Other side of the coin is they try to negotiate when there's two, three months left in the lease. And the landlord is assuming that they're not paying attention. They haven't hired representation. They don't know the market, they're behind the eight ball. And so you can start the transaction too early. And it's a it's a sign that you don't know what you're doing. And you can start it too late, which is a clear sign you don't know what you're doing. And either scenario, the landlord is gauging how serious you are. How savvy Are you? Do you have other viable options? Are you willing to move? Do you really understand the market? And are you going to fight hard for the terms that are commensurate with the type of property with the the market you're in with the economic climate? Or are you just bartering or bluffing? Are you just hoping for a better deal and guessing? So starting the transaction at the wrong time? That's a that's a big one right there. And
03:38
where and where is the sweet spot then? So it's like, it's like, what is that? Is it the the three bears? Goldilocks and the Three Bears like one bed was too soft, one was too hard to kind of have to find that sweet spot in the middle. So when it comes to negotiating, when should healthcare providers be thinking, Alright, now it's time to reach out to my landlord and start this process?
04:01
That's great question typically is right around 12 months from when your lease is about to expire. If you go outside of 12 months, again, the landlord's just don't have any real incentive to negotiate, because in their mind is I'll deal with it later. They can't go anywhere for 12 months or longer, and so they don't pay attention. But again, if you get too close, if you need to relocate, you don't have time to make that transaction happen. If you need to go to a new property, the negotiation process, the site selection that can take several months on average, you know, getting landlords to respond and negotiating the terms, getting an architect involved to look at the floor plan that takes a few months, it can take a month or two just to negotiate the actual lease contract Once you agree on terms working with the with the attorneys. And then if you need build out and you have to pull a permit or get contractors involved that can take another three or four months as well. So the ideal time is right about 12 months, that gives you enough time to handle each one of those steps that I just mentioned, but it's not too far out there.
04:56
Right. Excellent. All right. So Mistake number One not knowing when to negotiate. Now we have a better idea. What's another mistake?
05:06
Another mistake? And I'd say it's probably the top mistake. It's the do it yourself approach,
05:11
do ya probably be that would probably be was something I would do? Yeah.
05:15
Well, and there's a lot of reasons people take the DIY approach. Number one, it's typically because they're so busy, they don't know who to contact, they don't have time to do the research or due diligence in their opinion. And then it just comes up if the lease agreement shows up in the form of a landlord knocking on their door or property manager saying, Hey, listen, your lease is coming up, what do you want to do, and they just say, hey, send me a proposal. And that that starts the process of them doing it themselves. Or maybe you're looking for a new location or your first office, he started driving around, and you pick up the phone, and you start calling the listing broker landlord, asking questions, and all of a sudden, you have engaged and start the process all by yourself. The problem with this is that that is not the game plan for successful companies. If you take any national retailer that people would respect and say, hey, they do a great job, you take a Starbucks or Chipotle, they don't have some random person calling on properties or asking for proposals. They have a team of in house professionals and they utilize outsource experts that all these people do is negotiate professionally for a living. So when a landlord gets a phone call from a doctor or an office manager, no matter how well meaning that person is, the landlord is going to assume they don't know what they're talking about. And it's not, they're not trying to take shots at the person, they're just going to assume, Hey, you don't know the market, you've not want to look at 10 or 15 properties, you're probably not negotiating with three or four landlords simultaneously going three or four rounds of negotiations. And at the end of the day, if you were really serious about capitalizing and saving $100,000, on your next commercial lease, you would have engaged an expert, it's it's similar to, if you get audited by the IRS, if you don't get a really good CPA involved, you're probably not too serious about getting the outcome you're looking for. If you go to court, and someone's bringing a claim against you, or they ask you to go to mediation and arbitration, and you show up by yourself, you get your signaling, I'm probably willing to accept a much inferior result because I don't have the time, the money, the resources or whatever. And so when a landlord sees a tenant show up on representative, it doesn't matter if it's health care, or, or retail or office, they just assume that that person doesn't know what they're doing. And so that's, that's gonna cost the person a lot of money.
07:31
Yeah, so you really want to have the right professional at your side, so that you're not getting taken advantage of you're not prolonging things. And like you said, I love how you said that they're there thinking that you're willing to accept an inferior result. And as as a health care provider, or a physical therapist, like if, if someone broke their leg, and they need to rehab, well, they're not going to go to their account, and they're going to want to go to a physical therapist, that you don't want to do it on your own, because you're not going to get the right results. So same thing, right? You always want to have the right professional at your side.
08:08
Yeah, I mean, this would be much different than if a patient you know, if you talk to a patient or potential patient, and they needed to rehab something, and you knew it was an advanced rehab, and it's a time you have you have instruments, you have technology of equipment. And their response is, Well, I'm just going to head and figure it out. Like I'm going to search the web and just do some research, your response would be well, there's, there's a better game plan like you can, you can do that. And you can get some type of result or some type of an outcome. Just like a landlord knows, hey, you can you can lease a space without representation, but it's probably not going to be the most effective approach, you're probably gonna waste a significant amount of time. It's probably gonna cost you quite a bit of money. It's very similar.
08:41
Yeah, yeah. Okay, so don't know when to negotiate the DIY approach. What else? What's another big mistake?
08:51
Yeah, another big mistake. And I mentioned it briefly. It's negotiating on only one property. And this is different when you when you compare residential versus commercial real estate, okay. And residential. If you're going to buy a house or buy a condo or townhome, you go look at properties, you search online. And then when you find the property you're interested in, your agent writes a contract for you and they deliver it to the seller. If the seller signs it, you're under contract, you have the ability to cancel that contract with inspection, objections, financing, deadlines, and so forth. But you submit an offer towards one property and if they say yes, you're under contract, it's a binding contract. Commercial Real Estate works on what's called a letter of intent and loi, or a request for proposal and RFP. In either scenario, those are typically non binding. 99.9% of are non binding. There's, there's ways you can make them binding, but they're intended to be a non binding negotiation. And so in commercial real estate, the most strategic gameplan is you go look at X number of properties that meet your criteria. you narrow it down to the top three or four properties that are the best fit, even if one or two property One of your properties are the clear winners, alright, but you still negotiate on three or four properties. And you might even go two or three rounds of negotiations. The reason you do this is because it gives you the true picture of the market. You can't just go off what they're asking as a quote and lease rate on a brochure, because there's too many variables. Is the lease going to be a three year term? Or a 10? year term? Are you asking for no money for improvements? Are you asking for a couple? $100,000? Do you need a free build out period? Do you need free rent Upon moving? Or the annual increases? 2% 3% 4%? Are you going to personally guarantee the lease Are you trying to have your practice or business guarantee it, there's all these variables that are there. And so you've got to negotiate with multiple landlords to get a real feel for what the market offers. And when you do that, a couple things happen. Number one, landlords get more aggressive and competitive when they know they're competing. If a landlord thinks that this is the only property you're interested in, and you tell them, hey, this is my dream location, or you show them your cards, you're not going to achieve the best terms possible. And so being able to leverage multiple landlords against each other, again, respectfully with dignity, not you know, not not doing things in a way that's that lacks integrity, or cuts corners. But if you do it properly, you're going to know if that lease rate is market below or above, you're going to know if that's the right TI allowance, the right free rent package. And if you're getting three or four landlords to do something over here, and another, and another one over here is not one that you can leverage those against each other. And that, ultimately, is how that's one of the top ways that you achieve the most favorable terms possible.
11:31
Got at first, I thought you meant Wait, how many properties Am I getting, but it's not negotiating. It's not for you to have multiple properties. But it's for you to negotiate a single property, but through a lot of different through a couple of different landlords so that you you're kind of getting a better idea of the landscape,
11:52
you're you're gonna pick three or four properties to negotiate with, you're only going to choose one of them at the end of the day. But again, every landlords motivations are different. And so you might have two properties that you like equally, one landlord might be much more aggressive than negotiation. And if you add up all of the economic terms, you might find that two properties that appear very similar, that start out with pretty similar starting or quoted lease rates, you might end up with 100 $200,000 savings on one, or 100 or $200,000, in increased costs on the other. So just because the properties look similar, because they have close to starting lease rates, by time you actually work through all those economic terms, you can end up in a very different economic situation. Oh,
12:34
my God, I love that that is such a good tip. And I'm sure that's something I would never even think about. I would just think, well, I guess I'll just go with one property. So that is a great, great tip. Anything else? What other big mistakes and I know you said there's probably so so many, but maybe we'll keep it to like four or five.
12:52
I'll do two more of this. Okay, you quit, okay, I'm gonna kind of hinted at it. The next mistake healthcare providers make they tip their hand to the landlord, they tell the landlord, this is the property I want, or this would be the perfect space for me, or during a lease renewal negotiation, which is by which is by the way, that's the number one transaction in all commercial real estate, more lease renewals happen every year than any new office or purchase or relocation, okay? The number one mistake they make there is they talk to the landlord, landlord comes their office, the landlord might even be a patient, you know, property manager stops by and they say, Hey, your lease is coming up for renewal, what do you want to do, and the doctor says something along the lines of why don't want to move, or the space works great, send me a proposal. And again, what you have just signal to the landlord is you're not looking at the market, you're not hired representation, you don't know if it's going to be a good deal or a bad deal. And most likely you will accept an dramatically inferior deal. So signaling to the landlord again, you should not be telling the landlord anything that hurts your posture position, and they're looking for you, they're going to ask you questions, trying to get you to tip your hand. So that happens all the time. Here's why healthcare providers get into health care typically, because they want to help people. They're fascinated by the science. They're fascinated by the ability to transform people's lives to help protect lives, save lives, enhance lives. And they're not getting into health care, because they want to be a stone cold killer negotiator. Yet they're going up against landlords that are not playing games that have buildings that are worth 10s of millions of dollars. And those landlords get into real estate because they wanted to be a professional negotiator. So just be very careful what you say the best way to avoid this is to hire representation, let them talk to the landlord for you. And they will keep a very tight posture in the entire process.
14:43
Excellent. Okay, what's number five? Five, the
14:46
last one? Yep. Five. The last one is healthcare providers love talking to their peers and colleagues. And then they take that information that becomes the standard. And that's a really bad way of doing business. So So you might be in a building with with other tenants might be a dry cleaner could be another healthcare provider could be a restaurant. And they'll ask those tenants or neighbors, Hey, what are you guys paying? Or what did you get on your last negotiation, and then they share that information. But what they don't realize is they're asking people who may or may not have gotten a very good deal. We had this scenario, once we were helping a doctor in a building, it was a completely medical building two floors, six or seven doctors on one floor, six, seven doctors on the second floor, and we were talking to the doctor, we were looking at his lease, and he was significantly above market. And we said, hey, who's negotiate and what the last two or three renewals you've done? And you said, Well, I've done it myself every time. And we said, you know, how do you feel about these terms? Because this is exactly where the market is. And I said, How do you know that he goes, Well, I'm, I'm good friends with three out of the six doctors on this floor, we talk to each other all the time, we refer patients back and forth, we've we've swapped leases, everyone's paying the same thing. We're all paying $30 per square foot. And I said, well, like just so you know, their marketing space in the building, way lower than that. And we just negotiated a brand new lease on the first floor for a doctor at $21 per square foot. So you're gonna dollars a square foot above market, okay? And you haven't got any free rent your last couple of renewals. You haven't got any tenant Premadasa, renovate your space, and you're telling me you didn't get those because no one gets those I'm telling you right now, you and your three or four friends have been consulting with each other, you just have no clue what you're doing. So taking advice from somebody who is bad at negotiating or getting a really bad deal is super common. And so people share stories. They're on all these, you know, Facebook groups throughout all these threads, and everyone's sharing their experience, and it is their experience, but it might not be the best gameplan. So that's another big one we see too is talk to your friends about things clinically, when it comes to real estate, talk to real estate professionals when it comes to legal things, talk to attorneys comes to financials, talk to CPAs don't don't talk to other doctors about this. If they don't know what they're doing.
17:05
What a gut punch is, right? That guy must have been like, what $9? Over? Oh my gosh, what a Yeah, what a kick in the pants. That is. Okay, so those are really great. Five Great tips, five mistakes that people often make with their commercial real estate. And throughout that one theme certainly seem to emerge. And that is having representation on your side. So when it comes to commercial real estate agents, let's start with number one. How do you choose the best commercial real estate agent? And then how much does it cost? Because the cost is probably why people end up doing mistake number two, the DIY approach, right? Okay,
17:48
both both great questions. There's a handful of ways to find a really good real estate agent. Number one, if you're a healthcare provider, you want someone that has healthcare experience, it's very different talking to a real estate agent that focuses on million square foot distribution centers for Amazon, than it is someone who's working on a 2000 square foot physical therapy space, very different transaction. And commercial real estate, you got people that all they do is apartments, all they do is Office, all they do is retail, you want to find someone that understands healthcare that works in the healthcare space, number one. Number two, you want to find someone who's only going to represent your interests, commercial real estate, and residential real estate are known for agents that try to work what we call both sides of the deal. They're trying to represent the lammeter seller, and also the tenant or buyer, that is a clear conflict of interest. You can't negotiate for two opposing parties. It doesn't work that way. And so this is the idea of saying if somebody is suing you and you're going to court and you're asking the prosecuting attorney, if they'd give you advice, like that's literally what's happening, their client, the landlord or seller, they have a fiduciary to help that person or that group, make as much money as possible in the transaction and protect their interests, they cannot do the same for you. So you need to find someone that's not going to have a conflict of interest, someone who works in the tenant buyer side, who doesn't have listings with landlords in the area that you're looking because you want an unbiased approach with someone who's going to protect you right now. So those are two really important things. The next thing you say is, well, how do I find those people? You can search online, but typically, in any healthcare industry, you're going to have people that if you ask them, Hey, who do you know that specializes in healthcare, real estate for doctors, you're gonna have lenders that tell you, hey, this person or these people do, you're gonna have architects, contractors that have worked with these agents on a number of deals. And so there's a lot of referral partners in the industry that can weigh in on the topic. And so if you ask a handful, you should be able to get a few names very quickly, people that specialize in that area, and then what you need to do again, and that process only takes a little bit of time. It's not it's not no one's asking you to take a whole week off to spend dedicated towards that. But once you find a couple names, you need to speak with these people. You need to interview them, you need to talk them and say, what would your strategy be to help me maximize my profitability in my next transaction? How are you going to protect my interest? How can I know that you are the best fit for me? And like any other relationship or service provider, you're going to know quickly? What their responses just like a patient would say to you. Hey, how are you going to? How are you going to get me healed up? What is your game plan for me to get restored? Or to get you know, rehabilitated? What do you want to do, and you've got to earn their trust, it's the same way in real estate. And I tell doctors this all the time. If you talk to an agent, and you don't think that agent is the best fit, move on to the next one. And I mean, that's what we do for a living, I tell doctors, then if it's not us move on to the next person. Like it's, there's too much on the line for you to for you to just take whoever's there, don't settle in this area, find the person that you trust that you want to work with, that you believe has your interests in mind. And then that's how you get engaged. Yeah,
20:55
great advice. You beat me to the punch, I was going to ask you what questions to ask how do you vet and you just gave us those answers. So that was amazing. Now, let's talk about the money side of things. Because health care practitioners, yes, we get in to help people, we have our own business, it's also a business. So we want to make sure that we're maximizing our earning potential, if you will. So let's talk about one How much does it cost to hire a Commercial Real Estate Agent?
21:24
Okay, so that's one of the best parts of this entire conversation, it will not cost you as the doctor any money to hire a real estate agent. It's just like residential real estate. If you are a buyer, or a tenant residential real estate, you engage an agent as your exclusive agent, and they receive a portion of the commission from the landlord of the seller. So commercial works just like residential, again, for anyone in residential that's ever owned a house, when you hired an agent, you agreed to pay two Commission's one to your agent, and one to the buyer's agent, Sandman commercial real estate. And this is one of the biggest mistakes that healthcare providers make as well, we could put this as number six, if we wanted to, is they assume they're going to save money by not having an agent. And so they say, You know what, I'm not going to hire an agent. So I'm going to save money. But here's the reality, you're not determining whether or not a commission is paid or not paid. You're not determining what that commission amount is, when you go to a property, that landlord already has money set aside for every transaction. Even if they don't have a listing agents, they're doing it internally, they still have a commission set aside for every transaction. And if you do a deal as a doctor all by yourself, the listing broker gets a double commission, not one, but two, they double up to take both sides of it, or the landlord just keeps that money. And this is this is what happens is, you know, a lot of doctors have this like the do it yourself mentality. I always joke, it's like, every time you see a U haul moving truck, it says move yourself and save, right. But if you're moving yourself and give you a U haul, yes, you save money because no one's offering to pay your $3,000 movie bill. In commercial real estate, there's a commission set aside for the listing agent, and for the tenant or buyer's agent. And when the doctor the tenant doesn't have an agent, listing broker takes a double Commission, or the landlord just pockets that money. So it's 100% free service, it's not going to increase the lease rate for you, it's not gonna cost you money, it'll save you a significant amount of time. It'll help you avoid costly pitfalls, and it should save you a significant amount of money as well.
23:27
Okay, and that leads perfectly into my next question. So you had said earlier that lease negotiations or lease renewals, I'm sorry, are the thing that happens the most when it comes to commercial real estate? So how can healthcare providers or anyone for that matter, save $100,000? Or maybe more on their next lease renewal?
23:52
Great question. So we're gonna take, we're gonna accumulate my prior answers, and we're gonna, those are all the ingredients in that. And then here's what it looks like. So 12 months prior to your lease expiring, and you're going to look at your leisure going to figure out when you're when your dates show that you expire 12 months before expiring, you're going to start the process of finding an expert, commercial real estate agent in your area that represents healthcare, attendance and buyers that knows your industry, you're going to you're going to, you're going to call x number of people until you find the right person that you want to go forward with, you're going to engage that agent and you're going to have an exclusive relationship with that person, okay? That agent is going to take your requirement, and they're going to go to the market and we're going to find every property that meets your requirement. And they're going to whittle it down to the top three or four properties, even if you don't want to move. Even if you think that moving would be a convenient, they're still going to do their due diligence, and they're going to they're going to take their time energy and they're going to negotiate with three or four landlords simultaneously. And they're going to get to what's called best and final term so we're you know, if you were going to move to the property across the street, or down the street or across the city, you're going to know exactly what it would cost to do that, and you're gonna know what the economics would look like if you wanted to transact there. Once you have that information, you can now go to your, that agent can now go to your current landlord, and can negotiate with factual data, and with a very specific game plan. And here's why this is so important. Again, you can get this thing backwards. If you go to your landlord, and you ask them for an offer, you start negotiating. Here's the question, compared to what, how do you know if it's aggressive? You can compare it to what you're currently paying. But again, what if you're above market, and they say, well, I'll bring you down $2 a square foot, you can say why just save a bunch of money? Well, if you can move across the street don't say $5 a square foot. Or if you get a better landlord, or a better space or a larger space, you can't compare your current economics unless you are comparing them to other properties. So your agent goes, the market gets the top options negotiates, and then goes to your current landlord, and says, Listen, we brought to the market, we know what's happening. I'm a market expert, my clients now educated, and we got three or four other viable options, we'd like to have a negotiation and discussion with you, but it's gonna have to meet our criteria, because we've got two or three other properties, that could make a lot of sense for us, if you don't want to get competitive. And when landlords know that you're not an idiot, you know, you're not, you're not ignorant, you're not, you're not, you're not just gonna take whatever they give you, they come to the table with a much different approach. And when they know you're represented by an agent that is an expert, they're not going to waste their time trying to convince an expert that their deal is good if it's not good. So that that's the process. In a nutshell, there's a lot more to it than that. But that's how you get to the landlords, that will actually give you a good deal. Because at the end of the day, if you do move out of that property, they're not going to get the next tenant to pay above market, they're not going to get away with not giving them a tenant proven allowance or not giving them free rent, or trying to gouge them, because the new tenant won't take it, they'll just have go somewhere else. And so the landlord, if they think they've got you know, pushed into a corner, you have no other options, they will stick it to you. If they think that you have the freedom to move that you're willing to move, you got the help to move, they will come with a much more aggressive offer. And typically, at an average space of two 3000 square feet on a five or seven year deal. Those those numbers add up to usually a minimum of $1,000. And oftentimes hundreds of 1000s of dollars, that can be one in
27:23
your favor. Amazing. Again, having the right people in your corner doing your research coming to the table with facts and figures so that you have leverage to negotiate. All makes perfect sense. And now as we start to wind things up here, I just have a one, I think really interesting question, because I hear this quite a bit chatter on social media, when it comes to at least physical therapy business owners is do you buy your space? Or do you lease your space? So can you talk about that?
27:54
That is a great question. That's probably one of the top questions that we receive. The answer to that is you should look at both your options, don't pray determine one or the other, because every markets different, every economic climates different. And you could be in some markets where where you have multiple options to own and it's phenomenal other markets, there's not one option to own. So I mean, if you're doing real estate in a suburban Tulsa, that's different than if you were downtown Manhattan. I mean, you've got to know the different markets. What we tell healthcare providers is listen, we're going to go to the market for you and find the top properties that meet your requirements. And we're going to look at office options to lease and options to purchase, we're going to look at retail options, we're going to look at office options. And we're going to show you the top of what's available, you then are going to choose which properties that you're the most excited about. And then we're going to negotiate on three or four properties simultaneously. And then economics will tell you very quickly which property is going to make the most sense for you. If you can find a property to purchase. That's that's a top property if you love it, and the economics makes sense. We are a huge proponent of owning commercial real estate, you're building an additional asset, if you sell your practice, you can lease out the space. And typically that real estate is going to sell for more than your practice will sell for. We track this across the country, we work with 1000s of providers every year, and the real estate sells for more than the practice over 75% of the time. So if you could be an immediate to pay rent or mortgage either way, you've got to pay a landlord or or pay a company a mortgage company. So you're basically paying yourself in certain aspects of it. You got to make a payment either way, if you can own real estate and economics work phenomenal. A lot of times what you'll find is are you willing to pay more to own than to lease because of the upside. And so you might have scenario where it costs you an extra couple $1,000 a month to own and you get you have to decide is it worth that? Is it worth the extra expenditure to pick up some additional tax deductions to pick up that principal pay not every month you got to check X number of dollars go to pay down principal on the loan, your net worth goes up every month. And so we have those scenarios, if it's if it's 6000, or 6000, at least that's a no brainer at the back, right? If it's 10,000, or 6000, at least, you got a decision to make there a lot of times it's, you know, 12, or $15,000, or 6000. The least. And you have to decide which makes the most sense for your practice. And then you get in another 10, different evaluations, what's the downpayment? What's the cost of entry? What are the economic financing terms available to you? Is this space gonna fit you for three years? Or five years? Because if so, we don't want to purchase that we'd rather lease for three or five years, and then have you purchased the next location, if it's gonna fit you for the next 20 years? Again, that's a different story. So there's all these different variables, there's no one size fits all. There's there's groups that we help lease a couple spaces for that purchase, purchase couple spaces, then lease a lot of variables there.
30:48
Yeah, and and again, that's where coming together with your team makes a lot of sense, and and doing your pros and cons. But I hear that quite a lot. So thank you so much for your input on that question. And now, if you could put a bow on this conversation, what are the top things you want healthcare providers to walk away from when it comes to their commercial real estate questions?
31:17
Yeah, that's a great question. I would say, just realize what's on the line. We're not talking about, you know, did you overpay for a box of gloves, you weren't paying attached, you ran out and you know, you overpaid by $2, for a box of gloves, and you can go, you know, buy in bulk next week, or you have your supplier set, you know, whatever, we're talking about a transaction that you engage in every once once every five, seven or 10 years. If you make a mistake in it, again, the world's not going to end. But it will cost you 10s, or hundreds of 1000s of dollars in additional payments that you could have avoided. And there's a lot of other things that are on the line. Like there's economic terms, there's also business terms, what happens when you want to sell your practice, can you get off the lease, or you get stuck guaranteeing a lease for the person that buys your practice, because you don't have the right assignability class. So I would say this, make sure that you're treating your commercial real estate with the respect that it's still again, I mean, you can still do a lease, you can still stay in practice, etc. But again, the world's not gonna end. But there is a cost or a penalty to messing up here. And it's pretty high. Find a good agent, find someone that you trust, and that person will save you literally 3040 hours of your valuable time, they'll save you a significant amount economically, it's usually usually a minimum of 10s of 1000s, if not hundreds of 1000s. They'll also help you avoid complications and delays that come up all the time in commercial real estate when people are not paying attention. And then the last thing I'll say and I think this is more important than all these is that person's going to give you peace of mind. You're not going to have to wander every night you go to bed and put your head on your pillow for the next 10 years, you're not going to wander Did you get a good deal or a bad deal? You're going to know exactly what what terms you negotiate and how they compare to the market, you're not going to wander if you miss seeing a better property and you should leave somewhere else you chose, you chose the third or fourth best product in the market, he's just would have gone to market you would have known better, you're gonna have that peace of mind. So we can talk about saving time saving money, avoiding complications, delays, pitfalls, but I think ultimately, that peace of mind is invaluable. And for me, that's that's what I'm trying to deliver every time that I work with a client.
33:19
Yeah, you had me at saved 30 to 40 hours of your time. You could have ended it there. But I love having that peace of mind being able to sleep at night knowing that you really got the best deal that you possibly could because you started 12 months ahead of time you hired someone you had a team by your side. So perfect sense. So now, Collin, where can people find you? If they want more information? They have some more questions. What's your contact?
33:49
Absolutely, the best way to get ahold of us is our website. And that is car that US ca rr.us. On our website in the upper right hand corner, we have a couple options on our navbar that are of importance. Number one, you can click the Find an agent in your area. We've got agents coast to coast, we represent 1000s of healthcare providers every year, and we are working, we're working literally in all 50 states plus DC. So click Find an agent in your area. And then that's a great way to start. Another thing we have is a free lease evaluation. If you want to know where you stand in the market, even let's say you signed a lease last year and you got nine years left, we can still do a free lease evaluation for you. And we'll tell you where you stand based upon the market currently, if the market corrects, as we've seen some crashes last two years, who knows what we're going to be tomorrow, let alone five years now we can update that over time. So if you want to know where you stand in the market today, in a few years, we do that all the time, we can do it very quickly. And again, we can give you the peace of mind knowing where you're at and if you're way above market, then we're gonna try to capitalize on the next transaction. If you did a good job in your last deal, again, that gives you peace of mind knowing that you're in a pretty good position. We want to protect that or reserve that in your next negotiation. And then the third thing is we have a ton of resources if you want to study up, if you want to get educated, we got literally hundreds of articles, blogs, educational videos. And if you're interested in commercial real estate because it affects your practice, and you want to know more, we will give you information that will make you the subject matter expert.
35:21
Excellent. That was perfect. Now I have one more question that I asked everyone. And that is knowing where you are now in your life and in your career. What advice would you give to your younger self? So let's say that 19 year old in Lansing, Michigan, what advice would you give to him knowing where you are? Now?
35:39
That's a great question, I would say, surround yourself with the most successful people that you can get around. If you can get around them personally, and they'll spend time with you then do it. If you can't, then get around them through watching their podcasts through reading their books, you know, following their history. And then I would say that there's there's no substitute for hard work, you're gonna make mistakes, you're gonna fall down, you're gonna you're gonna do things that in hindsight, were less than intelligent to say them politely. But you just that's part of the process, owning a practice, you know, becoming a professional, anything in life, working as hard as you possibly can, and then learn from your mistakes.
36:17
I love it. This was so great. Thank you so much for taking the time out. I mean, I was taking notes furiously over here because I think this is such great information for certainly for healthcare providers, but I would say anyone that is looking to get into a commercial space, this was wonderful. So thank you so much. Absolute. It's been a pleasure to be with you. And everyone. Thanks so much for listening, have a great couple of days and stay healthy, wealthy and smart.