Do You Know What Your Practice Real Estate is Really Worth?
Part 2- Diversification and Maximizing Value
Written By: Daniel Eisenstadt and Ian Widensky of Calico Real Estate
Like we discussed in Part 1 of “Do You know What Your Practice Real Estate Is Really Worth?”, today many veterinary practice owners are recognizing that their practice and building are two different and unique assets. And, if they own both, are realizing that viewing each separately can create greater financial value and more flexibility. Two other scenarios that can highlight the value of leasing your practice real estate rather than owning are Diversification and Maximizing Value.
Many veterinarians that are considering selling their practice are surprised that their prospective buyer — a corporate group or an associate— is not interested in buying the practice real estate. For some veterinarians the opportunity to collect rent is an appealing option. For others, a lump sum cash payment means they can prepare for retirement with a well-diversified portfolio of investments.
Veterinarians are often surprised to learn that a sophisticated veterinary real estate investor may value their building for more than the standard real estate appraisal. When this is the case, the opportunity for a veterinarian to sell his or her real estate and lease it back to the practice can be more financially rewarding than other traditional options. In fact, certain veterinarians may garner higher values for their real estate through a sale today then by waiting for years to sell the real estate along with the sale of the practice. In light of today’s historically low interest rates, real estate investors are often able to pay more now than they would in a higher interest-rate environment. Many practice owners can maximize the value of their real estate when the practice is performing well as opposed to waiting until the growth of the practice begins to wane as the lead veterinarian slows down.