If you’re thinking of opening up a new practice or clinic, then one of the most basic questions you will have to ask yourself is, “Should I rent or buy my medical space?” Both options have their advantages and disadvantages, and a lot of the reasoning behind your choice is going to depend on your own preferences and goals for the future. Here are a few tips that all doctors should keep in mind when deciding how to they want to manage their medical space options:
Taxes
If you lease a medical space, you can write off that rental expenditure when tax season arrives. Obviously, this isn’t the case when you own a medical space, but, as an owner, you can deduct property taxes and mortgage interest rates. As an owner, you can also deduct for repairs, however, if you go a step further and decide to make improvements to a building, those improvements are deducted over a period of 39 years.
Investment
When you don’t own a medical building, you don’t have much in the way of commitment, which makes it easier to move to a different area or facilities if you change your mind about your current location. Obviously, as a building owner, this
However, as the owner, you have an investment, and can benefit from the appreciation of that value, or, if you like, you can put it to work for you. Some doctors have found that if their business gets too good and they need larger facilities, one of the best ways to accomplish this is to get value from the current property by leasing it to other doctors looking to start out in smaller facilities.
Costs
Depending on your decision to buy or rent, your operating costs may be fixed or variable. Leasing means less commitment, which may be a good thing if you’re starting out and just trying to get a feel for how you want to manage your future. But it also means that at the end of the lease, you’re vulnerable to the climate of the market upon lease expiration, which, obviously can be good or bad depending on the state the market is in at that point in time.
Being an owner means that your costs are much more predictable and fixed, which is a better prospect for people thinking longer term. There’s a chance you may have to be prepared for changes when it comes time refinance the loan. On the other hand, with a good fixed-rate loan on a property, your costs are under much more stability and control and this makes it much easier to make financial plans.
The decision to rent or buy a medical building in South Florida depends a lot on your own personal factors. People who are just starting out in a practice and trying to get a feel for things make benefit from the lower costs and commitment of rentals. For people that are more established and looking for more control and long term benefits however, the advantages of owning are hard to ignore.