Medical Real Estate Dallas

Your Personal Guide to Choosing the Finest Medical Properties

As you no doubt already know, medical real estate is one of the most lucrative sectors in real estate investment right now. Thanks to the Affordable Care Act, medical offices and other facilities are in incredibly high demand all over Dallas and the rest of the United States, as well. With millions of Americans getting health insurance, sometimes for the first time in their lives, people are eager to seek medical attention and improve their health. As a result, physicians are overbooked, and there’s plenty of room in the market for new practices. In fact, there’s a huge demand for them.

So, with all of that in mind, how do you choose the finest medical properties to ensure the best returns on your investment? If you follow a few simple tips, you’ll be able to spot the best deals and the best properties to diversify your portfolio and grow your wealth while you improve your area with more of the medical properties that local patients want and need.

Research Local Demographics

First of all, what is the average age of the population in the area where you want to invest? And what’s the median age? What percentage of the population are single, married, young, old, male, and female? The more you know about the demographics of the people who live in your area, the better you’ll be able to understand their medical needs.

For example, if you are investing in a location that’s mostly made up of young couples and families just starting out, your best medical real estate investments will likely be OB/GYNs, pediatricians, and family practices. On the other hand, if your area is primarily made up of retirees and senior citizens, a senior care center, nursing home, or senior living community might be the better investment. If you know where you want to invest, you can do just a bit of research to find out what kinds of medical properties are in demand and which ones will make the best investment opportunities.

Look for Positive NOIs and Cash Flow

Medical properties fall under the heading of commercial real estate, and the net operating income (NOI) of any commercial property is the difference between the income on the property from rent and the cost to maintain and manage the property, not including income tax or loans. This number needs to be positive if you want to make a profit when you decide to sell.

While your NOI determines the value of the property and will help you understand its resale value, you should also take into account any mortgage or loan payments, as well as your income and property taxes. Does the rental income from the property more than make up for these costs? If not, you’re not looking at a profitable medical property, and you should consider a different location, type of practice, and/or developer.

Consider Market Trends in the Surrounding Area

While commercial properties’ market values are based on their potential rental income rather than the value of comparable properties in the area (as is the case with residential properties), you should still look at the market trends and property values in the surrounding area. Essentially, you want to know if you’re investing in a medical property in a growing neighborhood or a community that’s slowly dying.

To determine this, look at the property values for both commercial and residential properties in the area over the last 18 months. What kind of trend do you see? If the trend is steady with a slight tendency toward positive growth, you’re looking at a good area to invest in. If it’s been steadily declining, you should move on to your next investment opportunity. If it has been rapidly increasing, you may want to be wary. This could be a sign that the area is growing and thriving, but that rapid rise in property values could either level off or crash. Be wary of volatile markets.

With this information, you should have everything you need to find the finest medical properties for the best real estate investments for your portfolio.