General Practioners (GPs) To Buy or To Lease?
When General Practitioners (GPs) are considering acquiring property for their practice, they face the decision of whether to buy the property or sign a lease.
Buying into a property allows GPs to own an asset that can provide long-term financial benefits. Ownership also grants more control over property improvements. However, it requires a significant upfront investment and comes with the responsibility of property maintenance and potential unexpected costs.
Leasing, on the other hand, may offer less financial burden upfront and free the GP from long-term maintenance responsibilities. It's crucial for GPs to consider factors like affordability, and succession planning before making a decision.
GPs seeking properties to buy or lease in Australia have various resources at their disposal. There are dedicated real estate professionals that cater to the commercial needs of professionals, including GPs. These professionals source and negotiate properties that fit the GPs brief based on their required location, price, and type of property, such as medical centres, offices, or clinics.
It's important for GPs to consider the location, accessibility, and potential for patient growth when selecting a property. Additionally, consulting with a real estate professional who has experience in the medical property market can provide valuable insights and assistance in the buying or leasing process.
When considering property options for GPs the decision to buy or lease can have significant implications for both personal and professional life. Here's an overview of the pros and cons:
Pros of Buying:
1. Equity Building: Purchasing a property allows GPs to build equity over time, which can be a valuable asset.
2. Stability: Owning a property provides long-term stability without the uncertainty of lease renewals.
3. Control: Ownership means control over the property, allowing GPs to modify the premises as needed for their practice.
4. Potential Appreciation: There's a possibility for the property to increase in value, offering a return on investment.
Cons of Buying:
1. Upfront Costs: Buying a property requires a significant initial investment and ongoing costs like maintenance, rates, and taxes.
2. Illiquidity: Property is not a liquid asset, which means it can't be quickly converted into cash if needed.
3. Market Risk: Property values can fluctuate, potentially leading to a loss if the market declines.
Pros of Leasing:
1. Flexibility: Leasing can offer more flexibility, allowing GPs to relocate if their practice outgrows the space or needs change.
2. Lower Initial Costs: Leasing typically requires less capital upfront, freeing up funds for other investments.
3. No Maintenance Responsibilities: Generally, the landlord is responsible for maintenance, repairs, and building insurance.
Cons of Leasing:
1. No Equity: Lease payments do not contribute to building equity; it's a fixed cost with no financial return.
2. Variable Costs: Lease agreements may include rent increases, and at the end of a lease, costs can significantly rise.
3. Less Control: Tenants have limited ability to alter the property to suit their needs without the landlord's consent.
GPs should assess their long-term business goals, financial situation, and the local real estate market before making a decision.
It's essential for GPs to explore all available options and seek professional advice to make an informed decision that aligns with their practice's long-term goals and financial stability.
After 20 years in the Commercial world these are just a few items I have encountered in my time. If you are looking to gain more insights into the above and how I can guide people and businesses in navigating the complexities of commercial property, please feel free to get in touch.
Peter Jarjoura