Why Your Dentist is a Real Estate God

Good morning! If you opened this thinking it was a Tiff’s Treats coupon, sorry! It’s a crummy newsletter on commercial real estate. If you think that’s cool, read on!

Here’s what we have for you this week:

• How your Dentist may be a Real Estate God

• Analyze a Self Storage investment (with video)

⬇️ Let’s get into it ⬇️

How your Dentist may be a Real Estate God 😲

Did you know your dentist is probably richer than you? Like a lot richer.

And not just because he owns his practice producing over $1mm a year.

No no, because his building is worth $2-3mm.

Don’t believe me? Take it from the healthcare real estate guy himself:

Wait, hold on. What makes it worth so much? The building next door sold for half that. Why’s dental man raking it in?

It’s called cashflow baby.

Rule #1 in Commercial Real Estate: Income producing assets are worth more than non-income producing assets.

Dental offices pay some of the highest rents in retail. It’s an investors dream to have a dentist as tenant.

They rarely go under, rarely leave, and always pay their rent.

So, Mr. Dentist over here bought his building for $500k, turned around and signed a lease (to himself) for the space, then proceeded to sell it to an investor for $3mm.

Literally created $2.5mm in value out of thin air.

I guess cleaning teeth is actually the biggest value-add real estate play there is!

You non-dentists out there can use this investing strategy as well.

Finding a quality vacant building, then bringing in a tenant (like a dentist) and then selling to an investor is one of the sure-fire ways to make money in CRE.

Kudos to you dentist man.

⬇️ Next up ⬇️

Analyze a Self Storage Investment (w/ Video)

Have you ever been curious on what underwriting a commercial property looks like?

Well here’s a look at a self storage listing where we go through exactly how we would underwrite a deal.

Below is a 20 minute video. A tad long, I know… But it’s packed with content for beginning investors or anyone looking at the self storage asset class.

Enjoy it!

If you don’t have 20 minutes right now, here’s the cliff notes:

1. Initial Assessment 
- Receive information on an on-market self-storage property listing.
- Gather basic details: asking price, Current Rent, Current expenses, Market projections.

2. Unit Breakdown and Projections 
- Review unit breakdown provided by the broker.
- Analyze market projections and compare with current rates and occupancy.

3. Projected Income and Expenses 
- Create projections for rent increase and occupancy improvement over three years.
- Estimate gross rental income based on projections. Consider non-rental income and operating expenses.

4. Expense Analysis 
- Review operating expenses provided by the broker.
- Assess expense ratios and identify areas for potential reduction.

5. Debt Payment Calculation 
- Determine loan amount based on equity and down payment.
- Use a loan calculator to calculate monthly interest and principal payments.

6. Net Operating Income (NOI) 
- Calculate NOI after debt payments.
- Analyze cash flow and cash on cash returns.

7. Sales Projection 
- Estimate potential sales price based on cap rates and projected income. - Factor in brokerage fees and pre-payment penalties.

8. Deal Assessment 
- Evaluate the overall deal based on cash flow, return on investment, and potential for value-add.
- Consider cash on cash return and long-term holding vs. value-add and resale strategy.

9. Final Verdict 
- Assess the deal's viability and potential returns. Consider market factors, occupancy rates, and investment strategy.
- Determine if the deal aligns with investment goals and risk tolerance.

Hope this helps for anyone looking at their first investment properties!

Be sure to check out more content like this at CREJunkie.com