Top 10 real estate boo boos


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Street | Sotheby's International Realty Medical is a trusted provider of credible real estate information and a skilled interpreter of that information for those who demand exceptional service. We provide our clients with the information and tools to make the right decision for themselves. Call Tom Dalcolma or Dr. Gerard M Papp to learn more.

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Top 10 real estate boo boos

  1. 1. TOP 10 REAL ESTATE BOO-BOOS THAT BEFALL PHYSICIANS 02/28/11 © Street Sotheby’s International Realty
  2. 2. The Top 10 List <ul><li>1. Not allowing enough time </li></ul><ul><li>2. Neglecting long-term priorities </li></ul><ul><li>3. Inadequate representation </li></ul><ul><li>4. Insufficient timing to transition to new space </li></ul><ul><li>5. Underestimating condition of the premises </li></ul><ul><li>6. Using the landlord’s professionals </li></ul><ul><li>7. Misunderstanding true space costs </li></ul><ul><li>8. Paying too much rent </li></ul><ul><li>9. Not enough landlord incentives </li></ul><ul><li>10. Not using a medical realty specialist </li></ul>02/28/11 © Street Sotheby’s International Realty
  3. 3. # 1 Not Allowing Enough Time <ul><li>Begin the negotiation process at least 12 months in advance. </li></ul><ul><li>Lease renewal </li></ul><ul><ul><li>Examine other opportunities in the marketplace </li></ul></ul><ul><ul><li>Compare rental rates and tenant improvements with commercial listings </li></ul></ul><ul><li>New Lease </li></ul><ul><ul><li>Negotiation takes time, can take months </li></ul></ul><ul><ul><li>Most likely needs tenant improvements before move-in </li></ul></ul><ul><ul><li>Permits for renovation and occupancy take time </li></ul></ul><ul><li>Purchase </li></ul><ul><ul><li>Consider purchasing an existing building and retrofit it </li></ul></ul><ul><li>Build New </li></ul><ul><ul><li>Process can take up to two years </li></ul></ul>02/28/11 © Street Sotheby’s International Realty
  4. 4. # 2 Neglecting Long-Term Priorities <ul><li>Don’t get caught with expansion problems in the future. Obtain space and lease terms which will allow a physician to expand, downsize, or relocate according to need. </li></ul><ul><li>Expansion Rights Clause </li></ul><ul><li>Cancellation Right Clause </li></ul><ul><li>Extension Right Clause </li></ul><ul><li>Sublet Right Clause </li></ul>02/28/11 © Street Sotheby’s International Realty
  5. 5. # 3 Inadequate Representation <ul><li>You use an accountant to file your tax forms, a lawyer to offer legal counsel and you should use a professional realtor® to represent your interests </li></ul><ul><ul><li>It’s saves time, headaches and money </li></ul></ul><ul><ul><li>Increase access to multiple commercial listings </li></ul></ul><ul><ul><li>Leave the negotiating to a pro to obtain </li></ul></ul><ul><ul><ul><li>the best rates, terms, incentives and lease clause protections </li></ul></ul></ul><ul><li>This valuable service is usually free to the physician since tenant representatives share in the leasing fees paid by the landlord or seller </li></ul>02/28/11 © Street Sotheby’s International Realty
  6. 6. # 4 Insufficient Timing to Transition to New Space <ul><li>This can be a disaster with unexpected delays in the planning, permitting, and construction stages consume the rent-free build-out period. </li></ul><ul><li>Use a medical realtor to suggest a list of qualified professionals, architects, builders, space planners. </li></ul><ul><li>The realtor should also propose a clause which provides for an extension of the lease commencement date if pre-opening delays are encountered which are beyond the control of the physician. </li></ul>02/28/11 © Street Sotheby’s International Realty
  7. 7. # 5 Underestimating Condition of the Premises <ul><li>Physicians who take a property “as-is” put themselves at great risk. </li></ul><ul><li>Building codes change. </li></ul><ul><ul><li>Inspection by a professional along with landlord guarantees are a must. </li></ul></ul><ul><li>No one can visually see how well the electrical, heating, ventilation and air conditioning systems are functioning. </li></ul>02/28/11 © Street Sotheby’s International Realty
  8. 8. # 6 Using the Landlord’s Professionals <ul><li>Physicians should use their own real estate agents, architects, general contractors, and legal counsel to control the various space plans, specifications, costs and documents. </li></ul>02/28/11 © Street Sotheby’s International Realty
  9. 9. # 7 Misunderstanding True Space Costs <ul><li>It is difficult to compare “apples to apples’ when looking at commercial medical real estate. </li></ul><ul><li>Understanding the different lease types such as: Full Service, Gross, Semi-Gross, net, Triple Net … </li></ul><ul><li>Understanding base rent, tenant improvements, cam charges are all part of the comparison equation. </li></ul><ul><li>Costly errors continue for the duration of the lease. </li></ul>02/28/11 © Street Sotheby’s International Realty
  10. 10. # 8 Paying Too Much Rent <ul><li>Failure to obtain accurate, current market research may lead to a rental rate that is too high. </li></ul><ul><li>Landlord’s rates and terms change constantly depending upon many factors including occupancy rates in their building and the competition, lease length, tenant’s use, parking requirements, financial strength of tenant… </li></ul><ul><li>ALL LEASES ARE NEGOTIABLE! </li></ul>02/28/11 © Street Sotheby’s International Realty
  11. 11. # 9 Not Enough Landlord Incentives <ul><li>Inexperience may hinder your ability to obtain negotiable incentives. </li></ul><ul><li>Typical incentives include periods of free rent both before and after lease commencement, discounted rent for various time periods, landlord contributions to build-out costs, landlord improvements to the space, caps on future rent increases and operating costs… </li></ul>02/28/11 © Street Sotheby’s International Realty
  12. 12. # 10 Not Using a Medical Realty Specialist <ul><li>Street | Sotheby’s Medical is the only brokerage team in Central Ohio dedicated to medical properties. </li></ul><ul><li>We are the provider of credible medical real estate information and skilled interpreters of that information. </li></ul>02/28/11 © Street Sotheby’s International Realty
  13. 13. FOR MORE INFORMATION OR A FREE CONSULTATION PLEASE CONTACT: GERARD M. PAPP D.O. [email_address] O-614-538-8895 EXT 188 C-614-531-8887 TOM DALCOLMA [email_address] O-614-538-995 EXT 180 C- 614-439-5311 02/28/11 © Street Sotheby’s International Realty