June 17, 2025 • 44 mins
In this eye-opening episode of the Will Power Podcast, host Will Humphreys sits down with commercial real estate expert Colin Carr, founder of CARR, to reveal a financial strategy most private practice owners overlook, owning the real estate their business operates in.
Together, Will and Colin dive deep into how real estate ownership can become the most valuable asset in a healthcare entrepreneur’s portfolio, even more than the practice itself. They discuss the pros and cons of leasing vs. owning, how to avoid costly mistakes in lease renewals, and why negotiating with the right strategy can save you hundreds of thousands of dollars.
What You’ll Learn:
- Why real estate is often more valuable than the practice itself
- The critical difference between leasing and owning
- How healthcare providers lose massive amounts of money during lease renewals
- Why timing the market isn’t as important as time in the market
- The top 3 mistakes practice owners make in real estate deals
- How specialized representation gives you the leverage you need
- Why working with a healthcare-specific real estate firm changes the game
- Real-world examples of providers who built generational wealth through commercial real estate
🔗 Connect with Colin Carr:
- Website: https://www.carr.us
- LinkedIn: https://www.linkedin.com/company/carrhealthcare
- Facebook: https://www.facebook.com/CARRHealthcare/
- YouTube: https://www.youtube.com/c/CARRHealthcare
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:08):
Every private practice owner should own the
building they're in.
Today we're talking to ColinCarr.
He is an expert in real estate,founder and CEO of Carr
Incorporated, the nation'sleading provider of healthcare
real estate for services foronly tenants and buyers.
They're so niche they only helphealthcare professionals or
(00:29):
private practice owners buy orlease their buildings and we're
going to be talking about how toavoid the biggest mistakes that
private practice owners makewhen it comes to leasing and
buying.
We're going to talk about whybuying is so important, no
matter what the market is, whenthe best time is to join the
real estate game, where you arein your stage of business and
how that could influence whetheryou buy or lease.
(00:51):
We're going to talk aboutsaving hundreds of thousands of
dollars with very smallnegotiating tactics.
This episode is worth so muchmoney and it's super short.
I think it's like 40 minutes.
Yeah, Colin, I am on a mission,like you are, to help private
practice owners understand theimportance of of owning the real
estate that their business isin.
(01:12):
I didn't know until after Isold, like how valuable that was
, so let's start really likefundamental stuff.
You know, when a privatepractice owner is looking at
their real estate consideration.
What do you think the pros andcons are of leasing versus
owning the space?
Speaker 2 (01:30):
Yeah, there's a lot of factors that go into whether
you lease or purchase, butbefore I jump in there, I do
want to hit on what you justsaid.
If you have the ability to ownreal estate, the real estate is
going to be worth more than apractice.
Once you get ready to sellLiterally, it's 80 or 90% of the
the real estate is going to beworth more than a practice once
you get ready to sell Literallyit's 80 or 90% of the time the
real estate is worth more thanthe practice and so when you
(01:51):
look at the value of that, youmight spend 10, 15, 20, 30 years
building a practice and you canpurchase real estate if you
have the ability to and it fitsyour requirement, that's going
to be worth more than thepractice at some point.
So it's really a two for one.
I mean, it's two of yourlargest assets that you have and
they're both very saleable.
And the real estate becomeseven worth more money when you
have a practice tied to it.
(02:11):
So I couldn't agree more.
Owning real estate is one ofthe greatest investments that
healthcare providers will evermake.
The question on what you shoulddo as far as leasing or
purchasing it comes down to acouple of factors.
Number one it comes down toinventory.
You might have a desire to ownreal estate.
You might have an establishedpractice and say I'm leasing, I
want to purchase now, and youmight go to the market and there
(02:32):
might not be any properties forsale that meets your criteria.
It's not like residential,where there's always another
house for sale or you can justpush into another neighborhood
or go a little further away fromthe metro area Commercial real
estate.
If you're in a finite area andyou want to stay in a certain
market, there might not be anyoptions for you to buy, and it
depends on the market.
If you're in Tulsa, oklahoma,there's going to be land on the
(02:54):
outskirts.
If you're in Manhattan, there'sno more land, and so inventory
is going to determine realquickly whether you've got
options to purchase or not.
The next factor is going to bejust what's your current
situation?
Do you have money for the downpayment?
What's the cashflow look like?
What's the quality of property?
Sometimes you can buy realestate, but if it's in an
inferior location it's going tohurt your patient referrals If
(03:17):
it's maybe not as good of alocation as you could find a
lease.
You got to take that intoconsideration too.
And then you just get into theeconomics of it.
You start looking at conceptslike what's it cost to lease
versus what's it cost to have amortgage.
What does it look like afteryou factor in tax deductions?
When you own commercial realestate, you can depreciate that
real estate and you can pick upadditional tax deductions.
(03:39):
What does it look like afterprincipal pay down?
When you cut a check to alandlord, that money goes to the
landlord.
When you cut a check to alandlord, that money goes to the
landlord.
When you cut a check to alender, like a mortgage company,
a portion of that pays downprincipal and every month your
net worth goes up.
So you can take a portion ofthat principal away from the
payment and say this is reallyjust a forced savings account.
And so the numbers are going totell a different story.
(03:59):
You might start out and have alease that's 5,000 a month, a
purchase that's $10,000 a month.
But after depreciation, aftersome of the deductions, after
principal pay down, theeffective cost of owning might
actually be less than leasing.
And so you've just got to runthe numbers and say what's the
actual cost of owning versusleasing and then you factor in
some of those other items likeinventory and quality of
(04:19):
properties and so forth.
Speaker 1 (04:20):
Yeah, but it sounds like as great as that was, and
thank you for defining that itsounds like.
At the end of the day, wheneverpossible, owning is the way to
go.
Speaker 2 (04:28):
That's my preference personally.
I mean there's some exceptionsthat roll.
If you just said, listen, I'mgoing to be selling my practice
in a year or two, I've got alease renewal coming up.
I just want to just kind ofstamp a lease renewal and then
(04:50):
sell my practice in a year ortwo and drift off into the
sunset, that's a different story.
If you're just getting startedand you think you're going to
want a much larger space or adifferent type of building in
the future, leasing might be thebest option for you to get
started.
Maybe you lease for five years.
Then, once you get your feetunderneath you and you know the
exact area you want to be in,you know the exact size that's
going to facilitate your need tothe next 10, 15 years, then you
buy the right size building.
So there are times when leasingdoes make more sense.
But if you are in a positionwhere you can see yourself in
(05:12):
that building for 15, 20 years,you've got the ability to put
the down payment on it.
The financing is going to workfor you.
You know I'm going to pushtowards the purchase nine out of
10 times.
Speaker 1 (05:23):
Well, and that's what I want to confirm, that was the
biggest surprise on thefinancial end of my exit.
So I had four to five locationsand when I exited I had
ownership in two of thebuildings and it was so amazing
to me how that played outBecause, as one of my friends,
ed Drummond, says, who's a realestate expert, he's like it's
(05:48):
not timing the market of realestate, it's time in the market,
and so what you're saying isparalleled with that.
You know private practiceowners who have their own
business, and if they own theirown building, while they're
doing this thing called owningthe business, there's all these
like short term advantages, taxwise, for owning the building,
not to mention before I continuemy call and there were times
where we we would have afinancially slow month and so we
(06:10):
just reduced our rent thatmonth because there was a little
bit of a gap there.
So we were able to make someadjustments that helped the
business in a way that alandlord wouldn't have been able
to do.
So, yeah, and then when we sold,it was so crazy because you
said it best.
Sometimes the value of thebuilding is worth as or more
than the value of the businessand, like in my case, the buyers
wanted to sign the highestlevel leases they could to keep
(06:32):
me engaged in the business.
So I got a AAA lease with allthese wonderful like it was a
great lease.
And after selling the practicehaving that business, the
building sorry, the income fromthe building come in has been
huge and my net worth hascontinued to scale over time
because that building continuesto become more and more valuable
.
Anything you want to say onthat piece before I start
(06:54):
drilling you?
Speaker 2 (06:55):
Yeah, no, To that point I mean when you own the
real estate and you go to sellthe practice you can decide at
that point do you want to sellboth assets?
Do you want to sell the realestate and the practice and cash
out of both?
A lot of people, though, willsell the practice, and then
they'll write like a 10, 12 or15 year lease with the buyer of
the practice, and then they'llcontinue to either pay that
building off or, if it is paidoff, they'll just continue to
(07:16):
cashflow, and it just becomes anannuity.
And so you continue to pick uptax deductions as an owner.
Every year you get depreciation.
Every year you get interestwrite-offs and other operating
expense write-offs.
Every month, the principal paydown goes to build your net
worth if you still have a loanon it.
So a lot of people will chooseto sell the practice, hold the
real estate and, again, at thatpoint, you can hold it for five
years, then sell it.
(07:37):
You can hold it for 10, 15.
You can hold as long as youwant to, but it becomes another
like a secondary business if youwill, and you know, as long as
you're the owner of the practicelike you are the most surefire
tenant you're going to ever have.
Like, if you're going to bet onanyone, you bet on yourself and
then, even when you go to sellthe practice, you've got someone
who's qualified enough topurchase the practice.
(07:58):
You set it up.
You know if it's a goodlocation, you know if it's run
properly, you know the propertyhas been taken care of well
because you've been the owner,and it becomes like one of your
best commercial real estateinvestments you can get your
hands on.
Speaker 1 (08:10):
Yeah, Rock stars.
What Colin is saying is sovaluable in so many ways because
I saw a guy in my exit who hadmultiple locations.
He used the money that he gotfor his practice to pay off the
remaining portion balances onhis commercial real estate loans
which is, by the way, there'scontroversy in that but he did
it because he wanted the passiveincome.
So it's like, like he, Colin,said, it's like starting, it's
(08:31):
like having this whole otherbusiness that doesn't require
effort, Like that was the thing.
It's like it continues to growvalue without you doing.
I mean, there's some propertyownership steps, but they're so
small and you can hire companiesthat are out there there's
great ones I can recommend butultimately there's this idea of
you're putting very littleeffort into this growing net
worth and then the passiveincome.
(08:52):
This guy was receiving multiplesix figures every month because
he had sold his business andthen set up these crazy cool
leases and just the freedom itcreates.
I always tell people if you'regoing to start a business, buy
the building.
So, Colin, my question to youis you're obviously recommending
that, even still, with theinterest rates being where they
are now versus where they were,let's talk about real-time
(09:15):
investments for people who arelike, yeah, but aren't interest
rates rising?
What do you say to those peoplewho are in a position where it
would probably make sense forthem to own a building, but
they're concerned about themarket?
Speaker 2 (09:25):
Yeah, that's great.
So here's what I tell youInterest rates for now are very
fair.
If you were to compare it towhere they were four or five
years ago, that's the lowestthey've ever been in the history
of interest rates, and so it'snot a real good comparison If
you look at a historical chartof the last 20, 30 years.
The markets go up, markets godown, rates go up, rates go down
(09:46):
.
You can't.
You can't anchor to where theywere three or four years ago,
because that was an anomaly.
You know where they're at today.
I mean, if you're purchasingcommercial real estate, you know
to get an interest rate like atmaybe five and a half six, six
and a half percent, even seven,like that's still a very fair
interest rate.
And the bottom line is we knowa couple of things.
We know the market's going tokeep moving.
We know rates are going to goup and down.
(10:08):
If rates are higher than youwant, you still transact, you
still buy the right building atthe right time and then you just
simply refinance it.
I mean, if rates come down insix months or a year, then you
refinance it and it's not hardto figure out.
So savvy real estate investorsdon't sit on the sidelines
indefinitely just because ratesare not where they want.
They still buy good propertiesand then they just wait for the
(10:28):
market to adjust and then, whenrates go down, they capitalize,
they refinance properties.
Then all of a sudden thingsmake more sense and they're even
more profitable.
So I mean we're not seeing anyslowdown.
Now again, if rates were 12%,yeah, you would see less people
being able to afford the sameamount of real estate.
You'd have to either downsizethe size of the building or the
(10:48):
purchase price to make thenumbers work.
But I mean you're talking aboutinterest rates like in again,
the high fives, sixes, maybe ahigh six or a seven, depending
on if it was an SBA loan orsomething was unusual about it.
I mean a 6% interest rate,that's as normal as it gets.
I mean that's still a very goodinterest rate.
You can't compare it to whenrates were at 3%, because that
(11:10):
was the product of a lot ofcrazy things happening and
that's just not where we're attoday.
Speaker 1 (11:16):
Yeah, it's so funny that you mentioned that.
I think the key thing you saidearlier, colin, was this idea
that this is for people who aregoing to be in their business
for a while, this idea that wethis is for people who are going
to be in their business for awhile, like if you have 10 years
minimum.
And here's a here's a story toillustrate your point.
My first commercial buildingthat I purchased for my physical
therapy practice was in 2006.
I bought at the peak of peaks,before the crash of crashes.
(11:39):
We bought our building.
It was a half million dollarbuilding for 2000 square feet
back in 2006.
Literally in a year and a halfit was worth half that much.
People were selling around forunder $250,000.
I was aware of this.
I wasn't thrilled about it, butit didn't bum me out because I
knew this was a practice that Iwas going to be growing for
decades at least a decade and adecade's a long time you know.
(12:04):
So like for me what we we still, even then, enjoyed having the
control of the mortgage.
I think the key thing there wasthat we could afford the
initial payment.
That was big because, as thingsfluctuated in that practice and
it fluctuated that was asecondary location for us, so we
were learning how to be realbusiness owners at the time.
So, like the profits would riseand fall and there was times
(12:25):
where we cut rent down but wewere.
We were always able to pay ourloan.
That was the big thing.
But then, you know, it fastforward to 2018.
And we actually ended upselling that business just a
couple of years ago, or thebuilding.
We sold the business in 2018.
But then we kept the mortgageor the excuse me the renter
income on that and then wedecided to leverage that into
(12:46):
buying more real estate.
So me and my partner sold that,that building, and we ended up
selling it for a profit that wasmore than what our initial
initial loan was.
So it's just kind of like areally cool illustration of what
you said is.
Like when people are listening,they're like I worry about
timing the market.
It's not timing the market,it's time in the market.
The bigger question I wanthealthcare providers to ask is
(13:06):
where is healthcare going in thenext 10, 20 years?
If they're going to be in theirbusiness for 10 to 20 years,
where's healthcare going?
Nowhere, so as long as they'regoing to stay in it and grind
through the normal crap withinsurance or whatever they're
doing.
There's going to be a return onthat.
So what I love about you guysand I mentioned this in the
introduction is that you guysspecialize, like you are the
(13:26):
most niche and you're thebiggest in the country that
specialize in helping doctorsand healthcare company owners
find the right real estateoptions for them.
So how does you, beingspecialized, provide additional
value for people that you work?
Speaker 2 (13:43):
with.
Yeah, I appreciate the question.
So it's very similar tohealthcare.
I mean, if you want to getbraces, you're not going to go
to an oral surgeon, go to anorthodontist.
If you're to get your hipreplaced, you're going to go to
an orthopedic surgeon, Likeeveryone's got you know their
own lane in some form ofhealthcare.
It's the same thing forphysical therapy, Like you're
going to a physical therapistbecause they're trained in a way
(14:05):
that helps you get back to yourprime or to help you get beyond
anywhere you've ever beenbefore recovery from a surgery,
an injury, whatever it might be.
You're not going to a familypractice doctor for that, You're
going to a physical therapist.
So it's the same thing for us.
All we do is specialize inrepresenting healthcare
providers.
We're only on the tenant andbuyer side.
We don't do any landlord or anyseller work, and so the first
(14:27):
thing that comes up is we justdon't have conflicts of interest
.
Speaker 1 (14:29):
That's the number one thing that you have to be aware
of that's a big one.
Speaker 2 (14:33):
Because people will drive around and call on a
building or they'll get onlineand search a database and
they'll call the listing agent.
The listing agent will startfacilitating information, love
to show you the property and allof a sudden that person doesn't
realize the person you'retalking to has a legal
obligation, a fiduciaryobligation, to help the seller
or the landlord maximize theirprofitability, Meaning they're
(14:54):
going to take you for thehighest lease rate, the highest
purchase price, the lowest.
They have a legal obligationbasically to punish you in the
negotiation.
And so, again, the person isnot going to be an idiot,
they're not going to tell youthat and they're going to be
gracious, cordial, accommodating, they're going to follow up
with you and you're oh, this man.
You're going to say this guy isreally nice or this lady is
(15:15):
really nice.
They're legally working againstyou.
And so once you realize that youcan't be in a situation where
there's conflicts of interestthat's paramount.
And then you get into the placewhere you realize that you've
got to have specializedrepresentation.
You've got to have an advocateon your side of the table who
knows what they're doing, whounderstands how to maximize your
upside.
How do you get the mostcompetitive lease rate or
(15:36):
purchase price?
How do you get the highestlevel of concessions?
How do you avoid getting stuckin pitfalls, delays or traps
that people fall into all thetime, when they don't know what
they're doing and you realizehow much money is really on the
line?
That's the foundation of ourbusiness.
Speaker 1 (15:50):
Yeah, and it's so true.
I had a situation like thatwhere I had a real estate agent
who was working both sides ofthe thing and they weren't even
healthcare specific and thatthat lease was so disappointing
compared to these other leases Ihad, and I really value that
part of being hyper-specialized.
You niche, and that's where thevalue comes in.
So let's talk about mistakes,then.
(16:12):
What are the most commonmistakes that private practice
owners make when they'repurchasing their real estate?
Speaker 2 (16:18):
Yeah, absolutely.
So I'll give you three or fourand these are going to apply to
whether you purchase or lease.
It's kind of the same thing.
The very first one is do ityourself.
It's the doctor or theadministrator that says I'm a
smart, intelligent person, Iknow how to pick up a phone, I
know how to send an email, I cannegotiate, I can sign a lease,
you can do every one of thosethings, but you can't do them as
(16:38):
well as someone who specializes.
So the number one mistake wesee people making is they just
do it themselves.
And yeah, I mean, I can pull myown teeth, like I have a pair
of pliers and I can.
You know, I can have my sonjump on my back and adjust my
back.
I can do a lot of things myself, but I'm not going to get the
same result.
So the do-it-yourself is numberone, unequivocally.
Speaker 1 (17:03):
Before you jump in, there's legal things too.
There's those things called youdo it better, but there's a
whole bunch of legal stuffthat's just out there constantly
floating around and to not haveto like to either just do it
thinking I'll never affect me assilly, or to be overly worried
when you don't even know how,where to start learning that
stuff.
It's nice to have thelegalities of how these things
(17:23):
work just kind of handled,because you're working with
professionals.
Speaker 2 (17:25):
Yeah, there's the legalities, absolutely.
But there's also just likestreet credibility, like there's
no landlord on the face of theearth that's going to get a
phone call from a healthcareprovider and think, oh, this guy
is a real estate savvy expert.
There's no way when a realestate listing broker or a real
estate landlord gets a call froma doctor, they're licking their
chops.
They're instantly thinking I'mgoing to take him or her for a
(17:48):
20% premium, I'm going to savemyself probably $50,000 to
$100,000 in concessions.
There's no respect there.
It's not hard to figure out.
Some random person that has noidea about real estate at
Chipotle is not calling onproperties.
Starbucks doesn't have somerandom administrative assistant
just dialing to say what'savailable.
(18:09):
Take any Fortune 500 companythe only people that are making
the phone calls on real estateare the most qualified experts
in the country.
And so you look at what does aFortune 500 or 100 company do?
And then a healthcare providerwill do the exact opposite of
that and think that they'resuper savvy.
And so I don't mean thatdisrespectfully, but the amount
(18:30):
of healthcare providers.
Speaker 1 (18:30):
It's a big mistake.
Speaker 2 (18:33):
Yeah, it's like if you got a letter saying you're
being sued, there's no one intheir right mind would say I'm
just going to go it alone.
You would lawyer up instantly.
If you get a letter from theIRS saying you owe a bunch of
taxes or you made a mistake,there's no way you're just going
to pick up the phone and callthe IRS.
To call the IRS, you're goingto have your CPA or a tax
(18:55):
attorney make that first phonecall, because there's no
credibility when some randomperson who's not trained in an
area is trying to do something.
Yeah, I love that, I love thatthe do-it-yourself is by far
number one.
The number two mistake and thisis one that's probably going to
surprise people, because it'svery different than most people
think is they don't know how tonegotiate.
They'll pick one property andthey'll just start trading paper
(19:15):
or submitting offers, and theproblem with that is there's no
benchmark or plumb line tomeasure the deal against.
And so the reason this iscontrary to how people think is
because in residential realestate, whether you go with an
agent or you look online, whenyou find a property you like,
you submit an offer, and it'stypical to submit one offer,
it's in a contract form.
(19:36):
If the seller says yes, I likeit, or they counter you and then
you agree, you're in a legallybinding contract.
There's options for you to getout or to avoid it, based upon
objections and deadlines andrequirements, but you typically
pick one property, submit theoffer and if they say yes,
you're under contract.
In commercial real estate, younegotiate on a non-binding basis
(20:01):
in a letter of intent or an RFPrequest or proposal, and it's
common in commercial real estateto be negotiating with four or
five landlords or sellerssimultaneously, and the reason
being is you don't have any ideaif one landlord is much more
motivated than another landlord.
You might have two propertiesthat are side by side, that look
identical.
Well, one landlord might'vebought it 20 years ago and have
no mortgage.
Other guy is leveraged to thehilt and he can't do the same
(20:23):
deal.
One landlord might be gettingready to sell their property and
they want the highest leaserate, but they're willing to
give significant concessions forit.
The other guy is going to holdit for the next 20 years and
he's willing to do a much morecompetitive deal because he
wants occupancy over lease rate.
And so you don't know thosethings until you negotiate,
multiple people and also, too,landlords aren't going to give
you their best deal.
A landlord is not going to comeup and say look, I would do a
(20:46):
deal at $25 a square foot if Iwas pressed.
So here's 25.
They're going to come at you at30.
They're not coming to 25 unlessthere's a fear of loss, unless
they think they're going to missthe deal, unless they think
other landlords that they'recompeting against are doing the
same thing.
They're not going to justvoluntarily give you a $200,000
rent reduction because you askedthem.
(21:07):
They have to be pushed intothat deal or forced to do it to
be competitive with the market.
Nobody just voluntarily givesaway hundreds of thousands of
dollars, and so you don't dothings like that unless you have
to.
If you were a provider, youwould never lower your rates or
fees or accept a lowerreimbursement from an insurance
company, unless you had to.
(21:28):
And so, yeah, and that's thewhole idea, and so, but you,
I'll say this and I'll let youjump in.
You cannot get to that pointunless you have four or five
landlords that you can leverageagainst each other, put one
against the other, and thenyou've got real-time
intelligence coming at you.
This guy's willing to do this.
This guy's willing to offerthis much free rent.
This guy's willing to do.
You know, these threeproperties are at 2% annual
(21:50):
increases.
I'm not going to pay three anda half with you.
You don't have that informationunless you are in the market
with multiple landlords andmultiple offers going back and
forth.
Speaker 1 (21:58):
Yeah, I love that.
It seems like to me from whatyou just said, there's a lot of
reasons why you'd want to workwith a professional who's hyper
niche in this space If you'regoing to be purchasing a
building as a private practiceowner.
There's all these things thatyou mentioned, but you really
hyper-focused on the negotiationpart of it.
Like there's all theselegalities, there's all these
different steps, but when youwere talking right now, I got a
real sense that, like,negotiating is a different level
(22:21):
at these commercial real estatepieces.
So how much is really on theline, like when people are
thinking about negotiating, whatdoes that look like?
I think you gave a good example, for example, but is there
anything else you would add tothat?
Speaker 2 (22:31):
Yeah, I mean, there's a couple hundred thousand
dollars that are in play inevery transaction, and that
number catches people off guard.
They either are surprised by itor they don't believe it, but
it's, it's how do you get tothat Like number?
(23:10):
Like I'm sure you use use how doyou get to that number?
Use some scenarios that wouldpaint that picture pay by that
amount of money.
That's only like a 10%difference on lease rate for a
lot of properties, like a grosslease rate of 30 a square foot
or even a base lease rate of 30a square foot.
If you overpay by $3 a squarefoot, $3 a square foot times
3,000 square feet, that's$90,000 over 10 years.
So that's just the lease rate.
If you have an annual increase,let's say that's at three and a
half percent and you could havepaid 3% or two and a half
percent and you're on aninflated lease rate already.
Like there's tens of thousandsof dollars more in annual
(23:32):
increases that you could haveavoided If you miss out on a
couple of months of free rent,like not just free build out
period but actually free rent tostart your new deal.
I mean it's not hard to figureout.
I mean every month of free rent, $30 a square foot on 3,000
square feet, that's $7,500 amonth.
If you only got a month or twoof free rent and you could have
received four or five months offree rent, there's another
(23:54):
$25,000, $30,000.
Wow and so you start gettinginto things like build-out
allowances, like to renovate aspace.
There's a number of otherconcessions that are available.
So of other concessions thatare available.
So again, you just start.
You take 90,000 here, 20,000here, 30,000 there, and you add
it up.
It's very easy to come up witha couple hundred thousand.
But even if it was just 50,000,like I don't like, let's take
(24:14):
it down to the most, like lowestnumber you could imagine, Like
who wants to lose $50,000 if youdidn't have to.
Speaker 1 (24:28):
Yeah, but it was hundreds of thousands of dollars
plus like terms.
I think the other thing thatgoes in negotiating that I
experienced was this idea oflike having a professional
negotiate terms, because there'sthe deal and then there's the
terms.
I coach people on how to selltheir practices.
I could, you know, I tellpeople all the time who here
would raise, sell their businessfor $10 million.
Right, every hand goes up, it'slike okay, and then I start
going through terms with allthese clawbacks and like
provisions and, very quickly,there's not a single hand raised
(24:50):
.
So you have like the moneythat's being left on the table
and, by the way, that's scary $3a square foot.
More, like I could see aprivate practice owner going oh,
that's not that big of adifference 10% but we're talking
six figures of difference.
And they're the ones becausethey know you don't have a
representative.
They're the ones saying like,well, let's see if he takes it.
Yeah.
Speaker 2 (25:10):
And they'll say stuff like this.
They'll say you know, this isthe lowest rate in the center.
Like I've never done this dealbefore, like man, you, literally
.
They'll say things likefour-year-old wrestling their
40-year-old dad.
Like somehow the four-year-oldmanages to pin the 40-year-old
dad and then goes and tells momlike hey, dad, or I just beat
(25:34):
dad in a wrestling match, andthe four-year-old is just like
walking high.
I mean landlords will say stuffto these tenants, especially
healthcare providers, that theywould never say in a million
years to like a Charles Schwab,or like a JP Chase Morgan or a
Lockheed Martin, like pick, yourlarge Amazon, your large
national company.
They would never say thingslike that because they know that
he called the carpet.
But they'll say things likewell, you know we don't do free
(25:57):
rent here, or everyone has a 4%annual increase.
Or if I do this deal with you,like you got to promise not to
tell anybody because you'll havethe most competitive leash
right.
And they're just literallylying right to the doctor's face
.
You say, well, why do they dothat?
Speaker 1 (26:14):
Because they can and they want the money, like they
don't care about the doctor,like they know ego with medical
professionals, especiallycertain types of docs where it's
like, wow, you really got mepinned against a corner and the
doctor was like, yeah, I did.
Another score for Surgeon Bob,like it's one of those where
literally, you have no clue thatyou're even being played, until
you have someone come in who'san expert and they would never
say that Wow, colin, you guysreally got our lowest rate.
(26:36):
We never go this low.
They would never do that crap.
Speaker 2 (26:39):
They'd feel like, fine, let's just go with it,
yeah no, and that's a greatpoint, and we can tell we get
their lowest lease rate becausewe start, I mean, they get
emotional and they start gettingupset and, like I mean, we
started getting landlords that,like you, would think these guys
could control their emotions ata higher level, but they a lot
of times can't And'll figure outwhat's going on.
(27:00):
We'll look at vacancy rates.
You get a landlord that's gottwo or three vacant units and if
you're in a lease renewal andyou might be giving them another
vacancy if they don't bringterms that are competitive
enough.
That's serious leverage.
They don't want to go negative$8,000 or $9,000 a month because
(27:25):
they didn't give you enoughfree rent to go negative eight
or 9,000 a month by becausebecause they didn't give you
enough free rent.
Like you can leverage the lossfactor or the fear factor of
these guys can't afford to loseyou.
But again you don't get thereunless you have other options.
You know how to play the gameand you know what's going on
with the market.
Speaker 1 (27:39):
I looked a word up while you were talking right now
, called leverage, becauseleverage is something that I
didn't.
We all hear this word.
These are words that we allhear in business and many people
get a sense of it, so they justmove on.
Here's what the definition ofleverage is, guys, cause I
learned this recently in greatdepth when one of my friends was
in a heavy negotiation overover a hundred million dollar
deal.
(27:59):
Leverage is the exertion offorce by means of an object used
, and it's that's like actualleverage, meaning like if you're
using a lever finance is adifferent definition, but it's
essentially it's using somethingfor maximum advantage.
When you have leverage, youhave momentum and capabilities
that you wouldn't have otherwise, and it's not about when we
(28:21):
hear the word force andhealthcare.
We're like, oh, I don't want tobe a jerk.
It's like that's not what it is.
We're talking about leveragingthe reality around us to get the
best rate possible.
We never want to get to thepoint where the people on the
other side are feeling screwed,but that's what you're saying,
is that that's not what they'retalking about?
Their, their modus operandi inthe vast majority of all cases
(28:42):
is to get the best rate possibleso that they can make the most
money off their, their people,that they're renting to them.
So if we can leverage, leverage, if we can use leverage to to
create a space of equality andto get a really good deal for
all, that's fair market value.
That's what we mean by leverageand that's where hundreds of
thousands of dollars coming up,I mean there's.
So it's interesting because, asyou're talking, I'm like okay,
(29:04):
private practice owners reachout to you when they want to buy
a building, but you're alsosaying reach out to you when
they're ready to renew.
Speaker 2 (29:11):
Yeah, the number one transaction where health
providers lose money at thehighest level unequivocally are
lease renewals.
It's the number one transactionand there's a couple reasons
why.
Number one most health careproviders signed a bad lease to
start.
They did not capitalize.
Maybe they got a good deal ormaybe they had great
representation that definitelyhappens.
(29:31):
But the vast majority signleases that are above market.
99% of all leases have anannual increase.
So if you sign a lease that's$2, $3 a foot above market and
then you have above marketannual increases and then for
the nine out of the 10 years yourelease it, it ratchets up.
By the time you get to that10th year you're way over market
.
Now you start out two, $3 afoot above market.
(29:52):
Now you're way over market.
And then they just sign off ontheir next lease renewal.
And so a lot of healthcareproviders don't realize this.
You know everything's in play ona lease renewal free rents in
play, renovation allowances inplay, lower lease rates in play.
And you have to ask thequestion if you move out of the
space, what is it going to costthe landlord to release that
space?
How long will it sit vacant?
(30:14):
How much money will they losewhen it goes vacant, how much
time will it take to release it?
If the new person needs a buildout, how long will it be in a
build out period for wherethey're not getting rent, and
then how much free rent are theygoing to give?
What does it cost to do a newdeal?
And you add up all that amountof money and it's significant
for a landlord.
So you know that that thatspeaks to a significant amount
(30:34):
of opportunity.
But on the other side of thecoin, landlords are going to
assume that you don't know whatyou're doing.
If you're a healthcare provider, if you haven't hired an agent,
you're not serious about moving.
So if you're just going italone and you say, send me a
proposal, that's one of thebiggest mistakes you could ever
possibly make is say send me aproposal or what would you do
for me?
That instantly tells thelandlord you have no clue what
(30:56):
you're doing.
And so lease renewals are thenumber one place where landlords
just punish tenants.
It's the number one transactionwhere they make significant
premiums 10, 15%, 20% premiumsthat they would never make with
a savvy tenant.
And so, yeah, leasing moretenants and more healthcare
providers.
Let me say this More healthcareproviders lose money during a
(31:17):
lease renewal than any othertransaction.
So, it doesn't matter if it'spurchasing or leasing, it's any
transaction with a landlord orseller.
You've got to come with your Agame and it's not going to be
you coming alone, it's becomingwith a savvy real estate agent,
exclusively representing yourinterest, that takes you to
market and then negotiates onfour or five properties on your
behalf.
Speaker 1 (31:36):
That's amazing.
It feels like what people woulddo in your case is they would
be developing more of a realestate strategy as part of their
private practice piece.
Because when you niche the waythat you do, you help people
like develop the secondary partof their business that they
don't even know.
That is like just tacking it onto what their main heavy lift
is, which is their privatepractice.
How do you operate with largerclients of yours that have
(31:59):
multiple pieces?
Do you multiple real estatepieces Sorry, there's a guy that
popped up over my windowcleaning the what is going on
but do you strategize with yourclients?
How do you help them develop?
They're really serious aboutwanting to expand multiple
locations in real estate.
How do you work with thoseclients?
Speaker 2 (32:16):
Yeah, we have a lot of clients that have multiple
locations and we have lots ofclients that have dozens.
We have clients that havehundreds of locations and we've
helped clients go from literallyzero to hundreds.
And so it's the same thing.
Every transaction gets the sameamount of attention.
It's not a matter of like hey,you've got 10.
We can only get to a few.
Every transaction has the sameevaluation.
(32:38):
We look at what they'recurrently paying, we do a market
analysis or we look at wherethey want to go and see, do a
market analysis, and then wealways negotiate on multiple
properties.
We'll look at options to lease,look at options to purchase,
We'll look at if they're in anexisting space, we'll look at
what would it look like if werelocated and bought a building,
or relocated and leased abuilding.
And then we always leverage andwe always negotiate with
(33:00):
multiple people.
That's the key is, you cannotjust ask a landlord for an offer
and then let's just say you geta little bit of movement.
You start with one property.
They come in at 30, you getthem on a 28.
Like, but still you don't knowcompared to what like?
What if the other two landlordsdown the street where I would
be at 26, not 28.
So just cause you got onelandlord to come off their lease
(33:20):
rate, $2 a square foot doesn'tmean it's a great deal.
It's better than it started,but it's still not able to be
measured against the market.
So that's really the key.
And so starting everytransaction if it's a lease
renewal 12 months in advance,that's key to make sure you have
enough time to complete thefull analysis.
And then actually, if you haveto move or want to move or want
(33:41):
to purchase, that's reallyimportant.
I guess I'm going to jump backinto our previous question.
Another top mistake healthcareproviders make is they don't
time it right.
They've got two months left intheir lease.
They're calling their landlordsaying you know, send me a
proposal.
That landlord knows this personhas no ability to move, Like
they've missed.
They've missed the window, Likethey lost their leverage.
(34:03):
They lost their leverage.
That's exactly right.
And so you know, not timing atransaction properly.
Or you get these people thatcall their landlord three years
in advance and say I want torenegotiate, there's no reason.
The landlord's going tovoluntarily just cut their cash
flow because you called them andasked them.
So timing a transaction isanother kind of top five mistake
as well.
And so having that propertiming and again, this is
(34:27):
probably the top takeaway, orone of the top takeaways
Landlords do not move unlessthere is a fear of loss.
Simple as that.
Speaker 1 (34:36):
Landlords don't move unless there's a fear of loss.
Speaker 2 (34:39):
Yeah, and I'll prove it to you.
If you were going to sell yourown house and you're going to
sell your house let's say you'regoing to sell your house for a
million dollars you're notcoming down to $800,000 unless
you think that's the only wayyou can sell it.
If you think you can sell it ata million, you're going to hold
firm.
If you think you sell at$950,000, you come down to
$950,000, but you're not goingfrom a million to $800,000
(35:01):
unless you think that's the onlyway you not going to lower your
lease rate.
They're not going to give you ahuge free rent package.
They're not going to give you abunch of money to renovate your
space unless they believe theyhave to in order to make the
deal.
Speaker 1 (35:12):
Amazing.
So this has been such aphenomenal episode.
I really did.
We get a lot of requests to beon the show.
I looked at yours and I wenthey, kim, we've got to fit Colin
in, because I think that ourbig focus on the podcast is
helping private practice ownerscreate financial freedom as well
as other types of freedom.
But there was no greaterfreedom, producer, on the
financial end, for me thanselling my business with owning
(35:34):
the building.
That was so huge and I didn'thave someone like you helping me
along the way.
And I do have something I wantto talk to you about personally
after the after the show, realquick.
But it's one of those thingswhere this isn't a cool thing.
This is a game changer thingand doing it with the right
professional is so huge.
I have a question that I knowthey're all asking internally,
(35:55):
which is on the real estate side.
When it comes to residential,they know how people get paid.
How do commercial real estateagents get paid?
Speaker 2 (36:03):
Yeah, that's the beauty of our industry is that
it's set up to where thelandlord or the seller is going
to pay the commission.
I'd say literally like 99% ofthe time.
So if you're in a residentialtransaction and you're selling a
house, you hire an agent tolist your property and you pay
the listing agent a commissionand you have a money.
Or you have a commission setaside for the buyer's agent too.
(36:24):
If a buyer shows upunrepresented, the listing agent
gets double commission.
Same thing in commercial.
If you go to market without anagent, the listing agent gets a
double commission or thelandlord just keeps that money.
You don't save money and that'sa misnomer.
A lot of people think well, ifI do it myself, I'm saving
commissions.
No, you're not the payer of thecommission.
If you own the building, youcould save money by not hiring
(36:46):
an agent.
That's one way to save it.
But if you're a buyer or atenant and you go unrepresented,
all you did is just forfeitbasically like free
representation.
You know, and wasted a lot oftime and energy and probably got
a really bad deal, and yet youdidn't.
The insult to injury is youdidn't get any savings Like.
You lost the savings you couldhave got and it would have been
(37:07):
paid for by the landlord or theseller.
So it should not cost you anymoney to hire an agent.
It should be a service that'sprovided and they're going to
get paid for their service.
But it's going to come out ofthe listing agents half or
portion, or the landlord'sportion but not yours.
Speaker 1 (37:22):
I love it.
Okay, final question that Ihave, and then I'm open to
anything on your end if you wantto talk about is this thing
about?
Why are you so passionate aboutdoing this, colin?
Like, what is it about whatyou're doing that drives your
passion?
And I asked the question forthose who aren't watching.
He lit up immediately,smile-wise, like he's excited to
talk about this.
Speaker 2 (37:40):
Yeah, no, I appreciate that.
So I got into real estate whenI was 19 years old.
I started managing apartmentcomplexes right after high
school, did not go to college,started working right away.
I got into brokerage when I was22.
And I worked for a guy that didWalmarts, wendy's, blockbusters
, large national retailers.
(38:05):
A couple years into my career Ijust realized I really liked
working with individual businessowners.
Like we work with large groupstoo.
That's great, but I likeworking with stakeholders that
actually really you know, reallycare about what's happening.
You know it's fine doing aWalmart deal.
It's an asset manager.
They're going to do 40 Walmartsin a year.
You're just kind of a number.
I just didn't enjoy that asmuch as I enjoyed working for
someone like you that actuallyit made a difference If I saved
you a hundred grand, like youknew it and you thank for it.
(38:27):
And so I just started realizingI liked working for individual
business owners.
And then, um, a number of yearsinto my brokerage career I was
working for the largest medicaluh landlord in the country or
really in the world.
It is a very large REIT, a realestate investment trust.
People give them money, theybuy a real estate, they send you
a check.
It's like putting money into astock or Amazon.
(38:48):
So I'm working for the largestmedical REIT in the country a
couple of class A medicalbuildings and every tenant in
the building is a healthcareprovider and we had a number of
deals that we did where thedoctors had lease renewals
coming up and I met with a.
I met with the very first one Iwas doing a leash renewal for
and I asked him like do you knowthe market?
(39:09):
No, have you hired a broker?
No, are you interested inmoving?
No, like I asked the questionsdifferently than that, but that
was the gist of the questionsthat I asked At that point.
I know the guy has no possibleability to do anything.
He has no leverage, no posture,no skill set.
(39:30):
So I go back and I report thatinformation to the landlord and
the landlord's like great, goback to him at this leash rate.
And the lease rate he wanted meto go back was so egregious and
so predatory.
I mean not like a slightpremium, like a 35% premium, and
I mean $400,000, $500,000 morerent than this guy should have
paid over a 10 year period.
And I went back and presentedit and the doctor looked at me
and he's like, well, if this iswhat the market is, I guess I
(39:53):
have no choice and he just signsoff on this deal and I watched
this guy lose like 400, 500grand, and there's more to the
story than that.
But that's the short version ofit.
Speaker 1 (40:02):
That was the pain of it, yeah.
Speaker 2 (40:03):
Yeah, and so I mean I did.
I was again.
I did a good job for mylandlord.
Like again, if you were sellingyour house and your broker got
you an extra 200, 300 grand,you'd be high-fiving your broker
.
You wouldn't be like refundingthe money to the buyer, like
that's just the game of realestate is you get what you can
get.
Everything was done ethically,no lines were crossed.
But I just had this likefeeling afterwards like that was
(40:25):
not a fair fight.
Like was like that was not afair fight.
Like it was like a heavyweightversus a lightweight or as a
heavyweight, like world championversus some random dude that
got pulled out of the stands.
That's never fought before.
Like it was just, it justwasn't right.
So I had three or four of thosedeals that went down in a short
period of time and I justrealized like look, no one's
helping the doctors.
Like there's a lot of guys thatwanted to list the property and
(40:46):
be the landlord rep for themedical building, but nobody was
working on the buyer and tenantside.
So within a short period oftime I started our company,
which is called CAR.
We launched it and from day onewe started moving the needle
for doctors by the teams ofhundreds of thousands, and when
we would show them how much wesaved them or what they would
have paid without us, like wehad.
(41:08):
We had friends for life.
And so for me, I've donethousands of deals now
personally and I just I lovewhat I do.
I love helping people, I loveprotecting them and you know not
, not every deal is a grand slam.
Sometimes it's a whole monthand then it's a single, but you
know, nonetheless you protectthe doctor's interest, you
protect their practice, theirlargest asset, their top income
(41:30):
source typically, and you do agood job for them.
They know it and theyappreciate it, and so it's like
you seeing someone go fromhaving a debilitating issue to
having full recovery and gettingtheir life back, I mean it's a
great feeling.
Speaker 1 (41:43):
Yeah, and I think there's this thing about maybe
you do have these grand slams,home runs, triples, doubles,
singles, but you don't have themstriking out.
That's the thing.
It's like you're protectingminimally against that.
Really, we share a passion inthat sense, because what I'm
doing now in a different way istrying to support who I believe
(42:04):
are the most important men andwomen in business of anything
which is healthcare businesses.
Because if, if we can protectthe private practice owner to
being more profitable and moresuccessful, they're not
typically not all, but nottypically the people who are
going to go buy lots of yachtsand that like they're going to
take that money and put it backinto healthcare, back into their
practice, helping patients havebetter experiences.
And I mean, is there somethingmore important than healthcare?
(42:27):
It's a foundational element forhuman survival.
So as we're helping the leadersof that industry be more
profitable and be protectedagainst these negative elements,
I feel like we're serving thecommunity at large.
So I'm so excited, colin, tohave met you.
This has been a real treat ofan episode for me.
I've been wanting to find aconnection to real estate on
this show for a long time andI'm hoping everyone whether
(42:52):
you're a student who'sgraduating, who wants to own a
practice man.
What a great episode for thoseguys and girls to have this
information that early.
But if you're even 20 years inbut you got 10 years to go, man,
save, hunt six, potentially sixfigure amounts on your renewal,
I mean it's like just this ideaof like what can be possible
through real estate, and it's itreminds me of the founder with
(43:15):
McDonald's, where Ray Krocrealized you know he's in the
real estate business, not theburger business.
We're not at that level, butit's important to understand
that being in healthcare,especially if you're in the
outpatient space real estate isa huge part of that business.
Guys, thank you for taking timeto listen to today's episode.
If you found today's informationto be useful, could you take a
minute and help me?
I would love it if you couldleave a podcast review in your
app so that other people who arelooking for this information
(43:36):
can find it.
Plus, my dream is to have thelargest network of medical
entrepreneurs and leaders in theworld so that together we can
change healthcare to make itbetter for all.
So, in addition, if you canthink of anyone that you can
send this to, not only wouldthat mean a lot to me personally
, but it would build thisnetwork so that we can make
healthcare the way that we wantit.
Every private practice owner should own the
building they're in.
Today we're talking to ColinCarr.
He is an expert in real estate,founder and CEO of Carr
Incorporated, the nation'sleading provider of healthcare
real estate for services foronly tenants and buyers.
They're so niche they only helphealthcare professionals or
(00:29):
private practice owners buy orlease their buildings and we're
going to be talking about how toavoid the biggest mistakes that
private practice owners makewhen it comes to leasing and
buying.
We're going to talk about whybuying is so important, no
matter what the market is, whenthe best time is to join the
real estate game, where you arein your stage of business and
how that could influence whetheryou buy or lease.
(00:51):
We're going to talk aboutsaving hundreds of thousands of
dollars with very smallnegotiating tactics.
This episode is worth so muchmoney and it's super short.
I think it's like 40 minutes.
Yeah, Colin, I am on a mission,like you are, to help private
practice owners understand theimportance of of owning the real
estate that their business isin.
(01:12):
I didn't know until after Isold, like how valuable that was
, so let's start really likefundamental stuff.
You know, when a privatepractice owner is looking at
their real estate consideration.
What do you think the pros andcons are of leasing versus
owning the space?
Speaker 2 (01:30):
Yeah, there's a lot of factors that go into whether
you lease or purchase, butbefore I jump in there, I do
want to hit on what you justsaid.
If you have the ability to ownreal estate, the real estate is
going to be worth more than apractice.
Once you get ready to sellLiterally, it's 80 or 90% of the
the real estate is going to beworth more than a practice once
you get ready to sell Literallyit's 80 or 90% of the time the
real estate is worth more thanthe practice and so when you
(01:51):
look at the value of that, youmight spend 10, 15, 20, 30 years
building a practice and you canpurchase real estate if you
have the ability to and it fitsyour requirement, that's going
to be worth more than thepractice at some point.
So it's really a two for one.
I mean, it's two of yourlargest assets that you have and
they're both very saleable.
And the real estate becomeseven worth more money when you
have a practice tied to it.
(02:11):
So I couldn't agree more.
Owning real estate is one ofthe greatest investments that
healthcare providers will evermake.
The question on what you shoulddo as far as leasing or
purchasing it comes down to acouple of factors.
Number one it comes down toinventory.
You might have a desire to ownreal estate.
You might have an establishedpractice and say I'm leasing, I
want to purchase now, and youmight go to the market and there
(02:32):
might not be any properties forsale that meets your criteria.
It's not like residential,where there's always another
house for sale or you can justpush into another neighborhood
or go a little further away fromthe metro area Commercial real
estate.
If you're in a finite area andyou want to stay in a certain
market, there might not be anyoptions for you to buy, and it
depends on the market.
If you're in Tulsa, oklahoma,there's going to be land on the
(02:54):
outskirts.
If you're in Manhattan, there'sno more land, and so inventory
is going to determine realquickly whether you've got
options to purchase or not.
The next factor is going to bejust what's your current
situation?
Do you have money for the downpayment?
What's the cashflow look like?
What's the quality of property?
Sometimes you can buy realestate, but if it's in an
inferior location it's going tohurt your patient referrals If
(03:17):
it's maybe not as good of alocation as you could find a
lease.
You got to take that intoconsideration too.
And then you just get into theeconomics of it.
You start looking at conceptslike what's it cost to lease
versus what's it cost to have amortgage.
What does it look like afteryou factor in tax deductions?
When you own commercial realestate, you can depreciate that
real estate and you can pick upadditional tax deductions.
(03:39):
What does it look like afterprincipal pay down?
When you cut a check to alandlord, that money goes to the
landlord.
When you cut a check to alandlord, that money goes to the
landlord.
When you cut a check to alender, like a mortgage company,
a portion of that pays downprincipal and every month your
net worth goes up.
So you can take a portion ofthat principal away from the
payment and say this is reallyjust a forced savings account.
And so the numbers are going totell a different story.
(03:59):
You might start out and have alease that's 5,000 a month, a
purchase that's $10,000 a month.
But after depreciation, aftersome of the deductions, after
principal pay down, theeffective cost of owning might
actually be less than leasing.
And so you've just got to runthe numbers and say what's the
actual cost of owning versusleasing and then you factor in
some of those other items likeinventory and quality of
(04:19):
properties and so forth.
Speaker 1 (04:20):
Yeah, but it sounds like as great as that was, and
thank you for defining that itsounds like.
At the end of the day, wheneverpossible, owning is the way to
go.
Speaker 2 (04:28):
That's my preference personally.
I mean there's some exceptionsthat roll.
If you just said, listen, I'mgoing to be selling my practice
in a year or two, I've got alease renewal coming up.
I just want to just kind ofstamp a lease renewal and then
(04:50):
sell my practice in a year ortwo and drift off into the
sunset, that's a different story.
If you're just getting startedand you think you're going to
want a much larger space or adifferent type of building in
the future, leasing might be thebest option for you to get
started.
Maybe you lease for five years.
Then, once you get your feetunderneath you and you know the
exact area you want to be in,you know the exact size that's
going to facilitate your need tothe next 10, 15 years, then you
buy the right size building.
So there are times when leasingdoes make more sense.
But if you are in a positionwhere you can see yourself in
(05:12):
that building for 15, 20 years,you've got the ability to put
the down payment on it.
The financing is going to workfor you.
You know I'm going to pushtowards the purchase nine out of
10 times.
Speaker 1 (05:23):
Well, and that's what I want to confirm, that was the
biggest surprise on thefinancial end of my exit.
So I had four to five locationsand when I exited I had
ownership in two of thebuildings and it was so amazing
to me how that played outBecause, as one of my friends,
ed Drummond, says, who's a realestate expert, he's like it's
(05:48):
not timing the market of realestate, it's time in the market,
and so what you're saying isparalleled with that.
You know private practiceowners who have their own
business, and if they own theirown building, while they're
doing this thing called owningthe business, there's all these
like short term advantages, taxwise, for owning the building,
not to mention before I continuemy call and there were times
where we we would have afinancially slow month and so we
(06:10):
just reduced our rent thatmonth because there was a little
bit of a gap there.
So we were able to make someadjustments that helped the
business in a way that alandlord wouldn't have been able
to do.
So, yeah, and then when we sold,it was so crazy because you
said it best.
Sometimes the value of thebuilding is worth as or more
than the value of the businessand, like in my case, the buyers
wanted to sign the highestlevel leases they could to keep
(06:32):
me engaged in the business.
So I got a AAA lease with allthese wonderful like it was a
great lease.
And after selling the practicehaving that business, the
building sorry, the income fromthe building come in has been
huge and my net worth hascontinued to scale over time
because that building continuesto become more and more valuable
.
Anything you want to say onthat piece before I start
(06:54):
drilling you?
Speaker 2 (06:55):
Yeah, no, To that point I mean when you own the
real estate and you go to sellthe practice you can decide at
that point do you want to sellboth assets?
Do you want to sell the realestate and the practice and cash
out of both?
A lot of people, though, willsell the practice, and then
they'll write like a 10, 12 or15 year lease with the buyer of
the practice, and then they'llcontinue to either pay that
building off or, if it is paidoff, they'll just continue to
(07:16):
cashflow, and it just becomes anannuity.
And so you continue to pick uptax deductions as an owner.
Every year you get depreciation.
Every year you get interestwrite-offs and other operating
expense write-offs.
Every month, the principal paydown goes to build your net
worth if you still have a loanon it.
So a lot of people will chooseto sell the practice, hold the
real estate and, again, at thatpoint, you can hold it for five
years, then sell it.
(07:37):
You can hold it for 10, 15.
You can hold as long as youwant to, but it becomes another
like a secondary business if youwill, and you know, as long as
you're the owner of the practicelike you are the most surefire
tenant you're going to ever have.
Like, if you're going to bet onanyone, you bet on yourself and
then, even when you go to sellthe practice, you've got someone
who's qualified enough topurchase the practice.
(07:58):
You set it up.
You know if it's a goodlocation, you know if it's run
properly, you know the propertyhas been taken care of well
because you've been the owner,and it becomes like one of your
best commercial real estateinvestments you can get your
hands on.
Speaker 1 (08:10):
Yeah, Rock stars.
What Colin is saying is sovaluable in so many ways because
I saw a guy in my exit who hadmultiple locations.
He used the money that he gotfor his practice to pay off the
remaining portion balances onhis commercial real estate loans
which is, by the way, there'scontroversy in that but he did
it because he wanted the passiveincome.
So it's like, like he, Colin,said, it's like starting, it's
(08:31):
like having this whole otherbusiness that doesn't require
effort, Like that was the thing.
It's like it continues to growvalue without you doing.
I mean, there's some propertyownership steps, but they're so
small and you can hire companiesthat are out there there's
great ones I can recommend butultimately there's this idea of
you're putting very littleeffort into this growing net
worth and then the passiveincome.
(08:52):
This guy was receiving multiplesix figures every month because
he had sold his business andthen set up these crazy cool
leases and just the freedom itcreates.
I always tell people if you'regoing to start a business, buy
the building.
So, Colin, my question to youis you're obviously recommending
that, even still, with theinterest rates being where they
are now versus where they were,let's talk about real-time
(09:15):
investments for people who arelike, yeah, but aren't interest
rates rising?
What do you say to those peoplewho are in a position where it
would probably make sense forthem to own a building, but
they're concerned about themarket?
Speaker 2 (09:25):
Yeah, that's great.
So here's what I tell youInterest rates for now are very
fair.
If you were to compare it towhere they were four or five
years ago, that's the lowestthey've ever been in the history
of interest rates, and so it'snot a real good comparison If
you look at a historical chartof the last 20, 30 years.
The markets go up, markets godown, rates go up, rates go down
(09:46):
.
You can't.
You can't anchor to where theywere three or four years ago,
because that was an anomaly.
You know where they're at today.
I mean, if you're purchasingcommercial real estate, you know
to get an interest rate like atmaybe five and a half six, six
and a half percent, even seven,like that's still a very fair
interest rate.
And the bottom line is we knowa couple of things.
We know the market's going tokeep moving.
We know rates are going to goup and down.
(10:08):
If rates are higher than youwant, you still transact, you
still buy the right building atthe right time and then you just
simply refinance it.
I mean, if rates come down insix months or a year, then you
refinance it and it's not hardto figure out.
So savvy real estate investorsdon't sit on the sidelines
indefinitely just because ratesare not where they want.
They still buy good propertiesand then they just wait for the
(10:28):
market to adjust and then, whenrates go down, they capitalize,
they refinance properties.
Then all of a sudden thingsmake more sense and they're even
more profitable.
So I mean we're not seeing anyslowdown.
Now again, if rates were 12%,yeah, you would see less people
being able to afford the sameamount of real estate.
You'd have to either downsizethe size of the building or the
(10:48):
purchase price to make thenumbers work.
But I mean you're talking aboutinterest rates like in again,
the high fives, sixes, maybe ahigh six or a seven, depending
on if it was an SBA loan orsomething was unusual about it.
I mean a 6% interest rate,that's as normal as it gets.
I mean that's still a very goodinterest rate.
You can't compare it to whenrates were at 3%, because that
(11:10):
was the product of a lot ofcrazy things happening and
that's just not where we're attoday.
Speaker 1 (11:16):
Yeah, it's so funny that you mentioned that.
I think the key thing you saidearlier, colin, was this idea
that this is for people who aregoing to be in their business
for a while, this idea that wethis is for people who are going
to be in their business for awhile, like if you have 10 years
minimum.
And here's a here's a story toillustrate your point.
My first commercial buildingthat I purchased for my physical
therapy practice was in 2006.
I bought at the peak of peaks,before the crash of crashes.
(11:39):
We bought our building.
It was a half million dollarbuilding for 2000 square feet
back in 2006.
Literally in a year and a halfit was worth half that much.
People were selling around forunder $250,000.
I was aware of this.
I wasn't thrilled about it, butit didn't bum me out because I
knew this was a practice that Iwas going to be growing for
decades at least a decade and adecade's a long time you know.
(12:04):
So like for me what we we still, even then, enjoyed having the
control of the mortgage.
I think the key thing there wasthat we could afford the
initial payment.
That was big because, as thingsfluctuated in that practice and
it fluctuated that was asecondary location for us, so we
were learning how to be realbusiness owners at the time.
So, like the profits would riseand fall and there was times
(12:25):
where we cut rent down but wewere.
We were always able to pay ourloan.
That was the big thing.
But then, you know, it fastforward to 2018.
And we actually ended upselling that business just a
couple of years ago, or thebuilding.
We sold the business in 2018.
But then we kept the mortgageor the excuse me the renter
income on that and then wedecided to leverage that into
(12:46):
buying more real estate.
So me and my partner sold that,that building, and we ended up
selling it for a profit that wasmore than what our initial
initial loan was.
So it's just kind of like areally cool illustration of what
you said is.
Like when people are listening,they're like I worry about
timing the market.
It's not timing the market,it's time in the market.
The bigger question I wanthealthcare providers to ask is
(13:06):
where is healthcare going in thenext 10, 20 years?
If they're going to be in theirbusiness for 10 to 20 years,
where's healthcare going?
Nowhere, so as long as they'regoing to stay in it and grind
through the normal crap withinsurance or whatever they're
doing.
There's going to be a return onthat.
So what I love about you guysand I mentioned this in the
introduction is that you guysspecialize, like you are the
(13:26):
most niche and you're thebiggest in the country that
specialize in helping doctorsand healthcare company owners
find the right real estateoptions for them.
So how does you, beingspecialized, provide additional
value for people that you work?
Speaker 2 (13:43):
with.
Yeah, I appreciate the question.
So it's very similar tohealthcare.
I mean, if you want to getbraces, you're not going to go
to an oral surgeon, go to anorthodontist.
If you're to get your hipreplaced, you're going to go to
an orthopedic surgeon, Likeeveryone's got you know their
own lane in some form ofhealthcare.
It's the same thing forphysical therapy, Like you're
going to a physical therapistbecause they're trained in a way
(14:05):
that helps you get back to yourprime or to help you get beyond
anywhere you've ever beenbefore recovery from a surgery,
an injury, whatever it might be.
You're not going to a familypractice doctor for that, You're
going to a physical therapist.
So it's the same thing for us.
All we do is specialize inrepresenting healthcare
providers.
We're only on the tenant andbuyer side.
We don't do any landlord or anyseller work, and so the first
(14:27):
thing that comes up is we justdon't have conflicts of interest
.
Speaker 1 (14:29):
That's the number one thing that you have to be aware
of that's a big one.
Speaker 2 (14:33):
Because people will drive around and call on a
building or they'll get onlineand search a database and
they'll call the listing agent.
The listing agent will startfacilitating information, love
to show you the property and allof a sudden that person doesn't
realize the person you'retalking to has a legal
obligation, a fiduciaryobligation, to help the seller
or the landlord maximize theirprofitability, Meaning they're
(14:54):
going to take you for thehighest lease rate, the highest
purchase price, the lowest.
They have a legal obligationbasically to punish you in the
negotiation.
And so, again, the person isnot going to be an idiot,
they're not going to tell youthat and they're going to be
gracious, cordial, accommodating, they're going to follow up
with you and you're oh, this man.
You're going to say this guy isreally nice or this lady is
(15:15):
really nice.
They're legally working againstyou.
And so once you realize that youcan't be in a situation where
there's conflicts of interestthat's paramount.
And then you get into the placewhere you realize that you've
got to have specializedrepresentation.
You've got to have an advocateon your side of the table who
knows what they're doing, whounderstands how to maximize your
upside.
How do you get the mostcompetitive lease rate or
(15:36):
purchase price?
How do you get the highestlevel of concessions?
How do you avoid getting stuckin pitfalls, delays or traps
that people fall into all thetime, when they don't know what
they're doing and you realizehow much money is really on the
line?
That's the foundation of ourbusiness.
Speaker 1 (15:50):
Yeah, and it's so true.
I had a situation like thatwhere I had a real estate agent
who was working both sides ofthe thing and they weren't even
healthcare specific and thatthat lease was so disappointing
compared to these other leases Ihad, and I really value that
part of being hyper-specialized.
You niche, and that's where thevalue comes in.
So let's talk about mistakes,then.
(16:12):
What are the most commonmistakes that private practice
owners make when they'repurchasing their real estate?
Speaker 2 (16:18):
Yeah, absolutely.
So I'll give you three or fourand these are going to apply to
whether you purchase or lease.
It's kind of the same thing.
The very first one is do ityourself.
It's the doctor or theadministrator that says I'm a
smart, intelligent person, Iknow how to pick up a phone, I
know how to send an email, I cannegotiate, I can sign a lease,
you can do every one of thosethings, but you can't do them as
(16:38):
well as someone who specializes.
So the number one mistake wesee people making is they just
do it themselves.
And yeah, I mean, I can pull myown teeth, like I have a pair
of pliers and I can.
You know, I can have my sonjump on my back and adjust my
back.
I can do a lot of things myself, but I'm not going to get the
same result.
So the do-it-yourself is numberone, unequivocally.
Speaker 1 (17:03):
Before you jump in, there's legal things too.
There's those things called youdo it better, but there's a
whole bunch of legal stuffthat's just out there constantly
floating around and to not haveto like to either just do it
thinking I'll never affect me assilly, or to be overly worried
when you don't even know how,where to start learning that
stuff.
It's nice to have thelegalities of how these things
(17:23):
work just kind of handled,because you're working with
professionals.
Speaker 2 (17:25):
Yeah, there's the legalities, absolutely.
But there's also just likestreet credibility, like there's
no landlord on the face of theearth that's going to get a
phone call from a healthcareprovider and think, oh, this guy
is a real estate savvy expert.
There's no way when a realestate listing broker or a real
estate landlord gets a call froma doctor, they're licking their
chops.
They're instantly thinking I'mgoing to take him or her for a
(17:48):
20% premium, I'm going to savemyself probably $50,000 to
$100,000 in concessions.
There's no respect there.
It's not hard to figure out.
Some random person that has noidea about real estate at
Chipotle is not calling onproperties.
Starbucks doesn't have somerandom administrative assistant
just dialing to say what'savailable.
(18:09):
Take any Fortune 500 companythe only people that are making
the phone calls on real estateare the most qualified experts
in the country.
And so you look at what does aFortune 500 or 100 company do?
And then a healthcare providerwill do the exact opposite of
that and think that they'resuper savvy.
And so I don't mean thatdisrespectfully, but the amount
(18:30):
of healthcare providers.
Speaker 1 (18:30):
It's a big mistake.
Speaker 2 (18:33):
Yeah, it's like if you got a letter saying you're
being sued, there's no one intheir right mind would say I'm
just going to go it alone.
You would lawyer up instantly.
If you get a letter from theIRS saying you owe a bunch of
taxes or you made a mistake,there's no way you're just going
to pick up the phone and callthe IRS.
To call the IRS, you're goingto have your CPA or a tax
(18:55):
attorney make that first phonecall, because there's no
credibility when some randomperson who's not trained in an
area is trying to do something.
Yeah, I love that, I love thatthe do-it-yourself is by far
number one.
The number two mistake and thisis one that's probably going to
surprise people, because it'svery different than most people
think is they don't know how tonegotiate.
They'll pick one property andthey'll just start trading paper
(19:15):
or submitting offers, and theproblem with that is there's no
benchmark or plumb line tomeasure the deal against.
And so the reason this iscontrary to how people think is
because in residential realestate, whether you go with an
agent or you look online, whenyou find a property you like,
you submit an offer, and it'stypical to submit one offer,
it's in a contract form.
(19:36):
If the seller says yes, I likeit, or they counter you and then
you agree, you're in a legallybinding contract.
There's options for you to getout or to avoid it, based upon
objections and deadlines andrequirements, but you typically
pick one property, submit theoffer and if they say yes,
you're under contract.
In commercial real estate, younegotiate on a non-binding basis
(20:01):
in a letter of intent or an RFPrequest or proposal, and it's
common in commercial real estateto be negotiating with four or
five landlords or sellerssimultaneously, and the reason
being is you don't have any ideaif one landlord is much more
motivated than another landlord.
You might have two propertiesthat are side by side, that look
identical.
Well, one landlord might'vebought it 20 years ago and have
no mortgage.
Other guy is leveraged to thehilt and he can't do the same
(20:23):
deal.
One landlord might be gettingready to sell their property and
they want the highest leaserate, but they're willing to
give significant concessions forit.
The other guy is going to holdit for the next 20 years and
he's willing to do a much morecompetitive deal because he
wants occupancy over lease rate.
And so you don't know thosethings until you negotiate,
multiple people and also, too,landlords aren't going to give
you their best deal.
A landlord is not going to comeup and say look, I would do a
(20:46):
deal at $25 a square foot if Iwas pressed.
So here's 25.
They're going to come at you at30.
They're not coming to 25 unlessthere's a fear of loss, unless
they think they're going to missthe deal, unless they think
other landlords that they'recompeting against are doing the
same thing.
They're not going to justvoluntarily give you a $200,000
rent reduction because you askedthem.
(21:07):
They have to be pushed intothat deal or forced to do it to
be competitive with the market.
Nobody just voluntarily givesaway hundreds of thousands of
dollars, and so you don't dothings like that unless you have
to.
If you were a provider, youwould never lower your rates or
fees or accept a lowerreimbursement from an insurance
company, unless you had to.
(21:28):
And so, yeah, and that's thewhole idea, and so, but you,
I'll say this and I'll let youjump in.
You cannot get to that pointunless you have four or five
landlords that you can leverageagainst each other, put one
against the other, and thenyou've got real-time
intelligence coming at you.
This guy's willing to do this.
This guy's willing to offerthis much free rent.
This guy's willing to do.
You know, these threeproperties are at 2% annual
(21:50):
increases.
I'm not going to pay three anda half with you.
You don't have that informationunless you are in the market
with multiple landlords andmultiple offers going back and
forth.
Speaker 1 (21:58):
Yeah, I love that.
It seems like to me from whatyou just said, there's a lot of
reasons why you'd want to workwith a professional who's hyper
niche in this space If you'regoing to be purchasing a
building as a private practiceowner.
There's all these things thatyou mentioned, but you really
hyper-focused on the negotiationpart of it.
Like there's all theselegalities, there's all these
different steps, but when youwere talking right now, I got a
real sense that, like,negotiating is a different level
(22:21):
at these commercial real estatepieces.
So how much is really on theline, like when people are
thinking about negotiating, whatdoes that look like?
I think you gave a good example, for example, but is there
anything else you would add tothat?
Speaker 2 (22:31):
Yeah, I mean, there's a couple hundred thousand
dollars that are in play inevery transaction, and that
number catches people off guard.
They either are surprised by itor they don't believe it, but
it's, it's how do you get tothat Like number?
(23:10):
Like I'm sure you use use how doyou get to that number?
Use some scenarios that wouldpaint that picture pay by that
amount of money.
That's only like a 10%difference on lease rate for a
lot of properties, like a grosslease rate of 30 a square foot
or even a base lease rate of 30a square foot.
If you overpay by $3 a squarefoot, $3 a square foot times
3,000 square feet, that's$90,000 over 10 years.
So that's just the lease rate.
If you have an annual increase,let's say that's at three and a
half percent and you could havepaid 3% or two and a half
percent and you're on aninflated lease rate already.
Like there's tens of thousandsof dollars more in annual
(23:32):
increases that you could haveavoided If you miss out on a
couple of months of free rent,like not just free build out
period but actually free rent tostart your new deal.
I mean it's not hard to figureout.
I mean every month of free rent, $30 a square foot on 3,000
square feet, that's $7,500 amonth.
If you only got a month or twoof free rent and you could have
received four or five months offree rent, there's another
(23:54):
$25,000, $30,000.
Wow and so you start gettinginto things like build-out
allowances, like to renovate aspace.
There's a number of otherconcessions that are available.
So of other concessions thatare available.
So again, you just start.
You take 90,000 here, 20,000here, 30,000 there, and you add
it up.
It's very easy to come up witha couple hundred thousand.
But even if it was just 50,000,like I don't like, let's take
(24:14):
it down to the most, like lowestnumber you could imagine, Like
who wants to lose $50,000 if youdidn't have to.
Speaker 1 (24:28):
Yeah, but it was hundreds of thousands of dollars
plus like terms.
I think the other thing thatgoes in negotiating that I
experienced was this idea oflike having a professional
negotiate terms, because there'sthe deal and then there's the
terms.
I coach people on how to selltheir practices.
I could, you know, I tellpeople all the time who here
would raise, sell their businessfor $10 million.
Right, every hand goes up, it'slike okay, and then I start
going through terms with allthese clawbacks and like
provisions and, very quickly,there's not a single hand raised
(24:50):
.
So you have like the moneythat's being left on the table
and, by the way, that's scary $3a square foot.
More, like I could see aprivate practice owner going oh,
that's not that big of adifference 10% but we're talking
six figures of difference.
And they're the ones becausethey know you don't have a
representative.
They're the ones saying like,well, let's see if he takes it.
Yeah.
Speaker 2 (25:10):
And they'll say stuff like this.
They'll say you know, this isthe lowest rate in the center.
Like I've never done this dealbefore, like man, you, literally
.
They'll say things likefour-year-old wrestling their
40-year-old dad.
Like somehow the four-year-oldmanages to pin the 40-year-old
dad and then goes and tells momlike hey, dad, or I just beat
(25:34):
dad in a wrestling match, andthe four-year-old is just like
walking high.
I mean landlords will say stuffto these tenants, especially
healthcare providers, that theywould never say in a million
years to like a Charles Schwab,or like a JP Chase Morgan or a
Lockheed Martin, like pick, yourlarge Amazon, your large
national company.
They would never say thingslike that because they know that
he called the carpet.
But they'll say things likewell, you know we don't do free
(25:57):
rent here, or everyone has a 4%annual increase.
Or if I do this deal with you,like you got to promise not to
tell anybody because you'll havethe most competitive leash
right.
And they're just literallylying right to the doctor's face
.
You say, well, why do they dothat?
Speaker 1 (26:14):
Because they can and they want the money, like they
don't care about the doctor,like they know ego with medical
professionals, especiallycertain types of docs where it's
like, wow, you really got mepinned against a corner and the
doctor was like, yeah, I did.
Another score for Surgeon Bob,like it's one of those where
literally, you have no clue thatyou're even being played, until
you have someone come in who'san expert and they would never
say that Wow, colin, you guysreally got our lowest rate.
(26:36):
We never go this low.
They would never do that crap.
Speaker 2 (26:39):
They'd feel like, fine, let's just go with it,
yeah no, and that's a greatpoint, and we can tell we get
their lowest lease rate becausewe start, I mean, they get
emotional and they start gettingupset and, like I mean, we
started getting landlords that,like you, would think these guys
could control their emotions ata higher level, but they a lot
of times can't And'll figure outwhat's going on.
(27:00):
We'll look at vacancy rates.
You get a landlord that's gottwo or three vacant units and if
you're in a lease renewal andyou might be giving them another
vacancy if they don't bringterms that are competitive
enough.
That's serious leverage.
They don't want to go negative$8,000 or $9,000 a month because
(27:25):
they didn't give you enoughfree rent to go negative eight
or 9,000 a month by becausebecause they didn't give you
enough free rent.
Like you can leverage the lossfactor or the fear factor of
these guys can't afford to loseyou.
But again you don't get thereunless you have other options.
You know how to play the gameand you know what's going on
with the market.
Speaker 1 (27:39):
I looked a word up while you were talking right now
, called leverage, becauseleverage is something that I
didn't.
We all hear this word.
These are words that we allhear in business and many people
get a sense of it, so they justmove on.
Here's what the definition ofleverage is, guys, cause I
learned this recently in greatdepth when one of my friends was
in a heavy negotiation overover a hundred million dollar
deal.
(27:59):
Leverage is the exertion offorce by means of an object used
, and it's that's like actualleverage, meaning like if you're
using a lever finance is adifferent definition, but it's
essentially it's using somethingfor maximum advantage.
When you have leverage, youhave momentum and capabilities
that you wouldn't have otherwise, and it's not about when we
(28:21):
hear the word force andhealthcare.
We're like, oh, I don't want tobe a jerk.
It's like that's not what it is.
We're talking about leveragingthe reality around us to get the
best rate possible.
We never want to get to thepoint where the people on the
other side are feeling screwed,but that's what you're saying,
is that that's not what they'retalking about?
Their, their modus operandi inthe vast majority of all cases
(28:42):
is to get the best rate possibleso that they can make the most
money off their, their people,that they're renting to them.
So if we can leverage, leverage, if we can use leverage to to
create a space of equality andto get a really good deal for
all, that's fair market value.
That's what we mean by leverageand that's where hundreds of
thousands of dollars coming up,I mean there's.
So it's interesting because, asyou're talking, I'm like okay,
(29:04):
private practice owners reachout to you when they want to buy
a building, but you're alsosaying reach out to you when
they're ready to renew.
Speaker 2 (29:11):
Yeah, the number one transaction where health
providers lose money at thehighest level unequivocally are
lease renewals.
It's the number one transactionand there's a couple reasons
why.
Number one most health careproviders signed a bad lease to
start.
They did not capitalize.
Maybe they got a good deal ormaybe they had great
representation that definitelyhappens.
(29:31):
But the vast majority signleases that are above market.
99% of all leases have anannual increase.
So if you sign a lease that's$2, $3 a foot above market and
then you have above marketannual increases and then for
the nine out of the 10 years yourelease it, it ratchets up.
By the time you get to that10th year you're way over market
.
Now you start out two, $3 afoot above market.
(29:52):
Now you're way over market.
And then they just sign off ontheir next lease renewal.
And so a lot of healthcareproviders don't realize this.
You know everything's in play ona lease renewal free rents in
play, renovation allowances inplay, lower lease rates in play.
And you have to ask thequestion if you move out of the
space, what is it going to costthe landlord to release that
space?
How long will it sit vacant?
(30:14):
How much money will they losewhen it goes vacant, how much
time will it take to release it?
If the new person needs a buildout, how long will it be in a
build out period for wherethey're not getting rent, and
then how much free rent are theygoing to give?
What does it cost to do a newdeal?
And you add up all that amountof money and it's significant
for a landlord.
So you know that that thatspeaks to a significant amount
(30:34):
of opportunity.
But on the other side of thecoin, landlords are going to
assume that you don't know whatyou're doing.
If you're a healthcare provider, if you haven't hired an agent,
you're not serious about moving.
So if you're just going italone and you say, send me a
proposal, that's one of thebiggest mistakes you could ever
possibly make is say send me aproposal or what would you do
for me?
That instantly tells thelandlord you have no clue what
(30:56):
you're doing.
And so lease renewals are thenumber one place where landlords
just punish tenants.
It's the number one transactionwhere they make significant
premiums 10, 15%, 20% premiumsthat they would never make with
a savvy tenant.
And so, yeah, leasing moretenants and more healthcare
providers.
Let me say this More healthcareproviders lose money during a
(31:17):
lease renewal than any othertransaction.
So, it doesn't matter if it'spurchasing or leasing, it's any
transaction with a landlord orseller.
You've got to come with your Agame and it's not going to be
you coming alone, it's becomingwith a savvy real estate agent,
exclusively representing yourinterest, that takes you to
market and then negotiates onfour or five properties on your
behalf.
Speaker 1 (31:36):
That's amazing.
It feels like what people woulddo in your case is they would
be developing more of a realestate strategy as part of their
private practice piece.
Because when you niche the waythat you do, you help people
like develop the secondary partof their business that they
don't even know.
That is like just tacking it onto what their main heavy lift
is, which is their privatepractice.
How do you operate with largerclients of yours that have
(31:59):
multiple pieces?
Do you multiple real estatepieces Sorry, there's a guy that
popped up over my windowcleaning the what is going on
but do you strategize with yourclients?
How do you help them develop?
They're really serious aboutwanting to expand multiple
locations in real estate.
How do you work with thoseclients?
Speaker 2 (32:16):
Yeah, we have a lot of clients that have multiple
locations and we have lots ofclients that have dozens.
We have clients that havehundreds of locations and we've
helped clients go from literallyzero to hundreds.
And so it's the same thing.
Every transaction gets the sameamount of attention.
It's not a matter of like hey,you've got 10.
We can only get to a few.
Every transaction has the sameevaluation.
(32:38):
We look at what they'recurrently paying, we do a market
analysis or we look at wherethey want to go and see, do a
market analysis, and then wealways negotiate on multiple
properties.
We'll look at options to lease,look at options to purchase,
We'll look at if they're in anexisting space, we'll look at
what would it look like if werelocated and bought a building,
or relocated and leased abuilding.
And then we always leverage andwe always negotiate with
(33:00):
multiple people.
That's the key is, you cannotjust ask a landlord for an offer
and then let's just say you geta little bit of movement.
You start with one property.
They come in at 30, you getthem on a 28.
Like, but still you don't knowcompared to what like?
What if the other two landlordsdown the street where I would
be at 26, not 28.
So just cause you got onelandlord to come off their lease
(33:20):
rate, $2 a square foot doesn'tmean it's a great deal.
It's better than it started,but it's still not able to be
measured against the market.
So that's really the key.
And so starting everytransaction if it's a lease
renewal 12 months in advance,that's key to make sure you have
enough time to complete thefull analysis.
And then actually, if you haveto move or want to move or want
(33:41):
to purchase, that's reallyimportant.
I guess I'm going to jump backinto our previous question.
Another top mistake healthcareproviders make is they don't
time it right.
They've got two months left intheir lease.
They're calling their landlordsaying you know, send me a
proposal.
That landlord knows this personhas no ability to move, Like
they've missed.
They've missed the window, Likethey lost their leverage.
(34:03):
They lost their leverage.
That's exactly right.
And so you know, not timing atransaction properly.
Or you get these people thatcall their landlord three years
in advance and say I want torenegotiate, there's no reason.
The landlord's going tovoluntarily just cut their cash
flow because you called them andasked them.
So timing a transaction isanother kind of top five mistake
as well.
And so having that propertiming and again, this is
(34:27):
probably the top takeaway, orone of the top takeaways
Landlords do not move unlessthere is a fear of loss.
Simple as that.
Speaker 1 (34:36):
Landlords don't move unless there's a fear of loss.
Speaker 2 (34:39):
Yeah, and I'll prove it to you.
If you were going to sell yourown house and you're going to
sell your house let's say you'regoing to sell your house for a
million dollars you're notcoming down to $800,000 unless
you think that's the only wayyou can sell it.
If you think you can sell it ata million, you're going to hold
firm.
If you think you sell at$950,000, you come down to
$950,000, but you're not goingfrom a million to $800,000
(35:01):
unless you think that's the onlyway you not going to lower your
lease rate.
They're not going to give you ahuge free rent package.
They're not going to give you abunch of money to renovate your
space unless they believe theyhave to in order to make the
deal.
Speaker 1 (35:12):
Amazing.
So this has been such aphenomenal episode.
I really did.
We get a lot of requests to beon the show.
I looked at yours and I wenthey, kim, we've got to fit Colin
in, because I think that ourbig focus on the podcast is
helping private practice ownerscreate financial freedom as well
as other types of freedom.
But there was no greaterfreedom, producer, on the
financial end, for me thanselling my business with owning
(35:34):
the building.
That was so huge and I didn'thave someone like you helping me
along the way.
And I do have something I wantto talk to you about personally
after the after the show, realquick.
But it's one of those thingswhere this isn't a cool thing.
This is a game changer thingand doing it with the right
professional is so huge.
I have a question that I knowthey're all asking internally,
(35:55):
which is on the real estate side.
When it comes to residential,they know how people get paid.
How do commercial real estateagents get paid?
Speaker 2 (36:03):
Yeah, that's the beauty of our industry is that
it's set up to where thelandlord or the seller is going
to pay the commission.
I'd say literally like 99% ofthe time.
So if you're in a residentialtransaction and you're selling a
house, you hire an agent tolist your property and you pay
the listing agent a commissionand you have a money.
Or you have a commission setaside for the buyer's agent too.
(36:24):
If a buyer shows upunrepresented, the listing agent
gets double commission.
Same thing in commercial.
If you go to market without anagent, the listing agent gets a
double commission or thelandlord just keeps that money.
You don't save money and that'sa misnomer.
A lot of people think well, ifI do it myself, I'm saving
commissions.
No, you're not the payer of thecommission.
If you own the building, youcould save money by not hiring
(36:46):
an agent.
That's one way to save it.
But if you're a buyer or atenant and you go unrepresented,
all you did is just forfeitbasically like free
representation.
You know, and wasted a lot oftime and energy and probably got
a really bad deal, and yet youdidn't.
The insult to injury is youdidn't get any savings Like.
You lost the savings you couldhave got and it would have been
(37:07):
paid for by the landlord or theseller.
So it should not cost you anymoney to hire an agent.
It should be a service that'sprovided and they're going to
get paid for their service.
But it's going to come out ofthe listing agents half or
portion, or the landlord'sportion but not yours.
Speaker 1 (37:22):
I love it.
Okay, final question that Ihave, and then I'm open to
anything on your end if you wantto talk about is this thing
about?
Why are you so passionate aboutdoing this, colin?
Like, what is it about whatyou're doing that drives your
passion?
And I asked the question forthose who aren't watching.
He lit up immediately,smile-wise, like he's excited to
talk about this.
Speaker 2 (37:40):
Yeah, no, I appreciate that.
So I got into real estate whenI was 19 years old.
I started managing apartmentcomplexes right after high
school, did not go to college,started working right away.
I got into brokerage when I was22.
And I worked for a guy that didWalmarts, wendy's, blockbusters
, large national retailers.
(38:05):
A couple years into my career Ijust realized I really liked
working with individual businessowners.
Like we work with large groupstoo.
That's great, but I likeworking with stakeholders that
actually really you know, reallycare about what's happening.
You know it's fine doing aWalmart deal.
It's an asset manager.
They're going to do 40 Walmartsin a year.
You're just kind of a number.
I just didn't enjoy that asmuch as I enjoyed working for
someone like you that actuallyit made a difference If I saved
you a hundred grand, like youknew it and you thank for it.
(38:27):
And so I just started realizingI liked working for individual
business owners.
And then, um, a number of yearsinto my brokerage career I was
working for the largest medicaluh landlord in the country or
really in the world.
It is a very large REIT, a realestate investment trust.
People give them money, theybuy a real estate, they send you
a check.
It's like putting money into astock or Amazon.
(38:48):
So I'm working for the largestmedical REIT in the country a
couple of class A medicalbuildings and every tenant in
the building is a healthcareprovider and we had a number of
deals that we did where thedoctors had lease renewals
coming up and I met with a.
I met with the very first one Iwas doing a leash renewal for
and I asked him like do you knowthe market?
(39:09):
No, have you hired a broker?
No, are you interested inmoving?
No, like I asked the questionsdifferently than that, but that
was the gist of the questionsthat I asked At that point.
I know the guy has no possibleability to do anything.
He has no leverage, no posture,no skill set.
(39:30):
So I go back and I report thatinformation to the landlord and
the landlord's like great, goback to him at this leash rate.
And the lease rate he wanted meto go back was so egregious and
so predatory.
I mean not like a slightpremium, like a 35% premium, and
I mean $400,000, $500,000 morerent than this guy should have
paid over a 10 year period.
And I went back and presentedit and the doctor looked at me
and he's like, well, if this iswhat the market is, I guess I
(39:53):
have no choice and he just signsoff on this deal and I watched
this guy lose like 400, 500grand, and there's more to the
story than that.
But that's the short version ofit.
Speaker 1 (40:02):
That was the pain of it, yeah.
Speaker 2 (40:03):
Yeah, and so I mean I did.
I was again.
I did a good job for mylandlord.
Like again, if you were sellingyour house and your broker got
you an extra 200, 300 grand,you'd be high-fiving your broker
.
You wouldn't be like refundingthe money to the buyer, like
that's just the game of realestate is you get what you can
get.
Everything was done ethically,no lines were crossed.
But I just had this likefeeling afterwards like that was
(40:25):
not a fair fight.
Like was like that was not afair fight.
Like it was like a heavyweightversus a lightweight or as a
heavyweight, like world championversus some random dude that
got pulled out of the stands.
That's never fought before.
Like it was just, it justwasn't right.
So I had three or four of thosedeals that went down in a short
period of time and I justrealized like look, no one's
helping the doctors.
Like there's a lot of guys thatwanted to list the property and
(40:46):
be the landlord rep for themedical building, but nobody was
working on the buyer and tenantside.
So within a short period oftime I started our company,
which is called CAR.
We launched it and from day onewe started moving the needle
for doctors by the teams ofhundreds of thousands, and when
we would show them how much wesaved them or what they would
have paid without us, like wehad.
(41:08):
We had friends for life.
And so for me, I've donethousands of deals now
personally and I just I lovewhat I do.
I love helping people, I loveprotecting them and you know not
, not every deal is a grand slam.
Sometimes it's a whole monthand then it's a single, but you
know, nonetheless you protectthe doctor's interest, you
protect their practice, theirlargest asset, their top income
(41:30):
source typically, and you do agood job for them.
They know it and theyappreciate it, and so it's like
you seeing someone go fromhaving a debilitating issue to
having full recovery and gettingtheir life back, I mean it's a
great feeling.
Speaker 1 (41:43):
Yeah, and I think there's this thing about maybe
you do have these grand slams,home runs, triples, doubles,
singles, but you don't have themstriking out.
That's the thing.
It's like you're protectingminimally against that.
Really, we share a passion inthat sense, because what I'm
doing now in a different way istrying to support who I believe
(42:04):
are the most important men andwomen in business of anything
which is healthcare businesses.
Because if, if we can protectthe private practice owner to
being more profitable and moresuccessful, they're not
typically not all, but nottypically the people who are
going to go buy lots of yachtsand that like they're going to
take that money and put it backinto healthcare, back into their
practice, helping patients havebetter experiences.
And I mean, is there somethingmore important than healthcare?
(42:27):
It's a foundational element forhuman survival.
So as we're helping the leadersof that industry be more
profitable and be protectedagainst these negative elements,
I feel like we're serving thecommunity at large.
So I'm so excited, colin, tohave met you.
This has been a real treat ofan episode for me.
I've been wanting to find aconnection to real estate on
this show for a long time andI'm hoping everyone whether
(42:52):
you're a student who'sgraduating, who wants to own a
practice man.
What a great episode for thoseguys and girls to have this
information that early.
But if you're even 20 years inbut you got 10 years to go, man,
save, hunt six, potentially sixfigure amounts on your renewal,
I mean it's like just this ideaof like what can be possible
through real estate, and it's itreminds me of the founder with
(43:15):
McDonald's, where Ray Krocrealized you know he's in the
real estate business, not theburger business.
We're not at that level, butit's important to understand
that being in healthcare,especially if you're in the
outpatient space real estate isa huge part of that business.
Guys, thank you for taking timeto listen to today's episode.
If you found today's informationto be useful, could you take a
minute and help me?
I would love it if you couldleave a podcast review in your
app so that other people who arelooking for this information
(43:36):
can find it.
Plus, my dream is to have thelargest network of medical
entrepreneurs and leaders in theworld so that together we can
change healthcare to make itbetter for all.
So, in addition, if you canthink of anyone that you can
send this to, not only wouldthat mean a lot to me personally
, but it would build thisnetwork so that we can make
healthcare the way that we wantit.
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