STRATEGIC WEALTH, LLC
  • About Us
    • Our Beginning
    • Why Us?
    • Services & Fees
  • What We Do
    • Personal Planning >
      • Family Bank
      • Retirement Planning
      • Investment Management
      • Charitable Planning
      • Risk Management
      • Social Security Optimization
    • Business Planning >
      • Expense Reductions & Tax Credits
      • Business Valuations
      • Buy-Sell Agreements
    • Case Studies
  • Client Access
  • Articles
  • Contact Us

Wing Tips

Four Reasons Why Medical Practitioners Should NOT Own Commercial Property

3/6/2017

1 Comment

 
Picture
​​While there are no guarantees, commercial property can be a great investment for those in the medical community. Certainly, there are many that put their proverbial toes in the water, but a lot more professionals sit back and wonder "Should I take the plunge?" 

After spending many years in commercial property consulting, we have identified four common reasons why those in the medical profession should NOT own commercial property:
Reason #1 - The Downside of Being Smart
Those in the medical profession are bright people. Due to the highly specialized training and education necessary though, most practitioners are solely focused on the art and science of their craft. They are not focused - at least as heavily - on maximizing the results of their financial affairs. Interestingly, while they recognize that running a successful medical practice requires a team where each member is playing his or her part, they don't apply that same model to their thinking about financial opportunities. Instead, they want to "know it all"....but because of their other commitments, they just can't.

To optimize your financial success in commercial real estate, you need a team.

Reason #2 - Lack of Legal & Tax Knowledge
When it comes to the unique tax issues involving commercial property ownership, you need a diverse financial consulting team in place. After all, many would-be medical property owners do not even know how to choose the correct entity structure for their property. To compensate for this, they often rely on their CPA to handle all financial matters. Unfortunately, the reality is that your CPA's knowledge is just like your knowledge and my knowledge. It's limited. As a result, your CPA may not have the required expertise to optimize the financial results of commercial property ownership.

Investing in commercial property, particularly for those in the medical field, requires knowledge of how to:
  • limit your liability, and
  • apply traditional tax incentives the operation of your medical practice and tax credits relating to the property's efficient management of energy, and
  • take advantage of accelerated depreciation schedules using cost segregation to drive down your current tax liability, and
  • accurately value the property

There is an African proverb that says "If you want to go fast, go alone. If you want to go far, go together." You can see how this applies to working with a knowledgeable team.

Reason #3 - Paying Too Much in Taxes
The government provides a lot of tax incentives for property owners. The problem is that few people know what those incentives are or what needs to happen to qualify for them. Because of this, owners of commercial property frequently end-up paying much more than they should in taxes. Additionally, property tax valuations across the nation are often inaccurate because of the Great Recession's impact on real estate. Because commercial property taxes are a big expense - and an expense that might come as frequently as twice a year - making sure your property is not over-valued on the tax rolls is important!

Reason #4 - Energy Efficiency
Is the building energy efficient? Will the state or federal government require it to be? How much are the utilities truly going to cost?

Utilities are a bottom line expense and often completely out of an owner's control. Most in the medical community have no knowledge of how to manage this expense. Even fewer are privy to the conservation products on the market. If you are unfamiliar with terms such as: Energy Metering, Power Factor Correction, Kilowatt-hours (kWh), or Demand Rate; you definitely should not own a commercial property.

Commercial property ownership is not for the faint of heart. If you own commercial property or are thinking about jumping into into it, you should consult a firm with expertise in the areas listed above. Contact us for more information.

Author

Bruce Wing is the principal of Strategic Wealth, LLC, a financial planning and business consulting firm located on the north side of Atlanta, GA.

View my profile on LinkedIn
1 Comment
Kate Elliott
6/21/2019 06:44:45 am

Thanks for highlighting the drawbacks associated with the commercial property investment. But, in my point of view, a person could simply buy a rental property which is a great source of passive income. Management of rental property and dealing with the tenants could be very stressful. So, a person could simply hire a property management professional for the management of the rental property. To hire a property management firm, visit
https://www.landwin.com/property/property-management/

Reply



Leave a Reply.

    Categories

    All
    Bonds
    Business Owners
    Charitable Giving
    College
    Economics
    Education
    Estate Planning
    Free Trade
    Health Care
    Inspirational
    Investments
    Kids & Money
    Life Insurance
    Oil
    Real Estate
    Social Security
    Tax Credits
    Taxes

    Archives

    December 2019
    November 2019
    September 2019
    August 2019
    October 2018
    August 2018
    July 2018
    April 2018
    January 2018
    December 2017
    November 2017
    July 2017
    June 2017
    March 2017
    February 2017
    January 2017
    June 2016
    November 2015
    September 2015
    May 2015
    April 2015
    March 2015
    June 2012

    RSS Feed

    Bruce Wing

    Entrepreneur, financial guy, husband and father of two great kids.

Strategic Wealth, LLC | 5957 Shiloh Rd, Suite 114 | Alpharetta, GA 30005 | (678) 456-5060
  • About Us
    • Our Beginning
    • Why Us?
    • Services & Fees
  • What We Do
    • Personal Planning >
      • Family Bank
      • Retirement Planning
      • Investment Management
      • Charitable Planning
      • Risk Management
      • Social Security Optimization
    • Business Planning >
      • Expense Reductions & Tax Credits
      • Business Valuations
      • Buy-Sell Agreements
    • Case Studies
  • Client Access
  • Articles
  • Contact Us