Somewhere in the continuum between one extreme of a complete blank slate of vacant land and the other extreme of a newly constructed medical office lies a grey area.
A grey area of potential.
Potential to rehab and transform that which already exists between the walls and roof into the desired product, the brand new medical office (or whatever purpose the structure will serve).
If you demand to know my preference, it’s always going to be new construction when every facet of the build can be determined and value-engineered before ground is even broken.
Energy efficiency and all the mechanical systems are planned in advance. Everything is straight, square, plumb, level, and not cobbled or messed up.
But life isn’t always so pretty, and budgets aren’t always unlimited.
Rehabbing an existing structure can be fun because of the challenge of the extent of the transformation. As well as the path along the way from point A to point B. How new can you make it? How energy efficient? How much money will you save over new construction?
Those are all valid questions that deserve succinct answers.
In the accompanying video, you’ll see the inner workings of a structure that needs a high-level makeover. Demolition. Floor cutting. Removal of roof-top heating units. New wiring. New plumbing. New walls. New just about everything.
I think I can do it for about $60 per square foot. Maybe less, depending on some variables that haven’t been decided.
My friend could have sold this building a month after he bought it. I took a call from the largest commercial real estate firm in southeast Michigan, and the broker on the other end told me he represented several restaurant chains and that one of his clients was interested in this building. Location and setting great, directly off a major interstate. Turns out we could have made a quick $300,000 – $400,000 profit flipping the building to them.
We declined.
After the high of a quick flip had worn off and the low of the capital gains tax bill that followed, where would we have been? The answer is the same place that we were before the building purchase – in need of medical office space for an eye care practice. And without a good rehab option.
I hope you enjoy the video, and the others yet to come, during the adventure that will unfold over the next 9 months during this exciting transformation.
P.S. Does anyone know exactly where I am in the video? Location, building, town, etc?
Until next time,
Dr. Lee Newton
How A Doctor Learned To Develop Real Estate
- Learn the consequences of delegating your real estate and construction decisions to others
- See for yourself how a physician cracked the code to success and profitability in real estate development
