Buying into Ambulatory Surgery Center +/- Real Estate

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Topic Author
Nthomas
Posts: 155
Joined: Fri Jul 15, 2016 8:46 am

Buying into Ambulatory Surgery Center +/- Real Estate

Post by Nthomas » Mon Aug 12, 2019 8:28 pm

I have the opportunity to buy into an Ambulatory Surgical Center (ASC). The buy in is basically the equivalent of the annual pre-tax dividends so it is a great investment. There is the opportunity to buy into the real estate portion of the ASC as well. This is about 260K and has a variable but historical ROI of 7-9%. If one doesn't buy into the RE portion they must pay rent to the other partners of around 2k/mo. The RE portion offers the dividends (basically rent that is then pass through income) and depreciation. However, that's a big chunk of change with another loan for the RE. The practice has been around for decades and is stable. No plans for big changes any time soon. Trying to decide if the RE portion is worth it. Any insights? TIA.

123
Posts: 4873
Joined: Fri Oct 12, 2012 3:55 pm

Re: Buying into Ambulatory Surgery Center +/- Real Estate

Post by 123 » Mon Aug 12, 2019 8:54 pm

Real estate can be subject to economic cycles independent of the business that operate within them. Healthcare has been good business so far but change seems to be "in the wind".

What percentage of your investment assets does this real estate deal represent?

How did this investment opportunity come your way?

What background in medicine/healthcare do you have?
The closest helping hand is at the end of your own arm.

Topic Author
Nthomas
Posts: 155
Joined: Fri Jul 15, 2016 8:46 am

Re: Buying into Ambulatory Surgery Center +/- Real Estate

Post by Nthomas » Mon Aug 12, 2019 9:01 pm

123 wrote:
Mon Aug 12, 2019 8:54 pm
Real estate can be subject to economic cycles independent of the business that operate within them. Healthcare has been good business so far but change seems to be "in the wind".

What percentage of your investment assets does this real estate deal represent?
It would be a significant percentage of assets at this point, however with buying into the ASC my income is going to double and I plan to save/invest the net difference. I will be investing 20-30k/mo in a taxable brokerage account. Therefore, within a few years the real estate would be a small % of overall investment. The ASC is by far the best investment as, again, my income will double. However, the benefits of the RE portion are less obvious. The dividends are about 7-9% per year historically, and then there is the tax benefit of depreciation, etc. I'm just not excited on taking another loan given the rather large one already being taken for the ASC (although will be paid off in 5 yrs, sooner if I defer the taxable contributions).

I'm a physician who does procedures at the ASC. It was part of the contract that after X months when I become partner I could buy into the ASC for a set (very reasonable) buy-in. It's 100% physician owned.

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