The present real estate market is having a profound effect on our profession — especially if your planning to buy OR sell a chiropractic practice- or even transition in any fashion here in the near future. Here’s a quick update on how & why:
First, let’s define who this article is for. This post applies to you if (in the next 0-3 years) you are…
- Planning to sell your chiropractic practice
- Planning to buy a chiropractic practice
- Planning to hire a chiropractic associate
- Looking for a chiropractic associate job
- Planning to leave chiropractic in some form in the near future
- Looking for an opportunity to buy-in, earn-in or be able to own a practice in the near future
- Interested in similar variations on the above themes in the near future
What the Real Estate Market Means to You
Just as real estate markets go through cycles of being hot or cold, practice sales and acquisitions feature similar patterns.
In fact, over the last decade or so, chiropractic practice sales and acquisitions have loosely followed the patterns of the real estate market in terms of sale values and most closely in terms of lending patterns.
So, when we look back a few years in time towards what we now know as the real estate “bubble” (and its subsequent burst), we can observe a few similar trends. As banks became more lax in their real estate lending requirements, the same banks and practice lending institutions had fairly liberal requirements to obtain funding.
And after the bubble burst, banks tightened their lending for real estate purchases and the practice acquisition market felt the same pinch in lending.
Fast Forward: Real Estate Recovery
Throughout 2016, trends in real estate pointed to the makings of a recovery market. Houses started selling and overall activity was up from the economic slumps we have seen in the past few years prior. These trends have continued as the start of 2017 rolled in and at present time (Summer 2017), the real estate market continues to look strong and show no signs of slowing down. In fact, in some areas the real estate economy is booming again!
And while we have not seen the presence of an influx of “subprime loans” like we did a few years ago in real estate, an interesting trend has emerged in the practice financing lending world.
Easier Loans = Better Chance to Buy AND Sell
The trend that we are seeing is simply this: practice financing is easier to obtain now than it has been in years.
Here are three brief examples:
- The Big Guys Are Back!
The largest lender for practice acquisitions nationwide (for all healthcare entities) has recently began accepting applications for chiropractic purchase loans – after years of automatically rejecting any chiropractic financing requests (regardless of the practice size, profitability or demographics). This amounts to good news to chiropractic practice buyers and sellers as big lenders often offer the most competitive lending rates.
- Flexibility Goes Further!
Among smaller lenders (often private lending institutions that are not main street banks), the trends have also been positive. While smaller lenders are typically unable to match the interest rates of big lenders, they do offer buyers more flexible lending requirements. In other words, their loans are typically a bit easier to obtain. Well, this flexibility has recently gone even further as several small firms have competitively REDUCED their lending requirements. In fact, the Vice President of one private lending firm recently informed me that he could get a potential buyer into a practice sale transition I was helping with for as little as $1500 down – that’s unheard of flexibility!
3. More Online Options
Online financing options continue to grow at a rapid rate, effectively increasing your ability to find a loan to purchase a chiropractic practice and making this one of the best times in history to be able to get funding. Put simply, doors which were closed to you in years past are now open thanks to the internet and we are seeing buyers get financing who previously would have been rejected thanks to the greater variety of lending packages that are available. So if you don’t have perfect credit, don’t have a large downpayment or a parent to finance your purchase, do not let this stop your search. Even if you are relatively new in practice (which was historically a situation where you could never get a loan) there still may be lending options for you!
What This Means to You
If you have been considering a transition on either side of the fence (buying or selling a practice), now is a great time to take some action.
In addition, chiropractors looking to hire an associate with the opportunity for the younger DC to eventually buy-in or buy them out, should consider making this happen sooner rather than later. After all, if you were $1500 away from having an Associate purchase your practice and help you realize your exit strategy, wouldn’t you want to take a step in that direction by getting the right associate in place now?!
Finally, even those of you who are looking for positions as associates in a chiropractic practice can stand to benefit from this trend. Here’s why: it’s not unusual for your student loans to be a significant handicap to getting financing for a practice startup. No offense to you but lenders don’t like the looks of someone who is already $150,000 taking an additional risk of a loan to start a practice from scratch. However, the DC who has an employment track record and who is looking to purchase an existing practice stands a a much better chance of scoring that loan. And if the lending requirements are getting better, so are your chances of achieving your dream of practice ownership.
How Soon is Now?
Regardless of your status, one question that you may have is “how soon do I need to work on my plans?” In other words, when should you take action if you are planning a transition OUT of practice or planning to transition IN to a practice opportunity?
Well, since it’s impossible to tell how long these trends will last, I would definitely recommend that you translate “soon” into “now.”
As I mentioned above, the conditions are ripe on both sides of the fence and delaying your decision for a few years may not necessarily yield any better results.
Next Steps IN or OUT!
Depending on your transition position, here are a few moves you should strongly consider making:
If you are looking to BUY A CHIROPRACTIC PRACTICE, get an associate position or an opportunity to transition IN to a better practice situation, consider starting your search now. We’ve got a simple Chiropractic Practice Sales & Associate Opportunities List that you can join (after completing a brief form) to receive notification on practice opportunities that may suit your interest.
If you are looking to SELL YOUR PRACTICE or transition OUT soon, you should consider several options:
- Option 1 = you need to learn more about the process of selling or transitioning your practice. Fortunately, we’ve got a FREE WEBINAR that is designed to give you details. The webinar is called Sell, Switch or Slow Down: How to Maximize Value For Your Chiropractic Practice Sale or Transition & Minimize Costly Mistakes and it is designed to help you with successful strategies & tips to transition in about 60 minutes time — join us!
- Option 2 = If you need to spend some more time in detailed planning (because you are not sure which route to go or because your exit is >3 years away), then the Ultimate Chiropractic Exit Strategy is the best selling program for exploring your transition options, developing a concrete plan for leaving chiropractic and maximizing the value of your practice sale or transition. It’s a great place to start helping you hatch your plan. And we’re launching the update & expanded REVISED EDITION soon. If you act quickly, you can get in the pre-publication price specials (clic the link above)
- Option 3 = you need to launch your chiropractic practice sale or transition soon and need guidance or assistance. If you wish to sell your chiropractic practice or transition to an associate soon (within the next 0-3 years), our Chiropractic Transition services are designed to get you there! Click the link for for info or contact us today and we’d be happy to help you make your transition goals into a reality!