Many chiropractors ask if or how the Real Estate market affects your plans to Buy or Sell a Chiropractic Practice. The quick answer is YES it does. The present real estate market is having a profound effect on our profession — especially if your planning to buy OR sell a chiropractic practice. Here’s an 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 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. As a result the Real Estate Market WILL affect your plans to buy or sell a Chiropractic Practice. In fact, over the last decade or so, chiropractic practice sales and acquisitions have loosely followed the patterns of the real estate market, especially in terms of lending patterns. For example, if we look back a in time towards what we now know as the real estate “bubble” (and its subsequent burst in 2007-2009 ), 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 to purchase a practice. 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
The housing market eventually recovered from the financial crisis in 2007-2009 and fast forward a decade or so, the housing market again started a climb towards another “booming” market. The 2020 pandemic only fueled a fire to the degree that real estate sales again started skyrocketing in terms of value and volume. Similarly, these trends proved helpful to chiropractic practice sales over the last several years. While we have not seen the presence of an influx of “subprime loans” like we did in real estate in 2007-2009, positive trends have emerged both in real estate and in the practice financing lending world that have contributed to a financial system that is helping buyers purchase both houses AND businesses.
Easier Loans = Better Chance to Buy AND Sell
Put simply, the current trends are showing that practice financing is easier to obtain now than it has been in years. Here are three brief examples:
- The Banks Minimum Requirements Are Still The Lowest Ever!
Thanks to SBA changes to lending policies that went into place in 2018, lending options for chiropractic practice purchases have never been better. Buyers can now qualify for a bank loan with as little as contributing 10% towards the purchase price (and with Seller help this can even be reduced to as low as 5% of the purchase price). Prior to this change, it was not uncommon for banks to require 15% or 20% or more downpayment to purchase. This again lowers the bar for Buyers and makes it easier for them to get a loan to buy a chiropractic practice (which benefits Sellers too)! These requirements are still in place in 2022 – still making it better for Buyers and Sellers!
- Low Interest Rates Makes Your Dollars Go Further
To respond to COVID-19 concerns, the Federal interest rates dropped in 2020. This positively impacted not only the real estate industry but also chiropractic practice sales. While home interest rates dropped even more, business acquisition loans were in a competitively low range which make the cost of borrowing money “dirt cheap” compared to historical norms. This essentially means that Buyers can qualify for more money used to purchase your chiropractic practice (again good for Sellers and Buyers)! Unfortunately, there’s talk of these interest rates increasing, so we’re not sure how long these great rates will last — which is why NOW may be a great time to buy or sell a chiropractic practice!
3. More MOVERS = More Activity
The Real Estate market has also seen lots of activity since the pandemic in 2020 with Sellers relocating throughout the US. In chiropractic, this has created a much more active market of BOTH Buyers and Sellers. In some cases, Sellers looking to sell in one state are also looking to buy in another. Lower interest rates and good lending terms have brought out more buyers. The Baby Boomers looking to retire are putting more Sellers on the market. What you have in all that mixture is a very active market!
What This Means to You
Now that you understand a bit more about How the Real Estate Market Affects Your Plans to Buy or Sell a Chiropractic Practice, if you have been considering a transition on either side of the fence (buying or selling a practice), you can see that now is a great time to take some action. While it’s not always possible to “time the market” perfectly, it’s easy to see that he Real Estate Market Affects Your Plans to Buy or Sell a Chiropractic Practice — and that it is still a good time – to time your practice purchase or sale!
In addition, chiropractors looking to hire an associate with the opportunity for the younger DC to eventually buy-in or buy them out, may want to consider accelerating their plans and making this happen sooner rather than later. After all, if you realized that due to low interest rates and loan terms, you (and your prospective buyer) were only a few thousand dollars away from having your Associate purchase your practice now and help you hatch your exit strategy, you may want to head in that direction sooner than later. One simple suggestion — learn what your chiropractic practice is worth NOW so you can see what you’re practice is worth and see how feasible this plan is for you! (we’d be happy to help you with this – Click the link here for more info on getting a chiropractic practice valuation.)
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.
Depending on your transition position, here are a few moves you should strongly consider making:
If you are looking to SELL YOUR PRACTICE or Transition 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 FREE WEBINARS FOR SELLERS and they are designed to help you with successful strategies & tips to sell or transition your practice for maximum value.
- 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.
- Option 3 = you need to launch your chiropractic practice sale or transition soon and need assistance with getting a practice valuation or selling your chiropractic practice. We’d be happy to help — > click the link on to learn more on how we can help you Sell a Chiropractic Practice — including valuing your practice to see what it’s worth.
are looking to BUY A CHIROPRACTIC PRACTICE or FIND AN OWNERSHIP OPPORTUNITY
- 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.
- Not 100% sure if you are ready to buy yet? Consider our FREE WEBINARS FOR BUYERS to show you how to navigate a practice purchase.