Medical financing continues to enjoy the best loan options in the business. Lenders continue to “salivate” over doctors, dentist, and veterinarians. For example, 90% financing on purchases or construction transactions still exists.
A lot of borrowers are surprised to hear this, especially in regards to construction financing, as most banks are currently no longer considering construction loans. However, there still are a hand full of national, non depository banks and lenders that continue to lend.
One of the interesting things about both purchase or construction financing for medical practitioners is the ability to roll in other non real estate components into the loan. For example, say you where considering purchasing an office condo, which only currently had the outer shell complete. The cost to build out of the space can easily be included. In addition, cost of medical equipment can be rolled into and often amortized over a 25 year schedule, unlike most equipment lenders that normally only offer 5 – 7 year schedules. Also lines of credit/working capital can be factored in, beyond the value of the real estate.
We are currently working with a doctor in Georgia, on a ground up construction project which is a very good example of this. He purchased the land for $300,000 and the cost for construction is $500,000. For most non medical borrowers they would only be able to have the 80% of the $800,000 financed. However with this doctor, he added $150,000 of equipment and a $250,000 line of credit. He received 90% financing of the $950,000 and still had the line of top of that… With this particular lender they will go up to 133% of the real estate/equipment value (only for medical financing transactions).
Medical practitioners should take some time or work with a seasoned third party provider to produce options beyond what the local banks provide. There can be huge differences, again like higher leverage, longer fixed rates (like 10 years) and amortization schedules to 30 years. As a comparison, most local banks only offer 20 year amortization schedules with 5 year fixed rates, and they expect side business, like your checking, saving, etc if you work with them.