RE: Percentage of Revenue as RENT?

[Guest guest]

No, not easy questions at all. We are shooting for 15% of revenue in our new lease.  It has been over 35%!  Our employee payroll is about 25%.  Our goal is to have our overhead at or below 50 (it's been running right around 70% during our " start-up/loan " phase).  We are getting busier and are looking at adding another half day per week of seeing patients, which should increase our revenue by about 10%, making those %'s shrink even more . Not to mention that our loan phase is finally coming to and end this year.  Phew!!!

Pratt

 

,

 

These are not easy questions to answer.  I am just getting my arms around what it would actually cost to own a property.  Paying rent to your own LLC seems reasonable, but taxes, depreciation, and interest are not straight forward as it may seem.

 

I like getting the cost down to $/sqft/year.  But you raise good points as landlord it is hard to move a building, hardeer to move practice and building.

 

The point that intrigues me is the $16.60 number.  I have been looking at lease deals for 8 years and have not really known what was the break even point to know a good buy.

 

With the current offer from our hospital at $25 with annual 3% increase, it seems I would be saving $10,000 per year if I built a small office across the street.

 

My next consideration is location, location, location.  The $10,000 of revenue difference is approximately 117 visits/year.  So if location is better, more convientient for patients, then should also have more visits. 

 

By the same token, $30,000 rent is 365 visits.  but $60,000 starts to break the bank at 720 visits (roughly 1/3 of our patient traffic).

 

So, what percentage of revenue is reasonable for rent?--

[Guest guest]

Our rent+ CMAs run about 6.7% of revenue. Gordon wrote an article where his was about the same, but he was leasing space in another office I think.

We are fortunate, I believe this is very low. Buying with the depreciation and write off of owning can really reduce the tax bottom line and if there is appreciation, you can do much better than renting over time.

From: [ ] On Behalf Of Pratt [kpratt.1022@...]

Sent: Monday, February 13, 2012 8:57 AM

To:

Subject: Re: Percentage of Revenue as RENT?

No, not easy questions at all.

We are shooting for 15% of revenue in our new lease. It has been over 35%! Our employee payroll is about 25%. Our goal is to have our overhead at or below 50 (it's been running right around 70% during our " start-up/loan " phase). We are getting busier

and are looking at adding another half day per week of seeing patients, which should increase our revenue by about 10%, making those %'s shrink even more . Not to mention that our loan phase is finally coming to and end this year. Phew!!!

Pratt

,

These are not easy questions to answer. I am just getting my arms around what it would actually cost to own a property. Paying rent to your own LLC seems reasonable, but taxes, depreciation, and interest are not straight forward as it may seem.

I like getting the cost down to $/sqft/year. But you raise good points as landlord it is hard to move a building, hardeer to move practice and building.

The point that intrigues me is the $16.60 number. I have been looking at lease deals for 8 years and have not really known what was the break even point to know a good buy.

With the current offer from our hospital at $25 with annual 3% increase, it seems I would be saving $10,000 per year if I built a small office across the street.

My next consideration is location, location, location. The $10,000 of revenue difference is approximately 117 visits/year. So if location is better, more convientient for patients, then should also have more visits.

By the same token, $30,000 rent is 365 visits. but $60,000 starts to break the bank at 720 visits (roughly 1/3 of our patient traffic).

So, what percentage of revenue is reasonable for rent?--

[Guest guest]

, I can't recall, is it your husband who works for EHR? They recently contacted me, and I want to get the inside dirt. If not you I know, my memory is shot! Sorry

CCote

To: Sent: Monday, February 13, 2012 7:57:35 AMSubject: Re: Percentage of Revenue as RENT?

No, not easy questions at all.

We are shooting for 15% of revenue in our new lease. It has been over 35%! Our employee payroll is about 25%. Our goal is to have our overhead at or below 50 (it's been running right around 70% during our "start-up/loan" phase). We are getting busier and are looking at adding another half day per week of seeing patients, which should increase our revenue by about 10%, making those %'s shrink even more . Not to mention that our loan phase is finally coming to and end this year. Phew!!! Pratt

,

These are not easy questions to answer. I am just getting my arms around what it would actually cost to own a property. Paying rent to your own LLC seems reasonable, but taxes, depreciation, and interest are not straight forward as it may seem.

I like getting the cost down to $/sqft/year. But you raise good points as landlord it is hard to move a building, hardeer to move practice and building.

The point that intrigues me is the $16.60 number. I have been looking at lease deals for 8 years and have not really known what was the break even point to know a good buy.

With the current offer from our hospital at $25 with annual 3% increase, it seems I would be saving $10,000 per year if I built a small office across the street.

My next consideration is location, location, location. The $10,000 of revenue difference is approximately 117 visits/year. So if location is better, more convientient for patients, then should also have more visits.

By the same token, $30,000 rent is 365 visits. but $60,000 starts to break the bank at 720 visits (roughly 1/3 of our patient traffic).

So, what percentage of revenue is reasonable for rent?--

[Guest guest]

Yep!  Feel free to contact me off-list.  Pratt

 

, I can't recall, is it your husband who works for EHR?  They recently contacted me, and I want to get the inside dirt.  If not you I know, my memory is shot! Sorry

CCote

 

To:

Sent: Monday, February 13, 2012 7:57:35 AMSubject: Re: Percentage of Revenue as RENT?

 

No, not easy questions at all. 

We are shooting for 15% of revenue in our new lease.  It has been over 35%!  Our employee payroll is about 25%.  Our goal is to have our overhead at or below 50 (it's been running right around 70% during our " start-up/loan " phase).  We are getting busier and are looking at adding another half day per week of seeing patients, which should increase our revenue by about 10%, making those %'s shrink even more . Not to mention that our loan phase is finally coming to and end this year.  Phew!!!

Pratt

 

,

 

These are not easy questions to answer.  I am just getting my arms around what it would actually cost to own a property.  Paying rent to your own LLC seems reasonable, but taxes, depreciation, and interest are not straight forward as it may seem.

 

I like getting the cost down to $/sqft/year.  But you raise good points as landlord it is hard to move a building, hardeer to move practice and building.

 

The point that intrigues me is the $16.60 number.  I have been looking at lease deals for 8 years and have not really known what was the break even point to know a good buy.

 

With the current offer from our hospital at $25 with annual 3% increase, it seems I would be saving $10,000 per year if I built a small office across the street.

 

My next consideration is location, location, location.  The $10,000 of revenue difference is approximately 117 visits/year.  So if location is better, more convientient for patients, then should also have more visits. 

 

By the same token, $30,000 rent is 365 visits.  but $60,000 starts to break the bank at 720 visits (roughly 1/3 of our patient traffic).

 

So, what percentage of revenue is reasonable for rent?--