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My grandmother always said, "Look for the silver lining in every cloud and you will always come out ahead." Well, some might say that today's economic climate might be more like a tornado and there is no silver lining to be found. For physicians, however, my grandmother's words of wisdom still hold true. In today's economic environment the banks and lending institutions are certainly taking a more conservative approach to their credit underwriting. There are many industries that are finding it very difficult to obtain financing. The silver lining is that physicians are still classified by many lending institutions as a desirable industry and are very actively making loans to qualified practices.

Historically medical practitioners such as physicians, dentists, surgeons and veterinarians have come out on the top of the list of the least likely to default on their outstanding debts. Because of this historical data, lending institutions find the medical industry to be one of the very few in today's economic climate still on their very desirable list of borrowers.

So, how can physicians turn the current tumultuous economic time into a silver lining?…. take advantage of today's available low rates and real estate values to purchase, build out and equip their own office space or building. Any medical professional who owns their practice and has as little as 10% cash equity to put down on the purchase of an office building or condo space today can find very reasonably priced buys available to them in desirable locations throughout central Florida. Because of historically low default rates by the medical profession, the larger more stable banks and lending institutions are willing to extend financing to physicians even in today's tight credit markets. There is no time better than now to diversify investment strategies to include not only stocks and bonds but also commercial real estate. What better commercial real estate to own but the office building that houses your own practice.

At market interest rates ranging approximately 6 percent, a very strong case can be made that owning your own physician's office versus leasing is a smart way to build equity in an asset that will appreciate, thus providing another avenue to personal wealth accumulation. An example of this would be as follows: A 7,500- square-foot medical office space at today's average market lease rate of $22 per square-foot would cost $165,000 annually, all of which is going to build someone else's equity/wealth. To purchase the same space at today's average price of $230 per square foot, the annual principal and interest payment on a mortgage note would be $119,400, recognizing a saving of $45,600 on an annual basis. To calculate an accurate analysis, you must factor in the after-tax costs and benefits of both of these options, including allowable deductions, depreciation schedules and tax brackets. This is where it gets trickier, however. Based on today's market prices and cost of funds, it would appear prudent for the medical practitioner to contact an accountant, commercial real estate practitioner and lender to explore the options.

Lenders have a wide range of loan products today to meet the specific needs of physicians from 80- 85 percent conventional financing requiring a 15-20 percent cash injection, to 90 percent U.S. Small Business guaranteed loans requiring as little as 10 percent cash injection. These loan products also include funding for construction/renovation; equipment and furniture; and working capital. Interest rates are at an all time low, and although banks are taking a much more critical look at their borrower's today, physicians are on the top of their list when it comes to the most desirable industries to lend to in this difficult economic environment.

Physician's owning their own practice today have a lot on their plate with managing the business aspect of their practice, while at the same time providing their patients with excellent care. Making the decision to purchase their own commercial real estate or expand their practice may be the last thing on a physician's mind but might be the most important to their financial future. When faced with these important decisions make sure to contact a trusted accountant, commercial real estate practitioner, attorney and banker.


Lynne Singletary is a Vice-President and loan specialist with Fifth Third Bank of Orlando who focuses on business and real estate financing. She has been in the Orlando market since 1994 and can be reached at Lynne.Singletary@53.com

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