Episode 117 | Buying a Building with Noreen Iqbal
WITH NOREEN IQBAL
- Episode 117 | Buying a Building with Noreen Iqbal 00:00
Hi Group Practice Listeners! In this episode, I’m talking with Noreen Iqbal all about buying a building.
In this episode we cover:
- Making the decision to buy
- Envisioning yourself in a space
- Non-negotiables to consider when buying
- Understanding your vision before buying
- The importance of outsourcing
- Best + worst parts of ownership
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Hey everyone, welcome to another episode of the group practice exchange Podcast. I am really excited because it’s been a long time we’re doing a real talk episode, where you guys get to listen in on a conversation between a friend and I. And today I have Noreen Iqbal on with me, she owns Olive Branch Counseling in New Jersey. And we’re gonna be talking about her experience in buying a building for her group practice. What that was like and kind of the journey that she took. So hi, Noreen. How are you?
Hi, Maureen, thanks so much for having me on.
I literally just had my heart drop because I was like, Did I just say hi Maureen? Yeah, how are things going?
Good Things are going well, um, you know, just moving along, as we all are, I think.
Yeah, I just had a coaching call with a person who just closed on a house. She’s probably in your group but just closed on a house two weeks ago for her group practice. It was like six months of loss of stress. And she’s finally feeling like, you know, good about decorating and renovating and stuff.
So I know a little bit about your journey with this just because we’re friends but I thought it’d be a good place for people to kind of hear your experience actually coaching and helping people through it. I mean, even better for people to get that support from you if they need it.
So I actually started my group practice as a group. So I started it as a group about, it’ll be four years this year. And two years into it, when I was about to renew my lease, I thought, you know, rent is so expensive, why not just buy? So I started looking, right.
So just to backtrack a little. When my son was three years old, I decided to buy a three family property in a college town nearby. And I always felt like real estate.
I come from a family of real estate investors, and I always felt like real estate was the way to go.
So I invested in that. Maybe he’s 16 now, so 13 years ago, I bought that property. And it’s college students and young professionals who occupy it and it’s always been, you know, it’s always been cost effective and it’s always been an income producer. So then when I was looking into my lease was off for my group practice and I thought, you know, let me let me look to see what’s out there. So I took a good six months just really looking in the neighborhoods, I saw a lot of stuff, you know, first I would just scope it out online. And then if I liked it, I would just tell my realtor like hey, I want to go see this and you know, then I had my eyes set on building that I bought.
It’s so pretty.
Oh, thanks. So I bought an 18 office, five bathroom facility. It looks like a single family home from the outside which I really loved. So when you walk inside, it’s a very homey feel because it’s almost like a colonial so when you walk in there stairs, and you know, when I first bought it, it had renters in it already.
So it’s always a good thing to have renters already there because then your chances of being getting approved from a bank are higher because it’s already a net positive property.
Versus okay, I’m just going to take this on and, you know, I don’t even have the staff to fill it. And you know, so I told the bank, okay, I’m going to take one floor, and the lower level as well as the upper level was already rented.
So I figured, let me just do this in phases versus, you know, just moving in kicking everyone out, that’s not what I did. So I just moved in, in phases. And as my practice grew, I didn’t renew leases for the other. I mean, on our lower level, we had a music company, so that didn’t really go with our theme or vision. So I had to tell them like, Listen, this is not gonna work, you know, everyone was already understanding and because our lease was up anyway, right.
Do you have that? So is the whole space yours now?
Yes, I’m so well, the only thing is so now I have. So we have 18 offices and five bathrooms but I have one office and a waiting room, rented by a psychiatrist which flows with our you know, it goes. She occupies. So I still have 17 offices. And, you know, that’s what we occupy. And honestly, it’s given me the flexibility of having so much in my practice that I wouldn’t normally have if I rent it right.
So we have a playroom. We have a sanitary room, we have an art room, like an official art room, you know, I have two art therapists on staff, right? I have a room that I just dedicate to my staff. So it has like a sectional fridge snack bar. Like it’s just, we call it like our heart space, because Brene Brown always says you need like a heart space, you know, so we call so after your sessions if you just want to, like regroup and just hang out if you want to do your notes. You can that’s a large space with like a fireplace and it’s just really like you’re sitting in your living room, you know, so I really feel like it It helps me also having a home space in general, helps you cultivate, like, good employee, like you feel like a team like a family, you know, like okay, yeah, We’re here versus like, you know, being in like a corporate building or, you know, so it’s really helped with that.
What was it like I guess making that decision initially? I know it might be different for you because you were doing kind of real estate type stuff–
Look, I think it’s numbers. I think a lot of people think into it, but you got to really like black and white. So when I help people try to figure out if it’s a good investment for me, it’s just black and white. It’s numbers, right? Does does it make sense? Right? So like, when people tell me oh, I have this group practice, and I’m buying this like, three room condo, I think to myself, the numbers don’t add up. If you grow, and you’re going to grow, right? So then what are you gonna do? Then you have to rent another space, you know, so for me, it’s all about, do the numbers add up.
And also, I think it’s about being able to see vision somewhere, right?
So there’s a lot of properties out there, but, you know, like, I would see some properties like, okay, the ceilings are so low. There was no windows stuff like that. You can’t do anything about because it’s not cosmetic, right? But the minute you are able to envision yourself in a space, I feel like that those are worth pursuing. Right without spending so much money, right? So like, there’s some hard non-negotiables like parking, right? My facility comes with, like 21 spots. And even that’s not enough sometimes, right? So it’s like, you really have to know like, okay, your demographic where they’re going to park, right? And also, to really understand your vision, because once you buy, remember, if you have a 25 year most commercial properties are 25 year with a five year extension, so you don’t really hit your principal for six years.
So you’re really stuck in that, you know, so you have to really think long term like, Okay, how is this really going to be profitable?
So that’s an interesting thing I don’t think about. You’re saying that in when you’re purchasing commercial space, that you’re not paying down any of the principal a handful of years.
So any 30 year mortgage right? Even cold, you don’t really touch the principal for six years.
So how is this important to look at when it comes to like your longer term vision with purchase purchasing?
It’s important because you have to think, Okay, how big do I want my group to be? If it’s just you, and you just want to buy, sweet, cool, right? But if you have a group, and you keep adding, or even a couple people become full, I mean, are you going to have enough room? So it’s, I think, sometimes it’s better to have a renter and then after the year, you know, okay, I don’t want to extend and then you’re able to have that flexibility, right? Or else you have to keep buying. And remember to keep buying, you need that down payment, you need those closing costs, you know, so it’s hard, right?
I tend to be a person that likes to grow into things so I can take that level of risk. I think that’s one of the things that a lot of practice owners struggle with. Is that making a big enough jump, you know?
Yeah. So I bought this building and I had seven people on staff and today I have like 25 you know, in two years, right. So I was able to and I just added three during, you know, the last three months, so I’m able to have that space, right?
I have two questions in my head now. One is, how is the process of actually purchasing and if you could take away your–I don’t know if you can do this–but take away the fact that you’ve done this before. In listening to the person who I was coaching earlier today just talk about how stressful the six months process was that typically
it’s very stressful. It’s very stressful, right? Because you need to have a thorough inspection. And also, I always tell people don’t get emotionally attached to things toward right but don’t get emotionally attached because there could be a lot wrong that goes wrong. And then what I mean, then you got to pull out because financially It doesn’t make sense right now, just dipping all this money into something, cosmetic things are fine.
But like, for example, I bought this building. And I knew that there was water on the lower level because I could see it. But then I, you know, the owner said, No, no, there’s no water. I said, I think there’s water. But I hired an excellent inspector. Like you’d never cheap out on a good inspector, right? Some inspectors are 800 Some are 1800. Right? And I went with the 1800. Because I was like, you know what I really need to know. He told me listen, there’s been water here, and it was here this day. And then the owner really had nothing to go back on. Right.
So closing gave me $20,000 to put in a new french drain downstairs. Right? And then I felt secure.
Right now if I had an inspector that missed that, I wouldn’t get that and then maybe I’ll have to pull out.
So I feel like it is very stressful. But the thing is, you just have to keep moving forward. It’s very overwhelming, but at the same time, you have to just keep your eye on the prize.
Like the light at the end of the tunnel light at the end of the tunnel is this is another job. It is like when people say, Oh, this is my side hustle. And this is passive income, I don’t know if it’s really passive, right? You have to work for it. There is work that goes into it, it’s another investment, you know, you’re gonna own your property, you are essentially paying yourself rent. Right? So there’s gonna be work that comes along with that.
Can you talk about that, because I think that’s something that people maybe don’t fully think through.
When you buy a property, you name it your own LLC. So now Olive Branch pays my LLC, which is basically the street address of the property right? The street address, so Olive Branch pays on the first of every month, it just goes auto, it pays for Olive Branch pays its rent, basically rent that we would pay for 17 offices and four bathrooms in this area. So I was able to like really see like, Okay, how much what’s square footage, you know, so I pay myself rent every month. Right? And all expenses and mortgage go from that other account. Yeah, from the property account, right. So expenses, like the garbage and landscaping, like whether olive branch was in this facility or not, it would still, you know, have to function right? So my taxes on my mortgage. Also when my renter pays me that payment also goes into that account. So my renter pays half of my mortgage. So makes sense. Right?
What kind of other work do you have to do as the owner of a building takeaway?
I guess being a good practice, owner, look, I think once you already have the furniture in, it’s just like you would run once you have everything set up. I mean, nothing’s really right. You just have to make sure you constantly have supplies, but the only thing is if something breaks down, like toilet gets clogged or something I’m really into outsourcing so I have someone on call for everything, you know, so I don’t Unnecessarily like the toilet breaks I’m not doing that work right? So the handyman charges 25 bucks an hour and he does it all. I have a vision you know, hey put this painting here we make a list and then he comes even after hours and he just does it right so once you find a reliable person it’s a dream like you know works like a well oiled machine like a good landscaper. Good, you know, so it is.
Would you say that’s an important part of?
Yes. Yeah, business outsourcing is absolutely. Look, you can’t do it. All right. And guess what, like, you know, I think like a lot of people are sold the DIY dream. And I appreciate the DIY dream. I love HGTV. But some things, you know, are just best done because you actually end up spending less, you know, because by the time I buy all the tools, everything and it still doesn’t come out right. So I’m like, why not just have a handyman do it? Yeah, you know.
And look, I think in the beginning, sometimes you do have to maybe paint a room or just to get from You know, but once your income positive, right? I think like in the beginning of buying and it’s just like when your house or when you buy a house right like things are tight, right? But then once you move it along, and you keep building your account, right where your profit is it, you should be okay to be able to outsource things.
What’s your least favorite thing? I have two questions left: least favorite thing about owning property.
I think the least favorite thing is when you have renters who are kind of annoying, you know? Or like me, I don’t want you know, I don’t like this. I don’t like that or you know, then that just gets really annoying. And then you just have to start thinking about Okay, listen, I’m not looking to renew. And that’s why I don’t do very long leases. You know, a lot of commercial leases are five years I don’t do five years. I do year to year and then we’ll, we’ll reevaluate based on your behavior. You know what I mean? Because I just feel like sometimes you know, about everything.
Yeah. Okay, that’s a good one. And what’s what’s your favorite part about owning.
Honestly, my favorite part is like, I own it, it’s like, I’m coming to my home. You know, it’s a beautiful space that I’ve created. And I just feel like if I had any vision or any dream, and I’m like, you know, like, I wanted this amazing coffee bar, well, I put it up, you know, like, anything I want, or any vision I’ve ever had for this for my practice to be able to, like, you know, I have it. Right, I able to, yeah, I’m able to, you know, just like little things like, you know, I’m able to, like outside for mental health awareness month, we have signs like I’m on a main road. So we have signs of like, you know, just like don’t give up and, you know, reach out for help. Like, I couldn’t do that if I was renting, right? Like I could, I could decorate the place how I want, I can do whatever I want. You know, that to me is everything. Right? Because it really customizes your space.
Yeah, as I say you do a really good job on the outside of your space because obviously when You don’t own you get to you, you can decorate the inside of your space how you want but the client experience really are the client experience that you have control over doesn’t get to start until you get into the office but with doors, I look at how you the front porch you always are decorating for the seasons.
Yeah, and I feel like you know, I feel like it eliminates that stigma or like that stuffiness or like, you know, that agency feel just kind of like, okay, you just walk into someone’s home and you just have a seat, you grab a cup of tea and you go see your therapist. Yeah, you know, it’s like, just it normalizes the whole experience.
Yeah. All right. Let people know how they can reach out to you because you have a Facebook group.
It’s called therapy property. And my website’s actually being worked on and I will be, you know, scheduling consultations later this month. So I can help you. I know walk you through it.
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Meet your host
Maureen Werrbach is a psychotherapist, group practice owner and group practice coach. Learn more about her coaching services here:
The podcast is structured so that you get practice building tips in small doses, where an episode can be listened to (and a group practice building lesson can be learned) in a single car ride.
Episodes are structured into categories: coaching sessions where I coach a group practice owner on a specific topic, tips of the day by yours truly, real talk where you get to be a fly on the wall while an established group practice owner and I talk about the highs and lows of ownership, and trainings done by experts in the field.
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