Updated almost 2 years ago on .
Valley Animal Hospital
Investment Info:
Other commercial investment investment.
Purchase price: $1,250,000
Cash invested: $250,000
We purchased the property in October 2018. It's a 2.23 acre property with a 12,000 S.F. building on site. We completely gutting the building and demoed the entire site. We upgraded all the utilities, brought in fire sprinklers, and renovated the entire building and site. We have gone though three development phases. The first phase was building out 6,800 S.F. of the building as our new veterinary hospital. The second phase was an interior remodel of 850 S.F> to be our grooming facility. They third phase was to build out a 1650, S.F portion of the interior to be our boarding and daycare facility. We still have the back half of the property to develop and the second floor which is about 2,400 S.F. The total construction costs were $2,400,000 with a purchase price of $1.250,000 for a total investment of $3,650,000. The property is now worth about $5,500,000 and the business is currently worth about $12,000,000.
What made you interested in investing in this type of deal?
We were looking for a building that would suit our needs and that we could grow into. We weren't looking for a major renovation, but we ended up finding this building, in the perfect location and, a fantastic size, and location on the property. We knew we had a lot of work ahead of us, but we couldn't pass up this deal.
How did you find this deal and how did you negotiate it?
We found the deal through a local real estate broker. The previous owners also used the building for their own purposes and they were ready to retire. We built a rapport with them and they really got to like us and our dream to turn it into our very own veterinary hospital. So they chose us and we negotiated the price down based on the existing conditions of the building.
How did you finance this deal?
20% LTV with a small bank that loves to loan to veterinarians.
How did you add value to the deal?
We did a complete renovation. We gutted the building and brought it down to the sticks. We abandoned all the existing utilities and ran everything new. We beautified the exterior and landscaped it very well, giving it major curb appeal and we improved the flow of traffic on site and as it convey on and off the street. Our major value add was in the business we created and expanded.
What was the outcome?
This was and continues to be a very good investment. We are growing by more than 20% year over year. We have two new associate doctors and a ton of support staff. We employ over 30 people and we have hundreds of 5 star reviews. We were able to add value to every client that walks through our doors, being conveniently located with plenty of parking, to offering infotainment and coffee in our waiting room, to our excellent standard of care. We are growing faster than we could have ever dreamed.
Lessons learned? Challenges?
We had a terrible contractor. I had to be the one keeping tabs on everything, providing onsite support, setting target dates and scheduling the process. I only stepped in after months of trying everything I could to get the general contractor to do their job. I ended up coordinating the completion of the project and getting the final inspection and C of O. Everything I learned on the first one, I was able to apply to the second and third projects, that went much smoother.
Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?
We had a great agent and our lenders were fantastic. We would recommend them both.
