How to Achieve Massive Profits Owning Medical Office Buildings

Welcome to the Raise Capital Legally podcast and YouTube channel, where we talk about topics of interest to real estate syndicators and fund managers with an opportunity for live questions and answers before we sign off. I'm Krisha Young, the business development director for the firm, and this is attorney Kim Lisa Taylor, the founder of syndicationattorneys.com. Now, before we get started, please note that audio and video from this event will be posted on our podcast platform, YouTube channel, website, and social media. and will be made available to the public. You can go ahead and ask questions at the end of the broadcast by raising your hand or by typing it in the Q&A. The information discussed during this event is of a general and educational nature and should not be construed as legal advice. And today's topic is how to achieve massive profits owning medical office buildings. In this episode, which is part of our Beyond Multifamily series of interviews, We explore the lucrative world of medical office buildings, MOB investments, with our client and special guest AJ Peek, founder of Health Wealth Capital. As a seasoned expert in healthcare real estate, AJ reveals the secrets behind achieving massive profits by investing in medical office buildings. Learn how Health Wealth Capital is creating robust opportunities for investors through its focus on healthcare-related assets. Offering stable returns in a recession-resistant industry. Exciting. Hello.

Thanks, Krisha. Hi, AJ.

Thank you for having me on.

Yeah, welcome. We're excited that you came. Um, so AJ is a client of our firm, and, uh, he's got an interesting business model. We wanted to share that with you. Um, some of you know that we've been on this quest to open our audience's eyes to the full spectrum of real estate investing, you know, because a lot of people get focused in a certain niche and then something happens in that niche with market conditions and all of a sudden they can't find deals. So it would be really nice to have some additional, uh, you know, ideas and, and thought processes of how can we continue to real estate— to invest in real estate during these times when our selected asset class doesn't work. So that's why we've, uh, kind of embarked on this journey of sharing some alternative asset investment So AJ, we'd love to hear about you and what inspired you to focus on healthcare. How'd you get— how'd you come up with this model?

Yeah, just a short background on me and it will lead into how I founded and scaled up HealthWealth Capital. In my 20s, studied business and joined McKinsey and Company as one of the larger strategy consulting firms. Loved it, mostly in the financial sector. They paid my way to go to the Kellogg School of Management to get my MBA, returned back to McKinsey and Company running teams. And I knew if I resigned on good terms, they'd always take me back. And when I was turning 30, I'm now nearly 47, I thought I knew it all and had a burning desire to do something entrepreneurial in the healthcare space. And my father was 60 at the time and a dentist. And the dental industry was consolidating, and he and I put together a large business plan to build a large dental group. So we started 17 years ago with virtually 4 employees and no revenues, and we built a nearly $100 million business in the dental space. And it was the several built from scratch that was our introduction into buildouts. Medical office space, oftentimes medical retail space. We also did over $50 million of acquisitions and transactions, giving kind of detailed understanding how to understand the credit risk of kind of strong medical or dental practices on that front. And during that journey of building that business, which is now majority owned by private equity, The many healthcare providers have debt on a building they own and debt on a practice they own, and it's cross-collateralized. And when they sell the practice, they want to sell the building. And to solve that problem, several years ago, I set up a separate fund with friends and family to buy the building. And kind of, it was the first foray into owning medical buildings. in a triple net lease environment. It was really to solve a problem and became incredibly lucrative. We learned more and more about how to underwrite those types of opportunities and create really attractive returns. And it has become kind of life-changing for my family and I, who are kind of the majority of some of the legacy stuff that led to scaling up HealthWell Capital into a more larger capacity of purchasing medical buildings under a triple net lease.

So really, the way I understand it from our previous conversations is you're coming in and kind of relieving these dental practice owners of the hassles of owning the building and maintaining the building and all of that, right?

That's right. And if they do it right and under the right lease agreement, both when they're transitioning their practice— very common to sell to a private equity-backed group these days— and if they transition the building in the right way at the right time, they can make $100,000 to $500,000 more on the combined value of the practice and the building if they just sort of follow the right strategies. So it's a really unique win-win where we're happy to buy the building, pay them more money as long as the right construct is in place. On that front. And it can be— it literally is lucrative for them as well. It's great for our fund.

So you're buying the building, you're taking over ownership, and then you're leasing it back to the dental practice. And so now they've got fixed costs instead of the variable costs of building ownership. Kind of helps with their cash flow, right?

It does. And many of these healthcare providers or dentists they have personal guarantees on the debt. They may not understand what is a proper lease with a larger private equity-backed group that they're considering or in the process of selling to. So we can bring all that expertise together. That's what increases the value of the building. And it's also private equity-backed groups are very common that they agree to, and majority of their locations are under a triple net lease Arrangement.

So, so then the dentist has the triple net lease with you, uh, so they actually still do maintain the building, right?

But they maintain the building, uh, but oftentimes they're now looking to transition their practice to a larger group. They might sell, you know, uh, the practice, 70% of the practice, and retain equity. And, uh, in, in doing so, they're getting a premium on the practice And the supporting financial backing, the private equity-backed group, but they're also getting, you know, significant liquidity outcome on the building that they wouldn't have gotten otherwise.

Smart.

It sounds like you've really figured out a way to solve a problem for a lot of medical professionals. And I guess it doesn't have to work just for dentists. It can work for anybody, right?

It's very applicable— veterinarians, urgent care clinics, etc. And I'd say in HealthWealth Capital, we are in some other healthcare verticals, but we only pick verticals where we'll have on our co-GP or our sponsor team an operator. And when I use the word operator, somebody that has been a CEO of a $100 million group or more. So we have that in the veterinarian space, urgent care space, in any healthcare vertical we go into. We just want that insider expertise to understand the credit risk of the tenant, but also be able to step in in a kind of absolute worst-case scenario.

Nice. So you're building a team of professionals, whether they're advisors or they're actually becoming part of the ownership structure, so that you can have the right expertise in the right practice field, making sure you're buying viable and profitable buildings, right?

That's right.

Okay, excellent. Um, love it. So what— good use of that. Hopefully you're paying down those, uh, student loans, right?

That's right.

Yeah. Um, so how does investing in medical office buildings differ from other types of commercial real estate?

You know, many of us, uh, have been exposed to multifamily investments, and I'm a big proponent of it. But as an alternative, there's sort of 5 big differences. differences when you're investing in the medical asset classes, and I think it's a strength. One is tenant types. Our tenants are high-margin healthcare tenants in nearly recession-resistant markets. So the tenants are kind of what I would say premium tenants in the whole economic ecosphere of this country. The second is lease duration. Medical tenants have massive buildouts. The switching costs are enormous. They want stability. And so many of the leases of the deals we do are 10 to 15 years. These aren't 1-year lease arrangements with individuals. These are high-profitable healthcare tenants with a long duration. The third is credit risk. We're doing financial reviews that are superior to even a bank. So when we will give you 3 years of financial review using all the expertise that we've acquired as operators. And so we're not only in great industry, great lease terms, but we're making sure we're getting the best of the best, really financially stable healthcare tenants. And 4th is operating expense risk. We virtually don't have any operating expense risk. If we have the right triple net lease in place, the tenants pay all our operating expenses. That's maintenance costs, insurance, property taxes. Those aren't risks in my forecast that you have to worry about. They are shifted to the medical tenant. And the 5th is just because we're not— our value at play is finding the right stable tenants. at the right pricing at the time of the buy, the value add that we provide is done, meaning the returns, if we did our work, are predictable. I'm not banking on 5 variables all coming together to make the returns. If we did the work on the front end, the returns are quite predictable.

Are these leases where they just pay a fixed price, or is there sometimes a component where you share revenue or anything like that?

So it's a fixed lease rate with annual escalators, usually 2 to 3%. And then because of the triple net lease arrangement, any insurance, property taxes, maintenance, and sometimes capital expenditures are billed back to the tenant, or they pay directly. It depends on the lease, but it's either reimbursed or paid directly by the tenant.

And so the benefit there is you'd do the build-out or the improvements, and they don't have to finance them upfront. So it's basically financing them over time. Okay. So is that— what other key benefits are there for owning medical office buildings for investors?

If you're an investor, essentially the best way to describe it is we're getting returns that rival other asset classes without the risks. And so specifically, our base case is sort of 15% to 19% IRR, internal rate of return, and 8% cash-on-cash distributions paid out almost immediately. And it's not based on this, this, and this has to happen. It's paid immediately. Those are base case. Upside scenario for us, there's a pretty incredible opportunity at scale at a certain amount of rent level. There's case studies in the marketplace where medical REITs will pay a premium to buy our assets, the premium being almost a 20% to 30% premium.

Wow.

And so as part of our case, I love getting returns of 15% to 19% on a risk-adjusted basis. You know, is awfully nice. Having the opportunity for that to be as high as 25% or higher is fun, and it's why we're excited about scaling this up in terms of the returns.

So when you're talking about the 15 to 19% IRR and, you know, even possibility for 25, is that what the investors get, or is that kind of the overall return and they get a portion of it?

That's what the LP investors get.

That's great.

Amazing.

Oh, that's fantastic. Um, all right. And, um, so why do you think medical office buildings are considered recession resistant?

You know, I think the best example is, you know, from the business I built in dental. In the last 22 years, the dental industry— and when you sum up all the revenues in the United States, it's only contracted twice. One of those years was COVID. Uh, if you think of COVID in dentistry, it makes sense why it's contract. And the other year had to do with a rebound effect, uh, post-COVID. Other than that, it has gone up year over year, and that is very similar to other healthcare verticals. If you have a toothache, regardless of recession, it hurts. You're calling a dentist. If you own a pet and you love your dog, uh, the way we, we love our, our little, uh, French Bulldog, you know, you're going to take care of it. Um, and so just healthcare tends to be incredibly recession-proof, but dental is just a great example. Uh, you know, it's just continued through previous recessions to grow.

Yeah, well, and, you know, I think we all know we've got an aging, uh, baby boomer population. So, you know, the more, more of us that transition into that age group, the more need there is, right? You know, and not just young people. I mean, you know, just the general population increase is always going to be contributing to that. So what, what, tell us about how you structured your fund, because I think people are curious. Okay, so you've got this, You know, this whole program, you got this underlying program about how you acquire properties, but how do you handle your investors? You know, what do they, you know, get to, you know, just tell us about your offering.

Through very talented professionals that I'm speaking with right now, was able to set up a 506 offering. And we use an investment portal that really enables our investors just real-time access to our legal documents, webinar presentations for me and all the presentation materials. I've also, myself or members of the team, kind of, we make ourselves available on that front. And it, it's just really opened up the opportunities to others above and beyond my friends and family. This has been incredibly lucrative and material for my extended family in terms of the passive income it creates. And so just having that 506 offering in combination with the investment platform that we've set up, it's just made it easy for others to learn about the opportunity, schedule time with me if they'd like, or see us in prerecorded webinars to learn more about the opportunity.

And which one of the platforms are you using?

Cashflow Portal.

Yeah, we like Cashflow Portal. We've got a lot of our clients that are using them, and they've had good and positive experiences. We've had their principals on our podcast a couple of times, getting ready to have another one come on and just kind of talk about some of the trends they're seeing in the industry right now. Because, you know, they, like us, we get a lot of people that are doing different kinds of deals, and these platforms also see people doing these different types of deals. And so it's interesting to hear what other people are doing. Sometimes our clients and our audience, I think, comes from a lot of the multifamily industry, which is fantastic. And, you know, we all love the multifamily industry, but helps them to have some exposure to these other places that they might not get anywhere else.

AJ, you mentioned something earlier before we started recording about people that you have going out there finding investors for you. I can't remember what word you used or what term you used, but we were like, we both leaned in and we're like, tell us more.

I've been fortunate enough to just find some really great leaders in the real estate syndication arena that led to other introductions to some of the kind of key leaders that have raised capital for other deals, might be multifamily, storage, et cetera. And through those relationships and the help of your firm, being able to accommodate 2 different capital raising partners, one being under the kind of the fund manager fund-to-funds relationship can accommodate and have done so. And then also in a co-GP kind of relationship. And so through that and people getting excited about the medical opportunity that we've built, it's different. It's not easy to replicate and just, you know, having excitement around the risk-adjusted returns. was sort of blessed enough to have, I think we're up to 6 now that have brought this opportunity to their group. And it's been pretty neat to see the excitement come in. I think I mentioned I woke up and saw notes from Cashflow Portal, I think 2 or 3 accredited investors coming in that they've met me through recordings, but they're really getting introduced through these co-GPs or fund managers who I've spent a lot of time with. And, you know, they get access to hundreds of opportunities, and I was blessed enough they chose this opportunity to personally invest in, but also bring to their group.

So how do you structure your relationships with your co-GPs?

I need to be careful on an attorney asking me these questions. Following all of the proper legal requirements, they, as a co-GP, they do need to do real work and it can't be a kind of pay-to-play. And so we set up co-GP kind of side letters of the expectations that they need to bring to the table to participate in the future upsides. And so I think knowledgeable enough, although I'm not an attorney, It can't be a pay-per-play arrangement. And so we were quite mindful of that. And they— this is not their first rodeo. So we kind of agreed to what that was after we'd spent a lot of time together. They got comfortable with the deal. I got comfortable with them. In the fund manager role, it's pretty easy. We've got economic tiers by check size. So if it's half a million, or more check size, the fund of funds already accommodates the economics for the fund managers to do quite well. And we have actually built an economic model in partnership with some of the fund managers so that their investors are actually going to get the same deal as if they came to me directly. And it has to do with our economic model and our private placement memo. If they invest over half a million, They're getting more economics, and in doing so, you know, they can get the proper economics for doing their diligence, and their investors still get the same deal as if they came to us directly.

Right. So in plain English here, I'm going to translate that.

Please.

That really means is that you have tiers in your offering where if somebody brings in or invests over a certain dollar amount, Then they would be entitled to a higher return than investors in the lower tiers.

That's correct.

So if you can bring in enough money, then, you know, say the lower tier is offering the 8%, you bring in $1 million, and now you're going to pay 9%. Well, that gives something for the fund of fund manager to be able to, to be compensated.

Thank you.

Still give the investors that 8%. And so I like that you're using the side letter that really defines what the role is that these co-GPs have to have. I think that's hugely important. With the fund-of-fund managers, not so important if they're just taking advantage of that tiered return to be able to compensate themselves. But if they want to have some further role in co-GP, I guess that's something they could maybe negotiate with you, right?

Correct.

Yeah. So, so I like that, that you've accommodated that model. Of course, we always want to be cautious about having too many co-GPs in a fund because, you know, it becomes indefensible, right? When you get to, you have, you know, 10 or 20 people, it's really hard if you ever had to defend that to a regulator to be able to say that those people all had a meaningful role in management. So it is best that you have something in writing with them, and then that they actually perform those jobs. Not— it's not just a, you know, hey, it's on paper, but you don't have to do anything. They actually do have to have a role. And so what we're alluding to, just back up one step further, is the rule that if you're going to bring on a co-GP and they're going to get compensated for bringing investors to you, they actually have to have a substantive role in management. other than just raising money, and it's not the raising money they get compensated for, it's their other role.

Absolutely.

Yeah.

Absolutely.

We usually just say everybody who's in the management has to have a role in management, and, you know, should, but you gotta again be careful of having too many people so where it becomes indefensible. It's always a balance. All right. So how is this— so what is the benefit? Like, if I am a general practitioner and, you know, you come along and say, hey, you know, what's your pitch and how do I, you know, how do I see what the benefit would be for me?

If you're a medical provider and you own your own practice and your own building, which is very common throughout, you know, dermatology, dentists, veterinarians, etc., The, the challenge is, is many of these providers are thinking about transitions of their practice and the real estate is an afterthought. Uh, and it's tragic. And then, dare I say, the majority of the time, the medical practice broker, of which many are my friends, they don't understand real estate, the real estate economics, and they're actually nervous about it because they don't have a license. And so they can get in trouble, you know, playing in both waters. So what ends up happening is their life's work is in their mind's eye, their practice. They sign up with a broker and the broker goes 100 miles an hour to sell the practice and, hey, we'll deal with the real estate at the end. That can compromise almost every time $100,000 to $500,000 in almost every situation. So the benefit when they reach out to us sooner, sometimes we may not even buy their practice or their building, But we'll give them the information of how to structure the real estate in tandem with the practice such that they're going to get $100,000 to $500,000 more. Why? A dollar of rent in the marketplace is worth 2 times more than a dollar of healthcare profitability, which is EBITDA. This is a thing people have a hard time getting their head around. Real estate is valued on cap rates. Medical practices are valued on multiples of EBITDA. Well, it's algebra. It's a mathematical equivalency. A practice that is being sold for 5 times EBITDA, which is common, 3 to 6 times EBITDA, versus a cap rate of 8.5%. 8.5% is mathematically equivalent to a 12 times EBITDA. So having a structured lease in a triple net lease environment, within reason, you can shift some economics, not too much, and you can maximize the value. The other obvious, you know, we can provide liquidity, get them out of the debt. We can even do 1031 tenant common type deals where They get out of active management, they're in passive and are able to defer their taxes. But the biggest is being able to, you know, I've navigated owning medical real estate and buying medical practices. We give them the help to maximize the value, and I'm happy to pay more for the building if they have the right lease in place. But if they handle that lease as an afterthought, It's tragic. I mean, we won't even put an offering on the building.

Yeah. Okay. So just in case there's any brand new people here listening and they aren't familiar with the term EBITDA, it's E-B-I-T-D-A, very common in the real estate industry, and it means earnings before interest, taxes, depreciation, and amortization. So it's used to determine profitability. of a project. So get to know that term. If you're brand new to real estate, look it up. And I always like to go to Investopedia because they have really good financial services definitions for those things. Okay, so what kind of things should investors be looking for if they're evaluating buying medical office buildings?

So 3 kind of rules of thumb that if you're new to the space can kind of help you stay in a safer place. One is when you're looking at a healthcare tenant, looking at their facilities expenses, and that's more than rent. So that's rent, utilities, etc., is not more than 10 to 12% of the revenues. So that's just a great rule of thumb to keep in a safe place, that the rent and facilities expense, utilities, etc., is not exceeding 10 to 12%. The second rule of thumb, if you're kind of new to this space, is, you know, going back to the EBITDA term, earnings before interest, taxes, depreciation, amortization. It's profitability, how much cash flow Does that healthcare tenant throw off? And the metric, you take your EBITDA divided by your revenue. So it's a margin. What's your profitability margin, your EBITDA margin? You really want it to be 15% to 20%. If they're operating at 15% or more, that's a very well-performing healthcare tenant. If it's less than 15%, you're going to want to get comfortable.

Why?

So that's the second kind of rule of thumb. The third is seeking out the right legal counsel that really understands triple net leases. In fact, even pay for their time just to give you a crash course. There's certainly lots of information online. Unfortunately, there is not a triple net lease standard. And it's a bit of a wild, wild west environment where people will say it's a triple net lease, but 2 triple net leases are not alike. And so really getting understanding that it covers all the expenses and you really understand what's in and what's out in terms of costs and capital expenditures is really important because unfortunately there's not a standard.

So you guys have kind of crafted your own that works for you.

We actually built a 25-point criteria with different weightings that scales up to 0 to 100. And we're actually in the process of building an AI model. We've done it prototype. We're not ready to launch it to the public place yet, but we are able to very quickly adjudicate what's in that lease on these 25 criteria. There's different weightings for things that it's going to make sure this is a really strong asset for us. There's no surprises in the future.

So you're either buying a facility that already has a lease in place, correct? Or you're buying a facility and putting the lease in place.

That's right. And it's easier for putting it in place because we're negotiating those you know, 25 or more criteria. But when we're inheriting something being advertised or quoted as a triple net lease, they are not alike. And we never get 100 out of 100. But, you know, we've sort of set our threshold to what we could live with. And it's something incredibly— it's so important. We may not even put an offer on the building when we put that through the sort of 25-point scale.

Got it.

Okay, so what about risks? I mean, is there risk associated with medical office buildings being mismanaged, out of business? What kind of risks are associated with these kinds of buildings?

So I'll flip it into positive, but talk about the 5 risks. And so there's famous quotes on Warren Buffett about never lose money, never lose money, never lose money. And so it's really embedded into our business model. One, That, you know, you're always at risk to the recessions. And so we're in kind of recession-resistant industries. 2, our risk is that tenant. These are 15-year leases. They need to be strong. And so we're using our experience buying healthcare businesses. We're doing 3 years of financials. And so we're trying to mitigate that risk that that tenant doesn't go dark, right? We don't, we don't have an office or apartment complex with 100 things to rent out. We need that tenant to be strong and pay rent for 15 years. So the financial diligence is the second. The third is our leases will always exceed our hold period, sometimes by 3x. So our hold period on our investments is 3 to 5 years. Our current offering has 10 to 15 years for all the leases. So a risk if you're buying a medical office building, and there's 2 years left on the lease, that's a pretty big risk you want to get comfortable with in terms of retenanting or renewing that lease. The 5th or the 4th is these leases have— it's of utmost importance to us. And so you got to watch out for— it goes back to discerning leases— guarantees. So we will have guarantees of the business, guarantees, corporate guarantees from the private equity-backed groups, oftentimes $100 million businesses are guaranteeing this individual lease. And if there is not a corporate guarantee, it's a personal guarantee, meaning that healthcare provider is putting their personal balance sheet as a guarantee of that lease. And again, that's a big risk. You want to be able to go after and may hold that lease if they were going to default. The 5th is, God forbid, those 4 risks, you know, all the strategies to mitigate them don't work. Is you want to have the skill set that you can step in, keep the lights on, pay the rent, and work with the heirs to sell the business. In this case, let's say a dental practice. And I have that skill set. I hope to never have to use it. But in an environment, God forbid something happens where all of these other risk deterrents are not working and we need to intervene, I think the longest I've ever had a dental practice go dark is 10 business days. Before we have per diem dentists working, keeping a practice going, working with medical brokers to sell to a new buyer who just steps into the lease and continues paying a lease.

Wow. Okay. And so, or maybe even if the— so I guess you're finding a new tenant that's going to come in and take over and not only just take over the building, but take over the practice.

That's right.

Yeah, I guess the other thing is you could find a new tenant that would just occupy the building as well. It would be like worst-case scenario, right?

Correct.

Yeah, okay. Um, so, you know, it is true that in any asset class there's always kind of that, you know, secret component. It's like, hey, you only have to do this, and as long as you do that, then everything is easy, right? But, you know, so it really sounds like Having an understanding of these practices and the private equity companies that are buying them and, you know, what they're looking for and what would be attractive to them would be key in making sure that you're acquiring the right buildings, right?

Right.

Yeah. So, you know, you, you would do have to have some knowledge of that, but this would be perfect for someone who has a medical background and maybe a business background. Um, all right, now you were working on some books the last time we talked. Uh, what will tell status of those. Yeah.

And if somebody's interested in doing this, a medical professional or just a business background and wants to go after this opportunity, I wrote a book on that very topic called Retail Property Riches, and it's a practical guide to commercial real estate investing to achieve financial freedom without prior experience. Embedded in Retail Property Riches is layered over and over again about buying medical buildings. And a lot of the medical buildings we buy are actually both retail and medical, where the intersection happens. So publishing that book as early as Monday next week. And the second book I authored is really focused on the medical professionals or any professional that owns their own building. and they're listening to us talk about triple net lease and they're like, I have no idea what that is. I just pay myself. And, you know, what does this mean? I wrote The Practical Guide to Commercial Leases and How to Secure the Best Terms and Protect Your Interest as a Landlord or Tenant. And it's ultimately where the value creation happens if you're a landlord. And that will be being published on the same time. as early as next week. So it's really helping both parties. Somebody that wants to go into this on their own and know exactly how we've built the, the fund and kind of real financial freedom for me and my family, that, that's where the Retail Property Riches come into play. If you own a building or you're a tenant of a building and you're not quite sure about all this stuff with commercial leases, Basically wrote the book to give you the ins and outs of commercial leases as an investor or a tenant to really better understand those risks and make more either direction, tenant or landlord.

This is amazing. Are you planning to do any kind of training programs or coaching programs out of any of this?

Yes, I nearly finished and will be ready in hopefully 2 weeks. All the front end is done. It's 6 hours of training on how to do a sales leaseback as a medical professional. And the title of it is the kind of $500K Secret. And I unpack all the strategies to make an incremental $100,000 to $500,000 If you follow the right sequence to transition your practice, your medical practice and lease, and it's, you know, fully refundable if they, you know, don't find it useful. We go through over 100 slides of content, about 6 hours in that training module. It should be ready in 2 weeks on that front.

So this one is really aimed at the medical professional that wants to kind of embrace this alternative owning their own building and, and look for options that way. What about any kind of coaching for other people that might want to follow your model?

They certainly can reach out to me. I, in Q2, have the outline to do an online course. I also, having scaled $100 million business and, you know, exited to private equity, Also building this in the medical portfolio. I do have a group of other founder CEOs that I do executive coaching with. They can reach out to me to learn more about that.

It's—

I can only accommodate so many, and I try to keep it under 8 in working with individuals on that front.

So how will people reach out to you, AJ?

Yeah, we're getting that question here.

Yeah. Twofold. The website, uh, is healthwealth.capital. The other way is they can email me directly. It's really simple, aj@healthwealth.capital. Um, and so again, it's aj@healthwealth, one word, .capital. There we go.

Okay, and I'll go find the URL now. I just wanted to type it in there so I didn't forget it. Your website here.

Okay, so let's talk a little bit about our books just so people know that we have them available for them. So reaching them, my bookshelf in my other house is much closer, so it's easier to reach. All right, so we have the first book, How to Legally Raise Private Money. That's a beginner's guide, short, easy to read, how to syndicate step by step. If you haven't raised capital before, this is a really good place to start. Easy read, 168 pages. This is the double-length version of that, so really a lot of the same information but more in depth. Uh, this one is available on Audible. Both are available on Amazon. Uh, the best way to find them is to type in my full name, Kim Lisa Taylor, and then you can, uh, get— So I've written— this one's How to Raise Capital Legally for Real Real Estate Legally. You know, got lots of information in here about fund of funds and different kinds of deal structures, not specifically AJ's structure. This is very unique. Yeah, but I'm excited.

For your audience, those books are excellent. It's how I found Kim, and I'm an avid reader and don't say it lightly, was really impressed with the book, and it's why I sought her out. For our offering, and that's an earnest testimonial and real.

Well, thank you for that. So, all right, do we have some questions, Krisha?

Mostly just, how do we find you?

So a lot of people are interested.

Yeah, sorry, I think we kind of answered this one from Deepak. Have you ever come across an empty medical building and then having to find a tenant? I think we did touch on that. Do you have anything else to add to that?

Yeah, it's, uh, it can happen. We, we don't choose to do that, but, um, uh, I've helped others in that place. And for us, it's networking with medical brokers. It's not actually the medical real estate brokers. This is medical, medical brokers who are in the business of selling, uh, practices. So we tend to reach out to them Usually they have great access. We also have lists in our network, and then the medical real estate brokers as well tend to have it. And one of the tips we do is we would help others think about incentives. It's legal to give brokers incentives. And so we get the word out, hey, we'll pay fair market value commission rates. And we've helped others then fill medical buildings that way. You just got to think about what's in it for the intermediary. And if you do that, then they'll get on the bandwagon of telling this to all of their other medical tenants at end of lease about thinking about moving from their location to your location.

Okay, so tell us about your fund. Yeah, yeah. What that's doing.

It's a 506 offering, so it's available to accredited investors. The base case returns are— I don't like to give a number, it's 17%, but it's underwritten in a range of 15% to 19%. That's to the investor, not to me. It has 8% preferred returns, meaning you get 8% on top of your invested capital before the sponsor HealthWealth Capital makes anything, then it's a 90/10 split from 8% to 15%. And after 15%, it's a 70/30 split. The cash-on-cash distributions is conservatively 8%. My legacy stuff, I think we paid out this year 12%. So conservatively, it's 8%. It'll start 90 days Post your investment and then paid monthly in our cash flow portal. Sync up your bank account, it goes right into your bank account.

Nice.

We do cost segregation studies. As you might imagine, medical buildings or dental buildings have a lot of things that you can do accelerated depreciation. And so in year 1, it's typically for every $100,000 invested, there's $50,000 of passive losses. The other way to think about this is if you compare this to investing in like a bond or a dividend that you get with your financial advisor, 8% in our world cash on cash is equivalent to like a bond paying 10% on an apples-to-apples sort of tax basis. When you think the S&P 500 has barely done 10%, you're getting that on a cash basis. Um, uh, for— from us. And that just is the favorable cost segregation and bonus depreciation over the life of the investment.

Great. So, um, yeah, so if you want to know more information about AJ and what they're doing, go to their website at healthwealth.capital. healthwealth.capital. There is a form there that you can fill out, or you can reach out to AJ directly at aj@healthwealth.capital. Capital, and I'm sure he'd be happy to talk to you about that. AJ, I've learned a lot. You know, this is— I love introducing people to new asset classes that they haven't thought about before. I think everybody understands that there's tremendous opportunity in the medical office buildings, but it's, you know, that again, it's that secret sauce. How do I get those tenants? How do I negotiate those leases? And it seems like you're kind of putting that whole program together, certainly in a way that's going to benefit medical professionals that don't want to continue to have the ownership responsibilities of their own buildings, but also maybe for some real estate investors that are kind of looking for some alternatives so that they can ride out these market waves that the multifamily industry and other industries seem to have. So we're super excited that you came and that you have created this. It's tremendous. Let us know when you're getting ready to launch your book because we will help you promote that so that it becomes a bestseller.

Thank you so much for having me and appreciate that as well.

Okay, very good. And we will let our audience know when those books are available and also, you know, how they can get them. But I think, you know, this sounds like something that we all should be reading just because it's a new and novel approach. Well, we love to see it and we wish you the best with your offering and also with your, just this tremendous building that you're, tremendous company that you're building. We love it.

Yeah, it's impressive.

Okay, excellent. Thank you so much. For the audience, you'd like to, encouraging words?

I've been in everybody's shoes of starting a business. And I've skinned my knee and have the scar tissue to show for it. So I love helping others be successful, whether that's working together or just, you know, giving any advice I can. So please reach out if you'd like to, and I will probably learn from you as much as you can learn from me.

Excellent. All right. Thanks, AJ. Thanks, Krisha.

Thank you.

Thank you. Bye, everyone.

Give us a call if we can help you with any securities offering stuff. We have pre-syndication programs for people that don't have a deal under contract yet or not quite ready to do a fund. That is access to our weekly masterminds. We hold them every Wednesday at 9 AM Pacific or noon Eastern time for our clients. So we'll look forward to seeing you on one of those soon. Reach out to Krisha at syndicationattorneys.com if you want to know more. Yeah.