The dialysis industry is growing rapidly, providing great opportunities for investors to grow their wealth through real estate. However, it is important to keep in mind that not all dialysis centers are created equal. To ensure you are getting stable returns on your investment, you should opt for a dialysis center for sale with a creditworthy tenant. On that note, one option that you should consider is a Davita franchise.
But like any other form of real estate investment, you should still do your due diligence to ensure you are making the best decision. This article will serve as your guide.
About Davita
Founded in 1999, DaVita is a health care institution that specializes in providing dialysis services to patients in the US. Aside from nocturnal, peritoneal, and hemodialysis, it offers other related services, such as renal diet support and vascular accessibility, which it administers at home or at their centers while educating patients on chronic kidney diseases (CKD) and their treatments.
At present, Davita already has around 2,500 outpatient centers, including those which are put on sale under triple net lease (NNN) agreements, serving hundreds of thousands of patients, making the company one of the largest CKD treatment providers in the country.
The Demand for Dialysis Centers
The CKD market is continuously experiencing growth, given the fact that patients are required to visit dialysis centers on a regular basis. From a franchiser’s perspective, there will be a steady stream of rental income associated with the demand.
In fact, according to research by BioSpace, the dialysis market in the US is expected to grow, with the North American dialysis market alone forecast to reach the value of more than $37.5 billion by 2026. This would be driven by certain factors, such as the shortage of kidney donors, high deployment in peritoneal dialysis, growth in in-center dialysis, and the rising burden of renal disease.
With this trend, there would be no better time to invest in this market and buy a dialysis center for sale than now.
DaVita Franchise Requirements
Before you can own DaVita dialysis real estate, the company will first assess your net worth. You must also have a minimum of $500,000 in liquid assets and be able to commit at least $200,000 for the start-up costs.
In addition, you should have prior experience in health care or management. You will also need to undergo Davita’s training program for two weeks and attend an initial meeting with the company’s executives.
How Much Does a Davita Franchise Cost
The DaVita franchise cost will generally depend on the location and the size of the property. However, you can expect to pay an initial franchise fee of $75,000.
You will also be responsible for the costs associated with setting up the center, such as equipment and furnishings. Davita provides a list of preferred vendors that have been pre-screened to provide quality products and services at reasonable rates.
But to give you a general idea of the actual prices of DaVita properties, they can range from $500,000 to $13,000,000.
Important Factors to Consider When Buying DaVita NNN Properties
Like any other type of real estate investment, there are also particular factors to consider when buying DaVita NNN properties.
Location
One of the most important factors when buying a DaVita dialysis franchise is the location of the center. It should be situated in a high-traffic area, with good visibility and ample parking space. The center should also be near other medical facilities, such as hospitals and pharmacies, to ensure that patients have easy access.
Tenant Creditworthiness
You should do some research on the tenant, such as their history when paying rents, to ensure that they are creditworthy. You don’t want to end up in a situation where the tenant defaults on their payments, which can lead to you losing money.
Lease Terms
When looking at a potential dialysis business for sale, make sure to scrutinize the lease terms carefully. The ideal lease should have a long term and be NNN, meaning that all of the operating costs of the property, such as property taxes, insurance, and maintenance, will be handled by the tenant. This will help reduce your liabilities and give you peace of mind knowing that your investment is protected.
Size of the Property
The size of the dialysis center is also an important factor to consider. You want a property that can accommodate a large number of patients, as this will help ensure profitability.
Capitalization Rate (Cap Rate)
The cap rate is the ratio of the annual net operating income to the purchase price, and it’s a key metric you should use when assessing potential dialysis center investments.
You should target properties that have a cap rate of at least six percent. This will ensure that your investment generates a healthy return on investment.
To calculate the cap rate of the property you are interested in, you can use the following formula:
Cap Rate = Annual Net Operating Income / Purchase Price
For example, if the dialysis center has an annual net operating income of $100,000 and you purchase it for $500,000, then the cap rate would be 20%.
Upkeep and Maintenance
Like any other type of real estate, dialysis center properties require regular upkeep and maintenance. You should factor in these costs when calculating your return on investment.
How to Find DaVita Properties for Sale
The best place to start finding NNN DaVita dialysis stores is by contacting the company directly. The company maintains a database of all its franchise properties, which are available for purchase by qualified investors.
You can also check out real estate listing websites. Just make sure to vet the properties carefully before making an offer, as not all of them may be a good fit for your investment goals.
Final Thoughts
If you’re looking for a solid investment opportunity that has a high potential for returns, buying a DaVita dialysis center for sale is definitely the right choice for you. The company has a proven track record of success and offers its franchisees access to quality training and support.
However, it is important to do your due diligence before making any decisions. So, consider the tips mentioned in this article, as well as all of the pros and cons, carefully before moving forward.
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