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Answers - Buying Investment Property
First a little story about buying investment property.
My wife and I stayed at a motel in Tucson for a week one winter. Our bill was for twice what it should have been, but since I al
My wife and I stayed at a motel in Tucson for a week one winter. Our bill was for twice what it should have been, but since I al
According to USFDA, a combination product is one composed of any combination of a drug and device; biological product and device; drug and biological product
ready paid the correct amount in cash, I thought nothing of it. During our stay, we noticed that the lobby and swimming pool were unheated, and passed it off as frugality. A year later
; or drug, device, and biological product and fixed dose combination would include two or more combinations of drug.
Examples of combination products may in
Examples of combination products may in
however, when I read a news story about a new owner struggling to make the motel work, I realized what was really going on.
To prepare the motel for sale, the owner had been using th
To prepare the motel for sale, the owner had been using th
lude drug-coated devices, drugs packaged with delivery devices in medical kits, and drugs and devices packaged separately but intended to be used together.
two most basic ways to inflate the appraised value: decrease expenses and increase reported income. Stopping repairs, turning down the heat, and quietly adding $100 in income to the b
here is enormous increase in the number of combination products entering the market in the recent years. Combination products have proven advantages but fixe
oks every day, might have increased the net income for the year by $45,000 more. With a .08 capitalization rate, that means the appraisal would come in $562,000 higher than it should h
d dose combinations are still in the process of convincing regulatory authority on their advantages over the single ingredient formulations.
Combination pro
Combination pro
ve. Imagine the the poor guy who overpaid!
To avoid a mistake like this when buying investment property, you need to watch for tricks like these. You also need to understand the basic
To avoid a mistake like this when buying investment property, you need to watch for tricks like these. You also need to understand the basic
ucts have become life saving products for the pharmaceutical companies who doesn’t have many innovative molecules in their product pipeline and have been inc
of appraising income property.
Valuation of income properties start with the capitalization rate, or "cap rate." When investors in an area expect a return of 8% on assets, the cap ra
Valuation of income properties start with the capitalization rate, or "cap rate." When investors in an area expect a return of 8% on assets, the cap ra
easingly used in the product life cycle management. Even the companies having product patents are trying to extend their product life cycle through the combi
e is .08. The net income before debt service is divided by this to arrive at the value of a property. This is expleained further in another article, but the primary point to remember i
nation products and maximize the revenues. But the companies involved in this practice are overlooking that they are burdening the patients both economically
that every dollar of extra income shown will increase the appraised value by $12.50 with a cap rate of .08 (Or, for example, by $10, if the cap rate is .10).
Avoid Dirty Tricks Wh
Avoid Dirty Tricks Wh
and physically. They need to rightly judge the benefits of the combination products and they have to even look at the risks involved when combining the produ
n Buying Investment Property
When sellers of income properties increase the net income by honest means, the property should sell for more. However, there are many dishonest ways,
When sellers of income properties increase the net income by honest means, the property should sell for more. However, there are many dishonest ways,
ts. Some of the combination products were well accepted by physicians while others suffered. Companies involved in development of combination products are fi
oth legal and fraudulent, that are sometimes used. Sellers of houses may cover foundation cracks with plaster, but the tricks used by sellers of income properties aren't about appearan
ding difficulty in defining their combination products and facing various challenges from selecting a combination to marketing it.
Following aspects would a
Following aspects would a
ce. These tricks are about income and expenses.
One way income can be inflated, is by showing you the "pro forma," or projected income, instead of the actual rents collected. Demand t
One way income can be inflated, is by showing you the "pro forma," or projected income, instead of the actual rents collected. Demand t
dd to the challenges in developing combination products:
Which markets to tap where the combination products can do fairly well?
Which combination prod
Which markets to tap where the combination products can do fairly well?
Which combination prod
e actual figures, and check to see that none of the apartments listed as occupied are actually vacant. See if any of the income is from one time events, like the sale of something.
Th
Th
cts are meaningful and rational?
Which therapeutic categories to select?
Which Combinations can address unmet needs of the patients?
Do combin
Which therapeutic categories to select?
Which Combinations can address unmet needs of the patients?
Do combin
income from vending machines is a gray area. Many smart investors subtract this from the net income before applying the cap rate, then add back the value of the machines themselves. F
tions increase the patient compliance?
What would be the developing cost?
How to tackle the risks encountered during combination product developmen
What would be the developing cost?
How to tackle the risks encountered during combination product developmen
r example, if laundry machines make $6,000, that would add $75,000 to the appraised value (.08 cap rate), if you included it. However, since they are easily replaceable, adding the $10
t?
As combination products don't fit into the traditional categories of drugs, medical devices, or biological products, the USFDA is in the process of devel
As combination products don't fit into the traditional categories of drugs, medical devices, or biological products, the USFDA is in the process of devel
000 replacement cost instead makes more sense.
The other important tricks sellers play involve hiding expenses. These can include paying for repairs off the books, or just avoiding ne
The other important tricks sellers play involve hiding expenses. These can include paying for repairs off the books, or just avoiding ne
ping new procedures for reviewing their safety, efficacy and quality.
Professional from academic institutions, pharmaceutical industries, health care indust
Professional from academic institutions, pharmaceutical industries, health care indust
essary repairs for a year. This can dramatically increase the net income, meaning you pay more for the property. It also means you have less income than expected, and deferred maintena
y and representatives from various regulatory agencies are working out to design the regulatory requirements for manufacture and sale of combination products
ce to catch up on.
Ask for an accounting of all expenditures. If a number in an expense category is suspicious, replace it with your own best guess. Then re-figure the net income.
Lo
Ask for an accounting of all expenditures. If a number in an expense category is suspicious, replace it with your own best guess. Then re-figure the net income.
Lo
.
As there is an increasing trend of the combination products companies manufacturing such products should be able to tackle the problems involved in the de
As there is an increasing trend of the combination products companies manufacturing such products should be able to tackle the problems involved in the de
k at each of the following, verifying the figures as much as possible, and substituting your own guesses if they are too suspect: vacancy rates, advertising, cleaning, maintenance, rep
elopment. They need to be wiser in analyzing the market trends and the regulatory requirements.
Companies that provide selfless information through particip
Companies that provide selfless information through particip
irs, management fees, supplies, taxes, insurance, utilities, commissions, legal fees and any other expenses. Do your homework, and avoid seller's tricks when buying investment property
tion in industry events and feedback to regulatory authorities would be able to face the challenges and will be successful in developing combination products
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