Expert: Mike Fortunato - 6/1/2009

Question
I own a medical office building valued at $3,500,000.  I have a note of around $2,700,000.  If the near economy develops into inflation or hyperinflation what would be the benefit or loss of selling the building now or holding on to it?

Answer
A lot more goes into a decision to sell or keep an asset, than the likelihood of inflation. You would also need to consider what kind of cash flow the property produces (and compare to what you might receive by placing the equity from a would-be sale into another form of investment). You should also take into account capital gain tax consequences of such a sale. And, you should consider whether the property stands to gain value from appreciation, and how long you plan to hold the asset.

There are a myriad of factors that need to be considered, some of which are unknown (such as what impact an inflationary environment would have on your medical building). I'm personally bullish on medical office properties, and tend to believe that well-located properties will do well in any environment as the demand for health care remains steady.