Networth and Owning
This podcast episode discusses how purchasing your real estate can significantly boost your net worth by $1 million or more and save hundreds of thousands in taxes. It's an excellent resource for anyone considering a startup or acquisition in the dental field. The interview features the founder of CARR Healthcare Realty, who provides a comprehensive breakdown of crucial factors regarding leasing and acquiring dental practice real estate.
Around the 17-minute mark, the speaker explains why opting to buy your real estate can easily add $1 million to your net worth and save over $100,000 in taxes. Using an example where purchasing practice real estate for $1 million on a 20-year loan, he illustrates how monthly payments reduce the loan principal, steadily building equity, resulting in a $40,000/year net worth increase. Additionally, with commercial real estate appreciating historically at around 3% per year, there's an added $30,000+/year increment to your net worth. The combination of loan repayment and appreciation can significantly boost your net worth by seven figures.
At the end of the 20-year period, the property purchased at $1 million is likely valued close to $2 million and is debt-free. If one chooses to sell the practice, they could potentially receive $2 million for the practice real estate, separate from the proceeds of the practice sale. Alternatively, considering a cash-out refinance could result in a tax-free withdrawal of over $1 million, while still collecting rent from a successor. A $2 million property can generate $100,000-150,000 cash flow annually, supporting an early and comfortable retirement.
I strongly advocate for practice ownership and owning practice real estate. In my view, there's no better method to increase net worth and achieve financial freedom earlier in life. If you're eager to explore practice ownership or real estate, I'm available to connect. Achieving ownership of your practice and real estate is feasible; sometimes, it requires creative use of available financial tools! I'm also happy to assist in evaluating larger deals, particularly multi-tenant retail or medical office complexes, provided the numbers align. Leveraging your operational business (dental practice) to invest in more passive ventures (commercial real estate) can be a strategic move!"
— Dr. Reed Faldet