Buying Your Dental Office Over Leasing

Why don't more dentists doing a startup consider buying a property for their start up, rather than leasing from someone else?

In a leasing scenario, you're often committing to 10-15 years of rent payments alongside prorated property expenses typical in a NNN lease. Understandably, a lease is as much a financial liability as a loan, each commonly supported by personal guarantees—both place obligations on you.

Moreover, the monthly payment on a 25-year mortgage for a property may not substantially differ from potential lease payments. So, could it be the down payment or liquidity requirements from the lender that deter many?

Some banks might extend loans covering 100% of the real estate purchase price, although it's not a prevailing practice. Traditional owner-occupied financing, conversely, typically demands a 15-20% down payment. If you lack such capital, exploring partnerships solely for the real estate might be worth considering. However, I'd advise against partnering on the dental practice startup itself, given its operational intricacies and potential upside.

Could the challenge lie in finding a viable property, seeming like an insurmountable task?

Certainly, it can be daunting, yet it needn't be overwhelming. This is where a proficient real estate broker comes in. Their job revolves around sourcing properties that suit your needs. By providing them with specific criteria, they can present potential properties aligning with your qualitative and quantitative guidelines. Engaging multiple realtors or brokers could be beneficial, as local realtors might offer valuable options. Always start with healthcare specific brokers as they are going to understand your needs the best.

–Dr. Reed Faldet