Should I Lease or Buy Commercial Real Estate for My Dental Practice?

Leasing versus Purchasing Commercial Real Estate

As with everything, there are pros and cons to both owning and leasing commercial real estate.  When determining whether leasing or owning is right for your practice, the decision may ultimately come down to:

·        Availability

·        Wants

·        Needs

Many choose to own versus lease the commercial real estate as it can be part of their retirement plan and is ultimately, a pretty sound investment.  However, it really comes down to understanding where your practice life cycle is.  For instance, if you’re just starting out and you weren’t able to secure 100 percent of your financing, leasing may make more sense.  On the other hand, if you’ve found your dream property and your finances are in place, this might be the perfect time to take the step to becoming a property owner.

Leasing

Pros

There are three main reasons why dental practice owners decide to lease their real estate over purchasing and they are:

1.      Flexibility - You can test drive a location with a 5 - 7-year lease.

2.      Predictability - Fixed monthly expenses; no surprises.

3.      Cost - Standard monthly payment.

Cons

With every Yin there is a Yang.  While the pros may seem pretty great for leasing, there are also cons that you should take into account when weighing your options.

1.      Losing control over long-term plan of practice.

2.      Growth restrictions.

3.      Dental build out is very costly.

4.      You can’t use a leased office as part of your retirement strategy.

Owning

Pros

Some of the top reasons dental practice owners should consider owning their commercial real estate include:

1.      Control

2.      Continuity

3.      Opportunity

4.      Retirement

Cons

There are a number of instances when owning the commercial real estate for your dental practice may not be very practical.  Have a look at some of the cons to owning commercial real estate:

1.      If you’re not able to secure 100 percent of the financing for your dental practice, you may have a sizeable down payment requirement.

2.      If you need to sell your current property while executing on a new purchase, it could result in a slower timeline.

3.      Purchasing and construction both typically have longer timelines as opposed to leasing.

4.      You take on the risks and responsibilities of the property.  Think slip and fall accidents, expensive maintenance costs, etc.

Is Property Ownership the Right Move for Your Practice?

Everyone has a different set of priorities and every situation is different.  When making the decision consider what your short-term, mid-term and long-term goals are.  These goals and objectives can help you make the right decision for your dental practice.

Regardless of what stage of your practice’s life cycle you’re in, Dental B-School is here for you.  To help you along your journey of dental practice ownership we’ve put together a collection of free resources for you to peruse.  Alternatively, you can schedule a consultation with us by sending a secure message.