4 Core Elements for Profitability in the Real Estate Portion of Practice Ownership
#1: Crucial Location Factors
All investments hinge on the power of information
If you’re thinking about biting the bullet by going for a practice start-up, don’t sell yourself short about the importance of location.
You have a vision about your practice: the perfect dental office with the “right address”. Choosing the right location is a big decision. And it’s the first step toward making your vision a reality and establishing a thriving practice.
Our cutting-edge research technology and expert counsel can pinpoint market opportunity anywhere within the continental United States. We have a national network of brokers/agents that provide the needed “boots on the ground” and “local turf knowledge” of any city of choice in the nation. This winning 2-part combination puts DENTREXX a step above the rest. We have the valuable expertise to manage your entire real estate transaction and help turn your vision into reality. And do it well.
Successful dentists have mastered the challenge of balancing their personal and professional lives, and it takes a while to get there! Dentists should look for a space that meets all of his/her needs: clinical, financial, and personal – and shouldn’t compromise on any of the three: Lifestyle preferences, favorable demographics, and spot-on location criteria within the favorable area of choice.
These three critical location factors must be closely evaluated whether a dentist is interested in a start-up OR a relocation.
Of course, the lease rate is important, but look beyond it. The local market determines the lease rate. Different landlords offer different tenant improvement allowances, as well as other concessions. Don’t simply look at the lease rate. Remember, it’s economic opportunity for future profitability and added practice value should you decide to sell.
There’s a ton of homework for the dentist to do about location selection.
At a certain point, it’s best to get wise counsel from a tenant broker that specifically represents dental tenants. An experienced broker will be able to draw from his/her in depth knowledge about what makes a successful location and will help guide you in the best direction.
An ideal practice for a new general dentist would be in a growth area in a retail center, and that meets the crucial selection factors, as most of the new residents have not established a dental provider. Specialty dentists typically will be in a destination location because they’ve been referred by general dentists.
Three Critical Location Factors to Consider:
- What type of practice do you envision: drill-n-fill, implants, periodontics, endodontics, pediatrics, orthodontics, etc.?
- What type of lifestyle fits you and your family: Urban, suburban, or rural?
- Where will you live within your lifestyle choice?
- What about commuting? It can get old and expensive.
#2: Market-Savvy Economics Negotiation – The Letter of Intent
Typically, saves 8%–12% in the Letter of Intent phase
A Letter of Intent is a non-binding agreement between the Landlord and the proposed tenant that establishes lease economics to be integrated within the final lease agreement.
These economics are normally limited to the lease rate, tenant build-out allowance, and free rent offered by the Landlord. There are, sometimes, deal-breakers that must be resolved before any additional time is invested in the transaction. These vary, depending upon each client’s individual circumstances.
The purpose of the Letter of Intent is to arrive at the lowest lease costs and see if agreement can be achieved with the Landlord prior to spending many hours negotiating the complex business terms necessary to a well-negotiated final lease.
Like most real estate transactions, the starting point is merely the “asking” price. DENTREXX typically saves an average of 8% to 12% in overall lease costs, which can mean tens of thousands of dollars or more, all at no cost to our dental clients.
There are many more dollars saved in provisions throughout the entire lease contract that protect the practitioner’s large capital investment. These provisions are not legal in nature – they are negotiated for business protection and risk avoidance.
“Norman Gelfand became a part of my team after a recommendation from Breakaway Practice Seminars. Also, a fellow dentist had high praises for Norman. Norman delivered huge in service and on paper. He negotiated a great deal by delivering a rock-solid lease that I had confidence in signing.
Thanks, Norman, for the hours of hard work and dedication to my lease!”
Jonas Ashbaugh, DDS
Owner, Blue Sky Dental Group
DENTREXX Does What Others Don't.
DENTREXX exclusively represents dental tenants and buyers in selecting strategic locations, negotiating money-saving Letters of Intent, and in negotiating business protective stipulations throughout the dental lease.
Leave the real estate portion of your dental practice to us.
FOCUS ON CASE ACCEPTANCE.
#3: Lease Analysis – The Devil’s in the Details
Our extensive lease analysis is comprised of our laser-focused identification of 68 business risks that can affect practice profitability. Our collective 50+ years of experience as tenant leasing brokers and our extensive knowledge of the far-reaching business consequences contained in dental leases sets us apart from other brokers who don’t specialize in dental tenant leasing.
We’ve seen, first-hand, what other dental practitioners have experienced without the operative business protections that a dental lease should contain. Each of these practitioners signed a legally valid and enforceable lease agreement; but, without the necessary business protections in their leases, they incurred unnecessary costs – in time, money, and in their sanity.
These business risks, while contractually, were perfectly legal, were bad business for each of the dental tenants.
Our Lease Analysis gives us the distinctive edge in structuring the operative business framework of the dental lease and is critical in our preparation for negotiating a protective, dental-friendly lease.
#4: Lease Negotiation – The Risk Shifter
A lease is a risk-shifting structure full of complexities.
A lease is a risk-shifting structure full of complexities. The purpose of a lease is to assign risk to the parties to the lease. It has two operative parts – the business structure (framework) and the legal structure (framework). And, there is a huge difference between the two. And it takes a seasoned dental real expert to know the difference.
Leases offered by Landlords are always skewed to favor the Landlord by shifting risk to the dental tenant. There are many Landlord stipulations in a lease that are perfectly legal. However, leases that lack protection from hidden business place the dentist at an elevated level of financial risk due to the significant capital investment in start-up costs, practice operations, and the possibility of lost revenue.
We always recommend legal review of the lease document prior to final signature. The client’s attorney will review the legality of the lease document to ensure that the lease stipulations are valid and enforceable.
A lease can be a best friend or a mortal enemy.
We’ve seen dental leases that inhibit buyer financing, that don’t protect against foreclosure of the property, that inhibit the right to sell the practice, and on, and on, and on. Leases that include, or exclude, these Landlord stipulations are legal issues and are not typically negotiated by most attorneys and not typically negotiated by a general commercial real estate broker. They are business issues outside of the legal framework of a lease. Without protections from these, and many more, hidden business risks that are largely overlooked or not addressed; the dental practice owner can suffer a devastating financial loss should conditions occur because the lease was not negotiated for tenant protection.
To sign a lease without business protection is playing with fire.
Trust DENTREXX to deliver a well-negotiated lease that contains the necessary business protection you need in the real estate portion of your practice. Maximum protection minimizes hidden business risk goes and goes a long way in controlling the future of your practice. A tenant-protective, secure lease that governs the real estate portion of practice ownership is the first step in developing an investment-grade practice and will deliver lucrative results when planning for an Exit Strategy.
Focus on case acceptance. Leave the real estate to DENTREXX.
In commercial real estate, you don’t get what you deserve, you get what you negotiate!
What dental practices don't know can cost them thousands...
About DENTREXX: How We Make a Difference for You and Your Dental Practice Profitability
DENTREXX is different because we make a difference! DENTREXX exclusively represents dental tenants and buyers in selecting strategic locations, negotiating money-saving Letters of Intent, and in negotiating business protective stipulations throughout the dental lease.
Four Core Elements for Profitability in the Real Estate Portion of Dental Practice Ownership
In order to have an overall profitable practice, there are many factors outside of the real estate portion that exist. DENTREXX's one and only focus is on providing the 4 state-of-the-art Core Elements for Profitability in the real estate portion of practice ownership.
The Age of (Mis)Information: Myths That No Dentist Should Believe Before Leasing a Dental Office
While it is doubtful that a dentist will go to the Internet and become a lease negotiation "Do-It-Yourselfer", there are misconceptions that can cost dental practitioners tens of thousands of dollars every year! Explore why these common myths often cost tenants like you thousands!
Know the Hidden Business Risks That Could Threaten Your Dental Practice's Profitability
"Hidden Business Risks" in Leases that are overlooked by most real estate professionals and many attorneys can wreak havoc in practice ownership – in profitability and in time away from patient treatment spent to resolve problems that can become nightmares.
The Importance of Exclusive Representation - Don't Overlook the "F" Word
It's all about the "F" word. Without exclusive licensed real estate broker representation, the dentist has no one watching his/her back! Licensing means we must adhere to the highest level of fiduciary responsibility to our client.
Why DENTREXX Services Cost Zero - How We're Paid For Our Sevices
If the dental tenant has no broker, the landlord pays the listing broker the entire agreed-upon fee. If the dental tenant has broker representation, the Landlord’s broker pays a portion of his/her fee to the dental tenant’s broker – and there is no cost to the dental tenant.
The Value of Having a Dental-Specific Team of Professionals On Your Side
Any dentist contemplating practice ownership should have an experienced group of dental-specific professionals on his/her team. Dentists, have an experienced team of proven dental-specific professionals on your team before entering into a lease.
Preparation for Your Successful Dental Practice Exit Strategy
View your office lease as a powerful portion of practice ownership, when negotiated for business protection. A business-protective lease plays an integral part in maximizing practice value at the time of sale and significantly helps to prepare for a lucrative Exit Strategy.
The Value of Well-Defined Dental Office Lease Renewal Options
Dental tenants should never settle for “renewal options at market rate” unless there is an accepted method of determining market value to arrive at a lease rate. Tenants should not sign a lease without the specifics of the renewal right.
The Age-Old Question: Whether to Lease or Buy Your Dental Office?
There is a fallacy created by most real estate salespeople/brokers or unlicensed consultants, that it’s always best to buy your location rather than lease it, making it seem that a purchase is a guaranteed win for the purchaser. Not so fast, here!
Buying a Dental Practice? It's Important to do the Homework!
Purchasing a practice is a huge emotional and financial investment and entails lots of moving parts. Dentists shouldn’t embark on such a journey without careful evaluation by a team of professionals who have a solid and longstanding reputation of helping dentists.
DENTREXX Dental Practice Success Stories - Real Dentists Share Their Personal Experiences
Satisfied DENTREXX clients proudly share their practice's stories of success and the positive impact DENTREXX lease negotiations have had within their practices.