How We're Helping Dental Practices Just Like Yours
DENTREXX Specializes in Five Areas of Specific Focus
1. Dental Location Assistance
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.
Dentists, take an in depth look at each portion highlighted below.
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 considerations must be closely evaluated whether a dentist is interested in a start-up or a relocation.
Geographical Area and Lifestyle Preferences:
- 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.
Area Demographics Preferences:
- Annual growth rate of the area
- Age distribution of the population in regard to your practice profile
- Population Density
- Median household income
- Disposable Income for oral care, based on the cost of living in the area
- Does a major part of the population own or rent?
- What is the education level of the population? The higher the education level, the more focus on oral care.
- Ethnic make-up
- Dominant language
- Unemployment rate
- Competition Ratio
- Physical distribution of competition
- Practice Emphasis of competition
- Location of Referral sources
- Type of fee schedule typical for the location
* Consider the insurance carriers that reimburse for services in the area of interest
* Having a hospital nearby is a major advantage-30% of ER visits deal with dental problems
Location-Specific Criteria Considerations:
- Synergy with other businesses
- Signage
- Access
- Traffic Count
- Visibility
- Drive Time Road Network
- Transportation Options
- Physical Geographic barriers to patient acquisition
The right location is the first step to a thriving practice – economic opportunity is key.
2. Letter of Intent
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. The Landlord’s starting point usually includes an inflated quoted rate in order to be able to agree to a rate reduction. DENTREXX typically saves an average of 8% to 12% in overall lease costs, which can mean tens of thousands of dollars or more.
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.
Savvy negotiation typically saves 8%to 12% in overalllease costs.
3. Dental Lease Analytics
We’ve developed an extensive lease review system we call LEASE ANALYTICS. This highly successful system 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 Analytics system 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.
The devil’s in the details!
LEASE RENEWAL OPTIONS should be very specific as to price and terms. Make sure Renewal Options convey if the practice is sold!
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. The accepted methods can become very time-consuming for both parties. Tenants should not sign a lease without the specifics of the renewal right. Frustration is alleviated when all parties are on “the same page.”
Dental tenants need renewal options to protect their investment in build-out and continue to develop their practice. These options (I say it in plural, because several options can secure the tenant’s space for many years) should be at an increase of no more than 2-3% per year.
Renewal at Market Rate means nothing and is totally ambiguous. It’s how the market rate is defined in the original lease. Savvy negotiation of the Renewal Option in the original lease is a single-edged sword that favors the Tenant. Landlords want tenants to renew. They do not want to incur costs for additional improvement allowances for a new tenant and real estate commissions to obtain a new tenant. They are business people-Landlords do not want their cash flow interrupted by losing rental income due to a lack of occupancy. It takes time and effort to find a new tenant. Tenants generally don’t want to move their practice, either, except in the case of an adversarial Landlord/Tenant relationship.
In the case of a practice sale, it is also vitally as important is that the lease conveys to the practice purchaser. The practice value is decreased at the time of sale without a lease in place that protects the Tenant from hidden business risk. There have been instances where the sales price had to be decreased by tens of thousands of dollars by the practice seller because of perilous conditions allowed in the lease. Remember, in the case of a practice purchase, the purchaser inherits the seller’s lease. Practice Owners, make sure your lease adds value to your practice!!!
We’ve been through two or three down markets in our 34 years in representing tenants. When market conditions became depressed and lease rates dropped, many of our clients were able to decrease their lease rate through savvy renegotiation of that rate contained in the Renewal Option.
During a market downturn, it is very possible that a tenant can get a lower rent rate elsewhere, with significant build-out allowances and free rent – and, guess what – the tenant’s Landlord knows this and may be willing to renegotiate the lease rate. The reason for that is clear – the Landlord wants to retain the current tenant.
Also, keep in mind that if the market is depressed, many Landlords in an entire area will be looking to lease their spaces by offering decreased rates and more generous build-out allowances in order to get a tenant.
Lease rate reduction at Renewal happens quite often – when the area market reflects lower rents overall than what is stated in the original lease and when there is a plethora of vacant space in the area.
It’s a matter of knowing the local market turf through thorough research, savvy negotiation, and the psychology of knowing how to get the best deal at the right time.
Laser-focused identification of 68 critical business risks that can affect practice profitability.
4. Dental Lease Negotiation
A lease is a risk-shifting structure full of complexities.
It has two operative parts – the business structure (framework) and the legal structure between the parties to the lease. 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, but are bad business for the dental tenant due to the elevated level of financial risk – a significant capital investment in start-up costs, as well as the possibility of lost revenue.
We’re different from other commercial brokers. We take dental lease negotiation to a whole new level. Our client-centered and tenant-protective approach means we negotiate the entire operative business structure of the dental lease to shift the business risks away from the dental tenant. Understanding the far-reaching business consequences of Landlord-favored lease stipulations has made us experts in anticipating potential business risks particular to dentists – both in the present and into the future. Through strategic positioning and proven negotiation skills, we minimize these business risks before they can impede the financial health of the practice. We make sure to incorporate protective agreements throughout the lease to preserve and safeguard capital investment and to expand the tenant’s rights.
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. These Landlord stipulations are legal, but are bad business for the dental tenant.
Trust Dental Real Estate Experts (Possible Name Change) to deliver a well-negotiated, airtight lease that contains the necessary business protection you need in the real estate portion of your practice. It goes a long way in controlling the future of your practice.
Focus on case acceptance and patient treatment.
Client-centered tenant protective lease negotiation shifts hidden business risks away from the tenant.
5. Exit Strategy Planning
FPO FPO - 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. The Landlord’s starting point usually includes an inflated quoted rate in order to be able to agree to a rate reduction. DENTREXX typically saves an average of 8% to 12% in overall lease costs, which can mean tens of thousands of dollars or more.
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.
FPO - Savvy negotiation typically saves 8%to 12% in overalllease costs. - FPO