The Age-Old Question: Lease or Buy?
The lease or buy is a HUGE consideration for a dental practice owner!
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!
Most of the time, residential buying vs. renting, works out well for the first-time homeowner. It is quite different from a commercial purchase. Many commercial purchases are made as a way of securing a location, without the threat of rising rent, with the incorrect assumption that equity is a part of the equation, etc. Maybe or maybe not. The buyer could be trading rent increases for ownership expenses that include loss of value of the building. It’s important to note, that in the residential arena, the first-time homebuyer is committing to a much smaller amount of funds for a down payment for a “starter home” than the required funds a new dentist needs for a startup practice.
Equity on any property is only realized at the time of sale. Market value at the time of sale determines the selling price. Very important aspects that affect the value at the time of sale are:
- Demographics of surrounding businesses that are sources of patients can leave the area
- Economic conditions of neighborhood can deteriorate, creating less patient affordability
- Functional obsolescence-the ever-changing advances in dentistry could change the functionality of the dental office. This applies to both interior AND exterior.
- Mortgage rates
These aspects can either increase or decrease the property value at sale, depending on stages, and gyrations, of the economic market cycle.
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.
"I would like to formally recognize Mr. Gelfand and his team for Lease Negotiation services. My husband had known “Norm” for several months and we are thankful for the decision in selecting him to negotiate for us. He is very knowledgeable and detail-oriented, all while providing exceptional customer service. Throughout our lease negotiation process, he took the time to explain each and every decision and secured lease terms that were very favorable for my practice. His team actually cares about their clients. Although our negotiation process was complete, Norman himself called to check on us as we received record hurricane flooding. He offered his services to revisit the lease if we were affected in any way.
I highly recommend DENTREXX. Please, if you have any questions, call or email me."
Courtney P. Jones, DDS
Jones Creek Family Dental
Baton Rouge, LA
All dental start-ups require huge amounts of capital investment.
A building purchase requires a large additional cash down payment up front – and yes, the location is secured. So, the practice owner has two huge loans: one for all aspects of the practice start-up, PLUS the building mortgage. Therein, lies the risk. Funds are tied up that could be used for further practice operations i.e., marketing, increasing personnel, equipment upgrades, etc. None of us has a crystal ball. Considering the four aspects noted above, a purchase is a gamble – a real win or a devastating loss – and it all depends on the market conditions. If a practice owner owns his/her building, and market conditions deteriorate, it is very difficult to realize any profit from a sale of a building, if it ever happens. There is always the possibility of taking a loss in a sale. The owner could get stuck in an outdated office, in a has-been location with few options to change the trajectory of the practice.
The flip side for a start-up is to secure a well-negotiated initial long-term lease with guaranteed renewal options at set prices. The lease should protect the dental tenant against hidden business risks that are not typically negotiated by attorneys. The tenant-protective portion of a dental lease will allow for future flexibility as the practice dynamics change, will positively affect profitability, and can increase practice value at the time of sale.
Buying or leasing is a BIG decision. Weigh all the positives and negatives. The financial interest of the tenant/buyer representative/unlicensed consultant is never a noble reason for advising a client to buy or lease space. Any business professional, whether licensed or unlicensed, that puts his/her own interests above that of the client’s interests is not worthy of the client’s trust. Fiduciary responsibility is key in a real estate transaction.
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.