If you’ve decided to own a dental practice, there are lots of things to be mindful of to be successful beyond the day to day operations. Your time, money and other resources need to be spent on marketing, effective management techniques, and bookkeeping. In addition to all of these, you also need to factor the whereabouts of the physical location of your business. And with that comes the need to think about what your plans are for your practice for both the long and short term.
Do you want to have more flexibility for the physical location of your practice? Do you have access to funds for a down payment and mortgage for your practice space, if desired? These types of questions can help you hone in on the more practical option for your business needs and goals.
And these questions lead to a very important one.
Should you own or lease the office space for your dental practice?
PROS OF LEASING
Leasing is essentially the same thing as renting your office space. If location is of utmost importance to you, leasing allows you to have more flexibility than owning real estate. There’s a higher likelihood of being able to find short term leases, for example, if that’s something you feel you need. In many cases, leasing gives you more options in terms of property locations. Finally, you won’t need to have a large amount of capital to invest in real estate property if you decide to lease.
CONS OF LEASING
If you’ve had experience with renting at all, you know that one of the biggest drawbacks is that rental rates consistently increase over time. If you’d like your dental practice to remain in the same location for the long haul, signing onto a long-term lease might not be in your best interest. You also don’t get the benefits of property ownership, namely equity value and tax advantages, if you lease your office space.
PROS OF OWNING
Real estate ownership offers many advantages and benefits in general, and the same is true if you want to purchase property for your dental practice. Some of the most compelling benefits are flexibility in controlling location and any future expansion projects, the ability to build equity as you pay down the financial terms, and to eventually earn a return on your investment.
CONS OF OWNING
In contrast, owning your dental practice location requires a significant amount of upfront capital. As a property owner, you would also be responsible for any upkeep and maintenance, including fronting the cost for any property-related damages. These responsibilities can take away from other tasks necessary to growing and sustaining your practice,like marketing, staff management, and accounting.
The decision to lease or own your dental practice property is based on a combination of your personal and business needs. It’s good to think through all of your options with either choice.
WONDERING WHERE TO BEGIN?
Are you just starting out with your practice? Sign up for Dr. Coughlin’s program that details the principles of success to learn what it takes to have a successful, thriving dental practice!