Lease or Buy? Making the Right Real Estate Choices for Your Dental Office

Real estate decisions can play a crucial role in the success of your dental practice. From where your office is located to how its layout affects your daily operations, the real estate choices you make now can determine the profitability of your business later.

One key consideration you may encounter as you search for the right property for your office is whether to lease or buy. This dilemma can significantly impact your long-term goals. Let’s take a closer look at the factors that can influence the critical decision of whether to lease or buy.

Understanding Your Practice’s Needs

Before deciding whether leasing or buying is right for you, it’s vital to evaluate your practice’s needs first. You will want to assess your current space requirements and determine whether that space will continue to serve you in the future. Your space needs should be balanced against your finances and how you expect them to grow.

Additionally, you will want to consider aspects of potential locations like:

• Accessibility
• Visibility
• Patient demographics
• Competing local practices

When you understand your practice’s needs, you can make decisions that will benefit it both now and in the long term.

The Pros and Cons of Leasing

Leasing offers the opportunity to make a short-term commitment. In some cases, you may have the option to purchase a property you have leased.

Advantages of Leasing

One of the most significant advantages of leasing is the low upfront cost. You won’t have to pay a mortgage for a leased property. You will also save money on maintenance and repair costs, which should be the owner's responsibility. Finally, you can easily switch locations when leasing if the location doesn’t offer enough space to grow.

Disadvantages of Leasing

A notable disadvantage of leasing is that you don’t own the property. This means you can’t customize it without the owner's permission, and it doesn’t grow equity for you or serve your long-term asset accumulation. The owner can also raise your rent or end your lease anytime, leaving your future more uncertain.

The Pros and Cons of Buying

Purchasing property is a long-term commitment that comes with both advantages and disadvantages.

Advantages of Buying

When you purchase a dental office, you control it. You can customize it however you need to, and it builds up equity. There is also the potential for property appreciation, which means that if you choose to sell it later, you may be able to do so at a profit. Mortgage payments are also fixed, so you can better plan your finances.

Disadvantages of Buying

The initial capital investment of purchasing a property is potentially prohibitive for many. Even with a mortgage, your finances can suffer due to closing costs alone. Furthermore, you are committed to that investment. While you can sell, that may take months or years. You are responsible for the costs of all repairs, maintenance, and taxes.

Financial Considerations

To make the right decision for your practice, you will want to analyze your financial situation and how it could change. You need to determine whether you can afford to buy or lease, both under current circumstances and if you face a financial setback. This means considering cash flow, tax benefits, and long-term returns.

Understanding your financial situation will also help you determine whether financing options like traditional or SBA loans are best for you.

Legal and Zoning Issues

Another part of this decision is zoning laws. These laws can affect your daily operations and prevent them from happening entirely. An experienced dental law attorney can help ensure you don’t run afoul of zoning laws.

Real estate also involves contracts and other legal complexities you will need a dental law attorney’s guidance in navigating.

Making an Informed Decision

Ultimately, your decision will depend on weighing the risks and rewards of buying or leasing within the context of your practice’s unique needs and circumstances.

You don’t have to consider your options alone. Consult with professionals like real estate agents, lawyers, and financial advisors. They will help you make a decision that meets the needs that are unique to your practice.

Consider All Options Before Choosing

From zoning laws to finances, many factors must be considered when deciding whether to lease or buy. Keep an open mind and consider both options carefully before choosing what is best for your dental practice’s future.