Essential Questions for Dentists in Commercial Real Estate

Leasing-Related Questions

1. What is the ideal lease term for a dental practice?

   Dentists often need longer terms to recoup build-out costs and secure financing.

   
   

2. What are the critical clauses to look for and negotiate in a dental office lease?

   Important clauses include assignment clauses, renewal options, relocation clauses, recapture clauses, subordination clauses, and non-disturbance agreements.

   
   

3. How are tenant improvement allowances (TIA) calculated and how can I maximize them?

   Understanding if it's based on usable vs. leasable square footage is crucial. Additionally, knowing negotiation strategies can help.

   
   

4. What are the common "traps" or pitfalls in dental office leases that I should avoid?

   Be wary of clauses that hinder practice sale, the landlord's right to relocate, and hidden costs.

   
   

5. When is the best time to approach the landlord when buying an existing dental practice that is currently leasing?

   Typically, this should be done after financing is arranged and the purchase contract is negotiated.

   
   

6. What are my liabilities if I assign my lease to a new dentist when selling my practice?

   It's important to seek a release from liability in such cases.

   
   

7. How do I ensure the lease supports long-term practice growth and potential expansion?

   Consider flexibility for future needs when negotiating your lease.

   
   

Purchasing-Related Questions

1. Should I buy or lease my dental office space? What are the pros and cons of each?

   Evaluate flexibility, equity building, upfront costs, and long-term financial goals.

   
   

2. What are the key factors to consider when evaluating a location for a dental practice?

   Look at visibility, accessibility, parking, demographics, co-tenants, permits, price, and geographical barriers.

   
   

3. Do I need a commercial property inspection and an Environmental Site Assessment when buying a dental office building?

   Understanding the due diligence process is essential for making informed decisions.

   
   

4. How does real estate ownership contribute to my retirement plan?

   Consider equity building and the potential for future income from your investment.

   
   

5. How much should rent and associated expenses be as a percentage of annual revenue for a dental practice?

   Familiarize yourself with industry benchmarks for financial viability.

   
   

6. Is it advisable to separate my real estate investment from my dental practice by creating a separate LLC?

   This can be a smart move for protecting assets and limiting liability.

   
   

7. What kind of financing options are available for purchasing a dental office building?

   Explore traditional loans, SBA loans, and private lenders.

   
   

8. What due diligence is required when buying a dental office, beyond financial records of the practice itself?

   Legal aspects, zoning, code compliance, and property condition are all important factors to consider.

   
   

Conclusion

Navigating commercial real estate can be complex for dental professionals. By asking the right questions and understanding the nuances of leasing and purchasing, dentists can make informed decisions that support their practice's growth and success. Whether you are leasing or buying, being proactive and informed is key to achieving your goals in the dental field.

For more insights on this topic, consider exploring resources that specialize in commercial real estate for dental practices.