Looking to get a new office for your dental practice?
It’s always wise to speak to dental specific contractors and consultants who can give you valuable advice, as well as examining real estate websites with special search functions for healthcare spaces.
Here are some helpful tips for selecting your next office space:
1. Decide on buying or leasing.
The Wealthy Dentist’s survey shows the following stats:
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24% own their building outright
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32% own and pay a reasonable mortgage
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4% are worried about their mortgages
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20% have long-term leases
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20% have leases up within the next 2 years
Deciding on buying or leasing can help to you move in the right direction as you search through real estate listings for a dental office.
Leasing leaves you free to pursue better locations when communities change or your staffing needs increase. Buying gives you freedom to build an income from rent. However, there could be a huge cash outflow if renovation is needed. There is also more risk if business slows down.
2. Perform your due diligence.
Ask all the necessary questions involved in getting a new dental office and review all the important information like zoning limitations, ADA compliance, utilities, lease rates in the neighborhood, and background on the dentist/company selling/leasing the space.
Find a dental-specific team of consultants according to your needs:
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A building contractor
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A specialized CPA
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Dental equipment specialist
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Dental-specific lender
Ask for the following documents from the seller:
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The balance sheet.
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The liquidation value of the business once all creditors are paid off.
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Cash flow statements.
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Insurance reimbursements.
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A non-competition agreement to prevent the seller from setting up a new dental practice near you.
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Rent increase agreements.
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Option to buy agreements.
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All the fees: management, maintenance, and the grace period for paying everything.
This information will help you spot negative cash flows, and if there are likely to be more. If so, would you have enough cash reserves and access to liquidity to carry the business through lean times?
3. Always negotiate.
Almost everything is negotiable. The landlord might have no influence regarding price, but he/she may make the deal better, remove detrimental clauses, etc.
4. How’s the location?
This deserves a separate section even though it’s included in due diligence. Low rent/asking price may mean it is a poor location. It’s worth paying extra to make your office as convenient as possible. And of course, ask about competition.
5. Don’t forget goodwill.
Clients become loyal to their dentists. If you happen to be moving into an existing practice, keep the outgoing dentist, or ask him/her to introduce you to his/her clients before leaving.
With smart preparation and patience, these tips will aid you in selecting a location that will grow your practice and improve your lifestyle.
