Should I Lease or Buy a Space for My Start-Up Dental Practice?

Should I Lease or Buy a Space for My Start-Up Dental Practice?

January 31, 2019 - Gohar Markaryan

One of the most common questions among dentists who want to start their own practice is whether to buy or lease a commercial property. Through in-depth analysis, it was concluded that buying commercial property is the better option if you plan on staying in the same location for 7 or more years. Therefore, considering the growth of your business will be a large decision making factor in choosing whether to lease or buy a space.

On average, over a 15 year occupancy period, leasing commercial real estate costs as much as 86.6% more than buying commercial real estate. In cases where you lease a space for less than 7 years, oftentimes this cost will be less than buying. Therefore, seven years is considered the “breakeven” point in terms of occupancy costs.

When determining whether to buy or lease commercial property for your practice, there are some questions to ask yourself:

  • Will I outgrow my space, and if so, how many years will it take for me to outgrow my space?
  • Am I in a position to tie up capital in commercial real estate?
  • Do I want the flexibility of leasing? Or do I prefer the stability of having a mortgage?
  • Am I up for the challenge and the hassle of maintaining a property?
  • What are the local trends in the commercial real estate market?

There are benefits to both leasing and buying a commercial space and by considering the pros and cons of each, you will be able to choose the path right for yourself.

Commercial properties tend to store their value, making them a good investment. Additional benefits to purchasing real estate include, but are not limited to, equity upside, asset appreciation, rental potential and tax benefits. On the other hand, when leasing a commercial space, you have more liquidity, more flexibility, and additional tax benefits you are able to take advantage of.

Overall, it is important to take the time to plan both your short term and long term goals in order to determine whether buying or leasing is the best choice to make. Ultimately, however, it is important to remember not to sacrifice location on the basis of buying or leasing a space for your dental practice. If investment in property is your concern, you always have the option to buy other real estate for investment purposes.

If you are considering starting your own practice, Contact Us for a free consultation and we can help with any questions and offer guidance through this exciting and complex process.

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