Are you looking to acquire a new dental practice but not sure where to start? In this post, we will evaluate some of your real estate and leasing options. This is Part 2 of a 3-part blog series. In Part 1, we offered a few tips on deciding the Location of your practice.
Real Estate: Leasing vs. Buying
After you decide on where you want to start your practice, your next challenge will be finding the right physical space and determining the possession/occupation structure. You will need to decide if you want to purchase the property or lease it. Both have their pros and cons. If you decide to buy, you will surely face higher costs, more responsibilities and you may run into challenges when you are ready to retire or sell. But there can be distinct advantages to owning the premises, including income diversification strategies. Leases can offer more flexibility with shorter terms of possession. But, with all leases and contracts, it is always best to have an attorney review these documents carefully to make sure you fully understand your risks and liabilities under the lease.
Lease Considerations: Every term in the lease is important, but here are a few in particular to consider:
- Renewal Options: What are the terms and what are the options to renew?
- Personal Guaranty: Are you required to personally guarantee performance? This is a major liability. If required, negotiate for limited guaranties in amount and length.
- Assignment and Release: How easy will it be to assign the lease and relieve yourself of future liability? These clauses constitute a big part of your exit strategy in the lease.
- Restrictions on Renovation: Will you be able to make any changes or improvements to the space? What are the requirements if you do make changes?