Is It Better for a Dentist to Buy or Lease Practice Space?

Brandy Keck is a Brockerage Liaison at Carr Healthcare Realty. In this clip, Keck discusses one of the questions she most often gets from dentists: Is it better to buy or lease space? There is no stock answer, Keck says. The appropriate course of action depends on specific circumstances for each dentist. Here’s an overview of what those circumstances are.

Interview Transcript (slightly modified for readability)

“At our firm, we get the question a lot of, what would be better for a dentist, to lease or own their space? To be honest with you, we don’t have a set answer. There are scenarios when purchasing is the best and there are scenarios when leasing is the best. Conventional wisdom will tell you that it’s always better to own, and that’s just not true.

Part of it would be, where is the dentist at in their career? If they’re a younger dentist straight out of a residency program or a couple of years of associating, they may not qualify. They may take on $400-500 thousand on the practice side. They may not qualify for the real estate piece as well.

The other side of it is, what’s their long-term plan? Are they intending to stay in the area? Do they want to relocate? Are they trying this out for a little bit then seeing where they want to go next? Part of it is the financial side of it. Are they in a position to be able to purchase at this time?

The other part of it is, there are markets throughout the country we’re seeing right now that are super hot where you’re buying at the peak. That may not be the best time to be purchasing a property. Dentists, a lot of them are working with demographic companies right now and figuring out what’s the best location for their practice. There may be a really good location for them to go into and the only option is to lease there or the only option is to purchase, so they really need to look at all of the numbers.

If they’re working with a commercial real estate firm that does something similar to us, we really break down the numbers. We do a comparative analysis of lease versus purchase, what those numbers look like, and then they can talk to their CPA about what makes the most sense. There are tax benefits on both sides of that and they just really need to figure out their options. One is not better than the other, they just need to know what’s best for their given scenario.”