Page 26 - The Dental Entrepreneur

The Dental Entrepreneur

Own your Own Building

Own your own building is in a category by itself. This is often a hard working individual who
feels as if rent is a “waste of money” and building your own office is an investment for future
retirement. Owning your own practice and building has one inherent flaw. When you approach
retirement or even a mid career move. The total sale price of the aggregate might be so high
you end up giving one or both away at a discount in order to move the real estate. The location
must be over the top and in an area that looks stable for the foreseeable future to consider
this. Look at most metropolitan areas and see at how areas have changed in the past two
decades. Some of the business locations that were once prime are now marginal at best.
Twenty to thirty years out is very hard to predict. By marrying these two assets you are
concentrating a certain amount of risk in my opinion. This is almost purely a location play so
approach this with extreme caution.

Prestige Location

There is a select group of practitioners who choose to practice in mirrored windowed ,high
rises, with marble floors and every amenity know to mankind. The obvious upside of this type
of location is that it has a very positive effect on attracting a particular type of clientele. But this
type of location is rarely an option for an inexperienced person setting up a practice. It is not
only difficult from an economic standpoint but also the skill level of a young practitioner would
rarely be up to the level of expertise that is necessary for this type of location. Everything in
this project will come at a premium price and the fixed overhead will be substantial. The high
rent, high overhead does not leave much margin for error and is probably best left for a more
established venture. $40 a square foot in a 1700 sq foot space will require nearly 1 million
dollars in revenue to make this overhead percentage work.

When Is Building From Scratch A Viable Option?

Rent is a cost of doing business but for some people they would prefer not to on many levels.
Some have heard that you can never lose by investing in real estate, (wrong) ,others like the
control of not having a landlord. As long as you understand the emotional reasons as to why
you want to own and also the risks involved, then go ahead. I have only one requirement. You
cannot compromise on the location. It must be stellar. Not average, not ok. It must be
outstanding. Otherwise you are putting two major assets at considerable risk. I would also
like to reserve this type of project to someone reasonably savvy on new construction or
remodeling as far as the terminology and timelines are concerned. To turn this size of a project
over to one individual that you will rely on 100% for decisions could prove to be very stressful
and costly.

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