For many physicians and dentists, the practice real estate becomes one of their most valuable assets, often rivaling the practice itself. But buying isn’t right for every practice. Here is the framework we use with healthcare clients.
Reasons to buy
- Build equity instead of paying rent indefinitely.
- Control occupancy cost with fixed-rate financing.
- Protect your build-out. Medical and dental build-outs are expensive; owning protects that investment from a landlord’s decisions.
- Retirement and exit planning. Owners can sell the practice and lease the building to the buyer, creating income.
- Rental income from extra space leased to complementary providers (subject to healthcare compliance rules).
Reasons to lease
- Flexibility for practices still finding the right location.
- Capital preservation for growth, equipment or technology.
- Partnership complexity if partners have different time horizons.
- Location constraints where the right space isn’t for sale.
A simple test
If you expect to stay in the same location for seven to ten years or more, have stable practice financials and have access to financing, ownership deserves serious analysis.
Financing options
- SBA 504 and 7(a) for owner-occupied real estate. See our SBA 504 guide.
- Conventional bank loans, often with favorable terms for established practices.
- Specialty healthcare lenders.
Ownership structure
Many practices hold real estate in a separate entity owned by the partners, which leases the space to the practice. Structure should be designed with your CPA and attorney, especially when partners have different ownership percentages or retirement timelines.
What to look for in a building
- Plumbing and electrical capacity for exam rooms, operatories and imaging.
- Accessibility and patient parking.
- Visibility and convenient access for patients.
- Proximity to referral sources and hospitals.
- Floodplain, generator capacity and power resilience.
Frequently asked questions
How long should a practice plan to stay before buying?
Generally seven to ten years or more to justify transaction costs and build-out.
Should the practice or the partners own the building?
Many practices hold real estate in a separate entity owned by partners. Design the structure with your CPA and attorney.
Can I buy a medical office condo?
Yes. Medical condos can be a good option for smaller practices.
How we help
We run lease-versus-buy analysis with your advisors, find buildings or condos that fit your practice, and negotiate purchase terms. Learn about our medical office practice.
Have a deal or question in mind?
Talk it through with Apurva. A 20-minute call is usually enough to know your next step.
