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Healthcare Facilities Solutions January, 2013 -
   
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News - Healthcare Facilities Solutions
Real Estate: Lease or Buy

In starting or relocating a medical or dental practice you must decide if the new space will be leased or purchased.  As with many decisions there are pros and cons for each and there isn’t an easy answer to which direction you should go.  Below are some points to consider when making the choice.

Leasing

  • Less time to occupy the suite.  Upon agreeing on the lease terms and signing the lease it takes on average 30-60 days to occupy the space.
  • Minimal upfront costs.  Most building owners allot an allowance for tenant fit-outs which in turn reduces the upfront investment.
  • No site maintenance.
  • Approximately 85% of real estate on the market for lease is considered “prime” real estate.
  • Building owner is responsible for building code compliance.
  • No hassle of selling before you can move to another location.  Some leases even allow for subletting.
  • Most leases allow for annual rent increases
  • Early terminations are usually unacceptable or invoke costly fees.
  • Could be a good option for start-up practices.

Purchasing

  • Equity!  It is always nice to pay yourself than a third party.
  • You have control over the rent you will pay.  Eventually the investment will be paid off which ultimately creates an annuity.
  • You can purchase a building that will allow you to expand your practice as it grows over time.  Offers flexibility.
  • If the space purchased is too big for your current practice needs, it can be leased out for additional income.
  • You can make substantial modifications to accommodate your practice without prior approval.
  • You have control over the signage for the building and property.
  • If your practice has partners it’s usually not a quick decision on purchasing or selling.  But, not all partners need to share in the building ownership.  If the owners form an LLC then the practice will be paying to lease the space and ultimately could show a positive cash flow.

In conclusion, owning your own space can be a wise investment but it’s not for everyone.  If you are currently leasing a space you should start planning your move at least 1 year before the lease expires. Contact a Realtor that has medical and dental office experience so they can assist you in making this decision.

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