Tip of the Week

We can not stress time and time again how important your lease situation is. Whether you are setting yourself up to sell in the near future or plan to drill for 20 more years. As a dental practice owner your two biggest expenses are payroll and your rent / mortgage payment and you have to manage this overhead to make your business as profitable and safe as possible.

Your typical lease term for commercial deals are 5 years with an option to renew period of “X” years. When you sign a 5 year lease or more, it is vital that you as a tenant get something in return. Whether it be new ceiling tiles, flooring, paint, or cabinets – the landlord should keeping your space modern for you! As a tenant, you could invest thousands of dollars but get nothing out of it when you leave and this is every landlords dream. Every lease situation is different and if you are in a competitive market with no vacancies in your plaza or building then the landlord may have more leverage to not do these tenant improvements. Every situation is case by case however in most situations the tenant has the upper hand. On top of this, every time your lease is up for renewal you should be paying fair market rent for that time period unless your rent is cheaper than fair market value. Many doctor has a 3 to 5% rental increase per year that compounds. After 10, 15, or even 20 years it can add it fast. If you are paying less than what is market value, clearly do not bring it up to the landlord however this again is rarely the case with the market on the rise.

We have run into various situations where a doctor is going month to month and does not even have a lease. PLEASE do not get caught in this trap as if your landlord isn’t pestering you to sign a new lease then something is off. You could get kicked out with 30 days notice and be scrambling to find a new location. It is essentially more risk for you, the tenant.

If your have further questions, reach out to us for help.

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