In the realm of dentistry, practitioners often focus on perfecting smiles and ensuring oral health. However, when it comes to securing their financial future, dentists must also consider strategic investments. One avenue that deserves serious attention is real estate ownership. While leasing may seem like the convenient choice and does offer some benefits, delving into property ownership can offer dentists a myriad of perks that far outweigh the simplicity of leasing.

1. Equity Building: Leasing means paying rent without accumulating any ownership stake in the property. Conversely, owning real estate allows dentists to build equity over time. Mortgage payments contribute towards ownership, gradually increasing the dentist’s share in the property. As the mortgage decreases and property values appreciate, the dentist’s net worth grows substantially. As a rule of thumb, depending on the area, most property values double every 10 to 15 years.
2. Long-Term Financial Stability: Dentistry is a stable and lucrative profession, but financial stability shouldn’t solely rely on patient flow. By investing in real estate, dentists create a potential future secondary income stream that can withstand fluctuations in the economy. When it comes time to retire, you could retain the property while selling the practice to become a landlord and have residual income for years to come as part of your retirement plan. If being a landlord is not something you desire to do, you will have the ability to also sell the property with your practice. In fact, a practice that includes the sale of the property has shown to increase appeal and salability.
3. Control and Flexibility: Leasing puts dentists at the mercy of landlords who dictate terms, rent increases, property modifications, and lease assignment. On the other hand, owning real estate grants full control. Dentists can customize the space to suit their practice needs without seeking landlord approval. Additionally, they have the flexibility to expand or remodel the property according to their vision, fostering practice growth and efficiency. One major hurdle in the sale of a practice is getting the landlord to consent to a lease assignment or new lease terms.
4. Tax Advantages: Real estate ownership offers dentists a plethora of tax benefits. Mortgage interest, property taxes, depreciation, and maintenance expenses are all deductible, reducing the overall tax burden. Furthermore, owning commercial property opens doors to additional tax deductions, such as operating expenses and depreciation of improvements. These tax advantages can significantly enhance cash flow and boost long-term wealth accumulation.
5. Hedge Against Inflation: Inflation erodes the value of currency over time, diminishing purchasing power. However, real estate serves as a hedge against inflation. Property values and rental income tend to increase with inflation, preserving the dentist’s wealth and ensuring financial security in the face of economic uncertainty.
6. Legacy Building: Beyond personal financial gain, owning real estate allows dentists to leave a lasting legacy. Property ownership provides a tangible asset that can be passed down to future generations, securing their family’s financial future.
7. Aggressive Landlords: Commercial landlords often earn a reputation for being aggressive in their dealings with tenants. Whether it’s stringent lease terms, frequent rent increases, or assertive negotiation tactics, their behavior can significantly impact businesses. The aggressive nature of commercial landlords is shaped by a combination of market dynamics, investment pressures, economic factors, and legal considerations. While landlords have the right to maximize returns on their investments, excessive aggression can have negative consequences for tenants and the broader commercial real estate market. Achieving a balance between landlord profitability and tenant satisfaction is essential for fostering a healthy and sustainable commercial real estate environment. Landlords will always make a business decision which could be at your mercy.
8. Running the Numbers: To gain some perspective, consider this scenario – If your office lease costs $4,000 monthly, that’s $48,000 annually. Over a 30-year period, you’d end up spending $1,440,000 with nothing to show for it when you retire. Moreover, this calculation doesn’t even factor in the typical 3% annual increase in your lease, which compounds overtime. As a result, it’s highly probable that you’ll have spent over $2 million in total.

In conclusion, while leasing may offer short-term convenience, the long-term benefits of real estate ownership far outweigh the simplicity of renting. Dentists who venture into property ownership secure their financial future, build equity, gain control, enjoy tax advantages, hedge against inflation, and leave a lasting legacy. Therefore, it’s evident that for dentists looking to maximize their wealth and secure their future, owning real estate is not just a prudent choice but a strategic imperative.