General vs Specialist Startup Practice Location

[Stanelz]

Now in general i think the sentiment is that if you are a general dentist, it would be best to move to a rural or at least suburban area to increase your patient potential. With specialties however, how would you decide on where to start a practice?

Correct me if im wrong but it would seem as though you would want to be in an area with the most amount of general dentist as possible to increase referral rates. So does that mean going towards the city/urban area? Look for a crowded suburban area? Go rural with a few offices and no other competing specialists?

For those of you that are general dentists or specialist how did you go about looking for a location for your practice?

Thanks.

---

Members don't see this ad.

 

[Cold Front]

Now in general i think the sentiment is that if you are a general dentist, it would be to move to a rural or at least suburban area to increase your patient potential. With specialties however, how would you decide on where to start a practice?

Correct me if im wrong but it would seem as though you would want to be in an area with the most amount of general dentist as possible to increase referral rates. So does that mean going towards the city/urban area? Look for a crowded suburban area? Go rural with a few offices and no other competing specialists?

For those of you that are general dentists or specialist how did you go about looking for a location for your practice?

Thanks.

In my experience, general dentists are more in a retail space with a good visibility and foot traffic. Specialists are more in a destination style offices, because of their referral based business model. You will more likely see a general dentist office next to a Starbucks, but not an oral surgeon or a periodontist office.


Sent from my iPhone using SDN mobile

 

[charlestweed]

2 of my 4 offices are located inside professional buildings. One of them was previously a medical office and I converted it to an ortho office at a very small cost. The outsides of both offices are very well maintained by the landlords. I don't have to worry about homeless people walking by, about picking up trash at my front door, and about someone spraying graffiti on my office's glass windows. I don't have to clean the bathrooms because there are common bathrooms outside of my offices. There are also plenty of parking spaces for my patients to park their cars. This is important for ortho offices because we usually see 60-100 patients in a day.

And for the other 2 offices, I share the spaces with 2 general dentists. I pay one GP owner $1700/month rent and I pay the other GP owner (who is my sister) the % of the collection. Since of both of these GP owners don't work on Sundays, I come to work 1 Sunday a month at each of these 2 offices so I can use all 7 chairs for patient treatments.

You are not wrong about choosing the area that has a lot of general dental offices if you are a specialist. I chose an area that has a lot of GP offices that target the same low income Hispanic/Asian populations like I do. I also wanted to set up my offices near the corp offices to compete against them since they and I target similar type of patients. The 2 most important things that I look at when I choose an office space are: low rent and high number of parking spaces for my patients.

 

[periopocket]

2 of my 4 offices are located inside professional buildings. One of them was previously a medical office and I converted it to an ortho office at a very small cost. The outsides of both offices are very well maintained by the landlords. I don't have to worry about homeless people walking by, about picking up trash at my front door, and about someone spraying graffiti on my office's glass windows. I don't have to clean the bathrooms because there are common bathrooms outside of my offices. There are also plenty of parking spaces for my patients to park their cars. This is important for an ortho offices because we usually see 60-100 patients in a day.

And for the other 2 offices, I share the spaces with 2 general dentists. I paying one GP owner $1700/month rent and I pay the other GP owner (who is my sister) the % of the collection. Since of both of these GP owners don't work on Sundays, I come to work 1 Sunday a month at each of these 2 offices so I can use all 7 chairs for patient treatments.

You are not wrong about choosing the area that has a lot of general offices if you are a specialist. I chose an area that has a lot of GP offices that target the same low income Hispanic/Asian populations like I do. I also wanted to set up my offices near the corp offices to compete against since they and I target similar type of patients. The 2 most important things that I look at when I choose an office space are: low rent and high number of parking spaces for my patients.

How do you feel about investing in the real estate you practice out of? Good investment or would you prefer to rent for life?

 

[charlestweed]

How do you feel about investing in the real estate you practice out of? Good investment or would you prefer to rent for life?

I prefer renting because I wanted the startup cost to be at little as possible. In case my office fails, I just close up shop and walk away with minimal loss. Lower overhead = lower stress level = higher profit margin. With low startup cost, I could afford to set up multiple ortho offices to reach out to more patients and more referring dentists without breaking the bank. Four of my offices are located in 3 different counties: LA, Orange, and San Bernadino. The total cost for setting up all 4 of them was less than $350k.

A nice stand alone office building with 20-30 parking spaces in CA easily cost over $2 million. To purchase it, I would have to put down a minimum amount of $600k (many lenders require 30% down payment) and the mortgage payments would be around $7-8k a month for the next 15 years. I don’t have that kind of money in the bank. I can only invest in residential properties. It’s much easier to come up with 30% down payment amount for a $400-500k house than for a multi-million dollar commercial building.

 

[laundry]

How do you feel about investing in the real estate you practice out of? Good investment or would you prefer to rent for life?

1) When buying existing practices w/ real estate for sale, some practice lenders, BoA, for example, will also finance your RE at 0%. Was the case with one of my offices.
2) If you plan on practicing in the same location for over a decade, it's always a good idea to purchase, assuming you can afford it.

 

[DouglasFir2020]

I’m also curious about this...from a specialist’s standpoint.

 

[P7898]

1) When buying existing practices w/ real estate for sale, some practice lenders, BoA, for example, will also finance your RE at 0%. Was the case with one of my offices.
2) If you plan on practicing in the same location for over a decade, it's always a good idea to purchase, assuming you can afford it.

They financed it at 0% interest? For the length of the loan? Was it because they used them for the acquisition of the office?

 

[laundry]

They financed it at 0% interest? For the length of the loan? Was it because they used them for the acquisition of the office?

0 downpayment

 

[charlestweed]

They financed it at 0% interest? For the length of the loan? Was it because they used them for the acquisition of the office?

The reason why some lenders don’t require the down payment or have very low interest rates is the loan might be a balloon loan. Three of my business loans were this type of loan. The monthly payments are also very low but after the loan term ends in 5 or 7 years, you will be left with a very high balance, which you will be obligated to pay off the entire amount in full.

Loan 1: for my wife’s office…$120k ($90k purchase price + $30k working capital). If I remember correctly, the interest was 6% and the monthly payment was only $1500 a month. The loan term was 7 years. And when this 7-year term ended, I had to pay off the remaining balance of $32k.

Loan 2: for my ortho office that I set up from scratch. I only borrowed $75K because I already had $55k in my saving. I acquired this loan from the same lender that approved the loan #1. The interest rate was the same. The loan term was 5-year. The monthly payment was also around $1200 a month. And at the end of the 5-year term, I would be obligated to pay the off the balance of $20k. Since there was no prepayment penalty, I paid the loan off 3 years later.

Loan 3: for a 5-unit apartment. Since it is not a 4 (or less) unit apartment, it could not be a regular residential loan….I had to apply for a commercial loan. The purchase price was $600k. The lender required 30% down. The interest rate was only 3%. The monthly payment was only $2400 a month. It’s a 7-year loan term and I would get a prepayment penalty if I pay the loan off before 4 years. At the end of the 7-year term, I would have to pay off the balance of almost $400k. Since I was already familiar with this type of loan, I decided to pay it off in 4 years and not had to pay the prepayment penalty.

 

[2TH MVR]

How do you feel about investing in the real estate you practice out of? Good investment or would you prefer to rent for life?

I used to have one practice located in a retail area. Another practice was located in a multi-dentist/specialist area. After years and years of paying increasing rent, paying for the landlord's property taxes, paying for new AC units on HIS buildings, NNN increases, lease management increases, etc. etc.
I decided to buy my own property. A brand new office condo next to a Dermatologist. Admittingly ... I bought at the wrong time, but that is another story.

When you own your real estate. You control the monthly costs (loans, etc.). You are also building equity into your real estate. After the sale of my ortho practice .... I now lease the ortho office to the new orthodontist. The lease payments pay my loan payments and I still have money left over (passive income). It's kind of fun being on the property owner side instead of the lease paying dentist side.

 

[Debt Free DDS]

You are always going to do better going to a place with the least amount of like specialists.