Dental Real Estate Advisory

Provide content to help dentist make real estate decisions based that are financially sound for the future of their practice

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Practice Real Estate

Many doctors notice that buying their building seems more expensive than leasing, at least in the first few years. That’s normal. Real estate ownership front-loads costs that leasing spreads out, but the economics reverse over time.

Where the Early Cost Comes From

    
• Down payment and closing costs paid at the start.
    
• Interest-heavy early loan years.
    
• Property taxes, insurance, and reserve funding.

Leasing appears simpler: one rent figure that increases 2–3 percent each year.

The Crossover Point

After several years, two forces shift the equation:

    
1. The loan principal portion grows, while interest declines.
    
2. Rent continues to escalate while the loan payment remains fixed.

That is the moment when ownership becomes the lower long-term cost.

Accountant’s Perspective

Your accountant will note that rent is fully deductible, while ownership includes both deductible and non-deductible components:

    
• Interest, taxes, and insurance are expenses.
    
• Principal repayment builds equity and is not deductible.

Inflation also favors fixed debt—the future dollars repaying today’s loan are worth less.