Can the Practice You Have Actually Afford the Building You Want?
Last week I was working with a doctor who had spent nearly ten years preparing for a relocation. Ownership mattered to him, so instead of signing a long-term lease he kept renewing short-term extensions while waiting for the right opportunity.
Eventually that opportunity appeared. A highly visible bank building came on the market and he now has the property under contract.
I see some version of this more often than people realize, where a doctor is financially prepared to buy the building before the practice is truly prepared to carry it.
On the surface it looks like a great deal. The location is strong, the building layout can work for a dental office, and the visibility is far better than his current location.
But once we modeled the numbers, a different question started to emerge.
Not whether the building was attractive.
Whether the practice could do more than simply support the building, and whether it could help the real estate produce a return that justified the investment.
Ten Years Preparing for the Move
Dr. Joe had been preparing for this moment for a long time. For nearly a decade he had been saving for a relocation while renewing his lease in short-term increments. His goal was simple: wait patiently until the right property appeared.
That patience eventually paid off when the bank building came on the market.
The location offered excellent visibility and a structure that could be converted into a dental office relatively efficiently. For a doctor who had been waiting ten years for the right opportunity, it felt like the moment he had been preparing for.
But real estate decisions are rarely just about the building.
They are about whether the practice can support the building and whether the investment can perform the way the doctor hopes it will.
The Expansion Decision
The building also presented an important choice.
The existing bank floorplan could be converted into a dental office with relatively modest changes. However, the property also included drive-thru lanes that could be enclosed to expand the footprint and create a larger facility.
From a construction standpoint, the most efficient time to do that expansion would be during the initial buildout. Once contractors are mobilized and utilities are being run, expanding the structure becomes much easier.
If that expansion is delayed and done years later, the cost would likely be closer to one and a half times higher because of demolition and disruption to finished space.
So the decision becomes more complicated.
Build the larger facility now while construction is already underway.
Or build only what the practice can support today and expand later at a higher cost.
That is where the math begins to matter.
Modeling the Numbers
When we modeled the project, the building itself was not the problem.
The real question was whether the practice could support the facility and whether the real estate could produce a return that justified the investment.
How many operatories should the practice ultimately have? What level of production would justify that size? How quickly would the practice need to grow for the project to feel financially comfortable?
One way I often frame this with doctors is by looking at facility cost relative to collections. If the practice is not producing enough to comfortably support the facility cost, the real estate can quickly become pressure instead of an asset.
Once we mapped out Dr. Joe’s organic growth trajectory, the answer became more nuanced.
His current path could likely get the project to break even over time. But break-even is not the same as a strong investment outcome.
For the real estate to produce market-level returns, the practice would need more intentional and strategic growth.
That does not mean the building is a bad opportunity. It simply means the practice and the real estate have to be evaluated together.
The Order of Investments
This is where many dentists get the order backwards.
They spend years preparing to buy real estate while underinvesting in the growth of the practice itself. But the practice is the primary engine. It produces the revenue, it produces the profit, and ultimately it is what makes the real estate work.
In many cases, investing in practice growth produces a higher return than investing in practice real estate. More patients lead to higher production, better efficiency, and stronger cash flow. Those improvements make ownership safer and more profitable.
That distinction matters because break-even is not the same as a strong investment outcome.
The Building Has to Be Earned
Real estate can absolutely be a great long-term investment for dentists. Ownership provides control, stability, and the potential to build wealth over time.
But the building cannot carry the practice.
The practice has to carry the building.
In Dr. Joe’s case the opportunity itself was not the problem. The building was good, the location was strong, and the construction plan made sense.
The real question was timing.
If the practice continues on its current organic trajectory, the project may eventually work at a basic level. But if the goal is for the real estate to generate market-level returns, that will likely require more strategic growth from the practice.
The building cannot carry the practice.
The practice has to carry the building.
So the real question is simple.
Can the practice you have today actually afford the building you want?