Tips on Buying Real Estate to Start a Practice By Rick Kushner, DDS

Real estate seems like an odd choice of subjects for a dentist, but with interest rates hitting a 40-year low and my own hectic plans to purchase properties for seven new offices, it seems like a good topic for the times. Comfort Dental currently operates 20 office locations and we handle most aspects of property acquisition internally, so we’ve unwittingly become “experts” in purchasing properties.

I hope what we’ve learned over the years will help you. Here’s the hard part: YOU should do the preliminary work. Don’t delegate everything to a developer or realtor. Yes, it’s a lot of work, but you’re much more likely to get the final results you want if you control the process. You’ll need to establish where you want to locate and why: Perhaps you want to be close to home, or you want to serve a particular area of town. Once you decide what area to locate in, you’ll need to contact the city municipality for that area to get their specific building requirements. Review the requirements carefully to find out if there are height restrictions, architectural design requirements, or any other unusual building regulations. It’s a good idea to ask the water/sewer district to ensure water and sewer are both available and if there are any special districts you will be taxed on or that you may be unaware of.

While you’re checking building requirements, you should simultaneously get a preliminary set of plans drawn. We have used both a draftsman and an architect for this. Using a draftsman is typically less expensive—just be sure this person knows the current UBC (Uniform Builders Code) for your selected municipality and incorporates these requirements. Regardless of whether you choose an architect or draftsman, you’ll incur additional expenses for electrical or mechanical plans. We also recommend hiring a general contractor to oversee the entire project once you begin construction. After you’ve reviewed the municipality’s building requirements and you have a set of rough plans, you’re ready to scour your chosen area to look for properties. We look for properties on major streets for maximum visibility. We suggest looking for properties that are considered “flawed” (read: less expensive) by fast food restaurants because they don’t have access from the primary street. This is good because dentists benefit from high visibility but don’t necessarily need the convenient main street access that other types of establishments rely on for business.

Finding an inexpensive property on a primary street is tough but it can be done if you’re patient. Have you checked out prices for commercial properties on main thoroughfares that are 2,500-4,000 square feet with ample parking? They’re not cheap. We drive the streets looking for properties and endure exhaustive negotiations, but we find properties at a third of the cost (often less!) of most advertised properties in the area. The hard work is worth the long-term savings.

Once we’ve selected a property, we ask the seller to conduct (at their expense) a Phase I environmental study that typically costs $5,000 plus. If any contaminants are found, the seller will usually take care of them in order to sell the property. If you don’t conduct this study before closing on the property, any environmental hazards become your responsibility and you’ll be required to obtain this document and remedy any problems before securing lender approval.

When negotiating the contract, be sure to include a contingency for obtaining a water/sewer tap (the buyer’s expense). Before closing, you’ll need to purchase the taps or verify in writing that taps can be purchased. Sometimes the water/sewer district is unable to issue taps for years after a property is purchased, and the builder cannot build until the taps are available.

We also include a contingency for signage. Before closing, we verify with the municipality that signage is allowed and we find out what the size regulations are. We recommend this because large visible signage can significantly increase your business.

The last important contingency is that a building permit can be issued. You don’t want to close on a property and then find out that you can’t build on it. Take your plans to the municipal building department for review before closing on the property to find if they perceive any problems with the plans. If the building department does not have any issues with putting your planned building on the specific lot you’re purchasing, then you’re good to go!

Our contracts stipulate a minimum of 90 days to complete this “due diligence” to ensure we have ample time to work out all of these details. Once all contingencies of the contract have been met, we’ll close on the property and start construction (usually three to six months to completion). The moral of this story is: stay involved in all aspects of buying a property! There are many unforeseen glitches that can arise if you are not on top of the details. If you take your time and are patient in your property search and negotiations, you can build quickly at minimal expense. Now, get out there and take advantage of these terrific interest rates!

Contact: Aaron Ferstman of GD&A Public Relations for Dr. Kushner and Comfort Dental Inc., 303-623-2529, aaron@gda-pr.com