Own vs. Lease: What’s Right for Your Medical / Dental Practice?
- healthcarerealtyse
- 2 days ago
- 2 min read
Frank Ricci
Principal- Healthcare Realty & Development Services, LLC
Real estate decisions are more than just financial—they’re strategic investments in the future of your healthcare practice. Whether you're opening a new location, relocating, or expanding services, the question remains: Should you own or lease your medical / dental office space?
In today’s complex market, traditional assumptions like guaranteed appreciation and easy financing are no longer a given. Healthcare providers must carefully evaluate multiple variables—financial, operational, and strategic—to choose the option that best supports their goals.
The Investment at a Glance
Whether you choose to own or lease, you’re making a substantial investment—not just in rent or mortgage payments, but in marketing, staffing, workflow, and long-term operational efficiency.
Benefits and Drawbacks of Owning Medical / Dental Real Estate
Medical / dental real estate can be owned through a partnership, LLC, or as a condominium. Each ownership structure carries unique legal and tax implications, but the core benefits are similar.
✔ Advantages of Ownership
Stable Occupancy Costs – Mortgage payments are fixed, protecting against market volatility.
Favorable Interest Rates – Rates remain relatively low, offering long-term value.
Tax Benefits – Depreciation, interest deductions, and other write-offs apply.
Rental Income – Extra space can be leased to other tenants for passive income.
Appreciation – Medical real estate often increases in value over time.
Equity Accumulation – Each mortgage payment builds owner equity.
⚠ Disadvantages of Ownership
High Capital Requirement – Most lenders require 20–25% down.
Long-Term Commitment – Selling a healthcare property can take time.
Less Flexibility – Relocating or expanding can be more complex.
Pros and Cons of Leasing Medical / Dental Office Space
Leasing may be the better option for startup practices, fast-scaling groups, or providers anticipating near-term changes.
✔ Advantages of Leasing
Lower Upfront Costs – Requires far less initial capital than ownership.
No Long-Term Debt – Leasing avoids taking on mortgage obligations.
Relocation Flexibility – Shorter terms allow for easier moves and expansion.
Minimal Maintenance – Repairs and upkeep are typically landlord responsibilities.
⚠ Disadvantages of Leasing
No Equity Gained – Rent payments do not contribute to ownership.
Escalating Costs – Lease rates often increase over time.
Limited Control – Landlords may restrict renovations or tech upgrades.
No Asset Appreciation – Leased spaces do not offer long-term asset value.
Conclusion: One Size Does Not Fit All
Choosing whether to own or lease your medical / dental facility is not just a numbers game—it’s a strategic decision that affects your practice’s flexibility, profitability, and long-term value. Your choice should be based on your financial position, growth plans, location strategy, and desired level of control.
The Author
Frank Ricci, President
Healthcare Realty & Development Services, LLC
📞 Office: 407-900-6003📱 Mobile: 407-947-5074✉️ Email: FrankR@HealthcareRealtyOnline.com
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