Should I make the purchase of my real estate mandatory with the purchase of my dental practice?

Ask The Experts - Providing insight for commonly asked transition-related questions

Today's topic: Should I make the purchase of my real estate mandatory with the purchase of my dental practice?

This is often a very personal decision driven by the need for retirement funds, the desire to maintain ownership of rental property, the  ramification of the taxable events within a calendar year, or the particular details surrounding the practice and real estate.

We find that most sellers will state that they are open to either selling both simultaneously, or leasing initially.

However, in some cases the real estate value is so great, as compared to the practice value, that it would hinder the buyer's ability to purchase both at the same time.  In other instances, the real estate may be a needed revenue source for a specific number of years beyond the practice sale.  And in some cases, the real estate market may be in a decline, and the owner needs to wait until it rebounds to be able to afford to sell.

We always try to satisfy our clients wishes by structuring the sale to either include, or not include the real estate, whenever possible.  But  sometimes, there are mitigating circumstances to which they must be sold either together, or separately, in order for the seller to proceed.

The rule of thumb we share with our clients, is that the larger the net you cast, the more fish you're able to catch.  Meaning, if your net is set to only include buyers willing to buy both practice and real estate simultaneously, then you limit your catch.  Same holds true in the opposite
direction.  If you limit your net to only catch those buyers willing to lease, and not on the real estate, you again limit your catch.  But if you throw a broad net allowing for both options, you increase your odds of catching more fish and getting your practice sold.

Thanks for watching. For additional information on this topic or any other transition related questions, contact us at 877.365.6786.