Going through the process of selling your dentist office can be one of the most exciting and complicated transitions of your life. There are numerous questions that need to be answered about your staff, your future, and a new owner. One thing many sellers don’t consider is the options they have when it comes to the property associated with their practice.
Depending on the value of your land and your financial position, you have three main options to consider when dealing with correlating property: sell the property along with the practice to the new owners, lease the land, or sell to a third-party investor.
Sell with the Practice
Selling the property with the practice is the most common and simple way to manage the sale. Once the sale is final, you’re out of the property and can focus on the future you have planned. However, there are some things to consider when you sell them together. One of the more glaring drawbacks is the fact that selling both can greatly limit the number of potential buyers you can field.
Many buyers will be fresh out of dental school and not possess the means to purchase both at the same time. Another factor to consider is the tax ramifications of the sale of both. You may face a lot of tax consequences and liabilities associated with the sale. One way to avoid them is by leasing the land to sell later.
Lease the Land to the New Buyers
If you have the financial means to be patient with the sale of your land, leasing the land to the new buyers can be very advantageous. In addition to initial tax breaks, leasing will provide you a steady flow of income and allow you to take advantage of property appreciation over time.
There are a few negative aspects of leasing the land. You are going to be responsible for maintenance, repair, and operating expenses of the property. This can consume a decent bit of time and energy that is precious for the next phase of your career. As an alternative, many sellers use a property management company, but this cuts into the profits you are making from the rent.
Sell to a Third-Party Investor
If you have a super practice and good credit rating, you should consider selling the property to a third-party investor. To pursue this option, you will have to negotiate a long-term triple net lease with the new owner of the practice. This security, along with your previous success and good credit rating, has great appeal to potential investors.
The guaranteed stream of income from the lease will allow you to sell your property for top dollar to an investor. This sale, combined with the sale of your practice, will almost always yield the highest dollar amount for the sale both together. However, know that you will have to put in significantly more effort.
In the end, the decision for your property is up to you. Be sure to consider the different pros and cons associated with each before making your final decision. If you would like more advice on how to sell your practice or would like more support throughout your transition, US Dental Transitions is here for you. We have successfully helped thousands of dentists in the sale and purchase of practices. Contact us today at 678-482-7305 or info@goUSDT.com to get started!