Dental Practice Finance & Interest Rates: A Critical Factor That No One is Talking About

Navigating Dental Practice Financing and Location Decisions

The Impact of Interest Rates on Dental Practice Financing

Editor’s note: This article was originally published on Practice Real Estate Group associate agent Shivani Kamboj‘s LinkedIn Feed.

Recently, a doctor let me know that she wanted to pause her search for a practice space because she felt too stressed about the impact of interest rates on dental practice finance.

And it’s understandable, given the higher interest rates over the last couple of years.

That said, we expect interest rates to decrease in the next few years, allowing doctors to refinance their loans at lower rates.

The Importance of Location in Dental Practices

Interestingly, a practice’s location, which cannot be changed for at least a decade, is not garnering as many headlines.  In competitive markets like Texas, development projects are pre-leased, sometimes even before they break ground.

And entrepreneurial doctors have caught on. They don’t drive around a neighborhood they like, hoping they see a for lease sign. Instead, they partner with a real estate agent for the long term, who can constantly be scouting for them, looping them in as opportunities arise. As a medical real estate expert, I often help clients sign on to their ideal sites before they even hit the market. In addition, I have access to off-market options that will never surface from an internet search or working with a generalist.

Case Study: Missed Opportunity Due to Financing Concerns

With the client I mentioned above, it worked out like this. She dreamt about opening a practice in her community but decided to wait. Dental practice financing is just too expensive right now, she reasoned. Shortly after, her ideal location – a retail space in a local shopping center – became available. Before the year ended, it was the site of a new, bustling practice owned by someone else. The road to practice ownership – already an incredible feat – became even more difficult for her, leaving her with fewer options and pushing her further away from her community.

Essential Elements for Opening a Successful Practice

Powerful Questions

In my experience, entrepreneurial doctors need two things to help them open a successful practice: 

  • Powerful questions
  • Path forward

First, doctors nervous about dental practice financing often need more confidence in their vision.  They require powerful questions to sit with while they craft their vision or to answer and push ahead. Fortunately for our clients, the Practice Real Estate Group’s approach begins with asking insightful questions about who you want to serve, why, where, and for what purpose. We listen deeply before we even begin the search. Once these questions are answered, interest rates no longer seem daunting because the client is clear on their offering and how it translates to a successful practice.  Leases become less intimidating when you have a vision and plan of action in hand.

Path Forward

Second, There’s no one-size-fits-all approach to open a practice or a universal handbook. However, with a clear, step-by-step path forward, the journey doesn’t have to be paralyzing. At Practice Real Estate Group, we are your partner in opening a thriving practice. 

Here are the next two, simple and actionable steps toward making your dream a reality:

  1. Seek Professional Guidance: Reach out to a real estate expert who specializes in commercial properties within the healthcare sector. An experienced agent will conduct thorough research to identify areas with high demand for healthcare services and minimal competition, considering factors such as demographics, accessibility, and local infrastructure.
  2. Secure Dental Practice Financing: Contact your bank or ask your real estate agent for a referral. A banker will prepare you for practice ownership by ensuring you are pre-qualified for a dental practice loan. With a pre-qualification, you can confidently explore potential locations and strengthen your position when making offers. Additionally, being pre-qualified streamlines the process, allowing you to act swiftly when the ideal location presents itself, minimizing the risk of losing out to competitors.

Conclusion: Timing and Location Over Interest Rates

It’s essential to acknowledge that while interest rates fluctuate, the opportunity to secure the perfect location is finite. Refinancing a loan is a very realistic and viable option, offering flexibility to adapt to changing financial landscapes. On the other hand, it’s nearly impossible to go back in time to get your dream location.

Bottom line – while interest rates will play a role in your dental practice loans, they should not overshadow the importance of a great location and timing. 

The right time to start your entrepreneurial journey is now. Embrace the opportunity to secure your location, it’s the foundation upon which your practice will thrive. 

Shivani Kamboj grew up in Santa Clara, CA but made Texas her home after attending Baylor University, where she earned her BBA degree and also received her MBA from Southern Methodist University with a focus in Real Estate.

Shivani Kamboj

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