DentaltownUK October/November 2019 - 9

bought their house for half the price.
So, if I can build this structure for $1 and I can
rent it for $2, I can double my money. What is the
variable? The renter.
Who's a better tenant: a commercial rental, a B-to-B
or a B-to-C? Well, obviously, if I own a business and
don't pay my rent and I get kicked out, I have no chance
of surviving. But if I'm a renter and I lost my job, I
got a divorce, everything went south, I'll say "to heck
with it" and walk away and go move in with my mom.
Renters have nothing to lose. That's why commercial
real estate is so much better than residential real estate.

Making the initial investment
I see a lot of dentists who want to go into real estate,
and I'm starting to see a huge uptick in older, wiser dentists
who are networking with some of those 6,000 students
graduating from dental school every year. The young dentist
says, "Well, I want to come back to your small town, but
I don't have a place to rent. There's a great building over
on First and Main-I wish I could go there, but I've got
$285,000 worth of student loans. I don't have the money
to buy the land and the building."
The smart dentist says: "Well, I'll buy that land
and building, and dig that thing out to a dental office."
Plus, maybe he plops some of his old dental equipment
in that new location and buys new stuff for his own
dental office. Then, the new dentist gets his new office
and the older, wiser dentist is in real estate now: He's
in passive income and his tenant is a dentist who ain't
going nowhere-it's not some guy off the street, it's a
doctor who signed a 10-year lease.
Guess what happens in 10 years? That younger dentist
will have paid off his student loans, he's now debt-free
and wants to buy that land and building. Well ... do
you have the power to price? I mean, this isn't just some
residential condo that's listed on MLS and everybody's

Earn CE credits and
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associate buy-ins
Attorney William Barrett's online CE course,
"Purchasing or Selling a Dental Practice vs.
Associate Buy-In," provides an in-depth
understanding of the business, legal and
practical considerations necessary to execute
the ideal practice transaction from the
perspective of both buyer and seller.
To discover more and earn 2 hours of
CE credit, head to dentaltown.com/ce.

bidding on. The tenant is a doctor whose average median
household income is more than 3.5 times the combined
median household income and he's been operating in
this location for 10 years. He wants this location. He
has no power to price.
So if you bought that whole thing for a dollar, you
rented it out for 10 years, so now you've got another
dollar, and now he's sitting there and you say, "You know
what? I want $1.25 for that," he'll likely say, "Absolutely,
because I don't want to move my office."

Everything old can be new again
You can buy used buildings for significantly less than
developing them. When you develop from scratch, you
have all these costs: blueprints, developers, architects. The
smart dental real estate developers are out there buying
20-, 30-, 50- or 100-year old buildings for about the size
of what an average dental office would be, renovating
them into dental offices and leasing them to dentists
fresh out of school as owner-operators.
They're going to work all day, every day, and they're
going to have peace of mind because they own that
business. And you're going to make money because
you're in the real estate business. If you've got a good
location, that's all that matters. ■

See Howard Live!
Howard Farran, DDS, MBA, is an international speaker who has
written books and dozens of articles. To schedule him to speak at
your next national, state or local dental meeting, email rebecca@
farranmedia.com.

2020
Jan.
11

Sunset Oral & Maxillofacial
Surgery Group

May
1

"Ortho 2020: Adapting
to a Changing World"

Sept.
18

Harrisburg Dental Society

Portland, Oregon

Rome, Italy

Harrisburg, Pennsylvania

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