Selling the Practice… But Keeping the Property?
If you own your dental office building and you’re preparing to sell your practice, one big question often comes up:
“Do I have to sell the real estate too?”
The short answer is: No — but it depends.
Many dentists choose to sell their practice but retain ownership of the building, either as a long-term investment or for greater flexibility. Others prefer to sell both together to simplify the transition.
In this post, we’ll walk through your options, the pros and cons of selling with or without the real estate, and what you need to know to make the right decision.
Option 1: Sell the Practice, Lease the Space
This is one of the most common approaches. You sell your dental practice and become the landlord, leasing the space to the new owner.
Benefits:
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Creates long-term income through rent payments
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Keeps you tied to the property in a familiar area
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May attract buyers who aren’t ready to purchase real estate
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Can offer more flexibility on price or terms
Considerations:
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You’ll need a formal lease agreement that’s assignable and bank-approved
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Buyers (and lenders) will want market-rate lease terms and long-term stability (usually 5–10 years minimum)
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You’ll retain responsibilities as the landlord (maintenance, insurance, taxes, etc.)
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Your ability to raise rent is limited by the lease, often for 5+ years
Pro Tip: If you’re planning to keep the real estate, work with your broker and attorney to structure the lease before listing the practice.
Option 2: Sell the Practice and the Real Estate
Some sellers prefer to make a clean break—transitioning both the practice and property to the buyer in a single deal.
Benefits:
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One-time payout simplifies your financial future
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No ongoing landlord obligations
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Often results in faster closings and simplified negotiations
Considerations:
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Fewer buyers may be willing (or financially able) to purchase both at once
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You may need to discount the real estate slightly to facilitate a package deal
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Tax implications for selling both assets together should be reviewed with your CPA
This option is especially common when the seller is relocating or retiring out of the area.
Option 3: Sell the Real Estate Later (After the Practice Sale)
This hybrid strategy involves selling the practice first and retaining ownership of the building for a few years, with the intent to sell later—often to the same buyer.
Benefits:
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Keeps initial costs lower for the buyer
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Allows you to negotiate a sale-leaseback later, possibly at a higher property value
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Provides ongoing income with a potential exit plan
Considerations:
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Must have a clearly defined lease and exit strategy
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Depends on the buyer’s willingness to eventually purchase the building
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Could result in holding a property longer than planned if the buyer changes their mind
This strategy works well when the seller wants to time the real estate sale for tax or investment reasons.
What Buyers (and Lenders) Will Expect
If you plan to lease the building, make sure your lease agreement includes:
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A minimum 5–10 year term, ideally with renewal options
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Fair market rent supported by comps or appraisal
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Triple-net terms (NNN) are preferred, where the tenant pays taxes, insurance, and maintenance
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A clear assignment clause, so the lease can transfer to the buyer without triggering default
Lenders view the lease as critical collateral—if it’s weak or missing, the loan could be denied.
Key Questions to Ask Yourself as the Seller
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Do I want long-term passive income, or a clean break?
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Am I comfortable managing a commercial property?
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Is the buyer qualified and interested in purchasing both?
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What are the tax implications of selling one vs. both assets?
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What role does the real estate play in the value of the practice?
Final Thoughts: Choose the Strategy That Supports Your Goals
There’s no one-size-fits-all answer. Selling your dental practice without the real estate is absolutely possible—but it requires advance planning, professional guidance, and the right buyer.
- Whether you keep the building as an investment or sell it as part of the transition, aligning your strategy with your long-term goals is the key to a successful exit.
Need Guidance on Structuring Your Sale?
At American Practice Consultants, we help sellers navigate every piece of the transition—from valuing the practice to structuring real estate lease terms or sales. If you’re thinking about selling your practice (with or without the building), let’s talk.