Can you get a 1.5 million dollar dental practice loan?

[Cold Front]

Would you say books and podcasts are the best way for someone to get insight into the business of dentistry, for someone who isn't currently a dentist?

There are tons of books that I read over the years; some before dental school (like Rich Dad, Poor Dad), others during dental school (like Millionaire Next Door), and some after dental school (like You Can Retire Sooner Than You Think by Wes Moss). Those are some examples, but I learned 30% what I know by curiousity and looking things up (like following local real estate market and meeting good local older realtors for coffee once a month for real estate investments), learned another 30% talking to older dentists (on dental town forums and some guys I network with locally), and 40% by reading and watching things (financial books, WSJ, Alpha, YouTube subscriptions, even from apps on my phone, movies and Netflix shows that are based on real business stories). There is wealth of information around us, and the goal is always to know more from as much or little as possible from different sources. Books alone are not enough. I learned a lot from my CPA. I learned a lot from my retired neighbor who teaches part time at a local business school. I learned a lot from average folks I meet as patients (like the lead manager at a local grocery store who tells me how her store performs at $200k a day in sales, and the Starbucks inside that grocery store with no drive-thru that makes $12,000 a day, all of which tell me how local businesses are doing). Some information you may come across may not matter today but will be someday in the future - like when I worked at a laundrymat or a call center before I got into dental school, but those experiences came back as gold when I opened my first practice few months after I graduated.

It’s all about living life through learning, don’t be too specific and too focused in learning few things (the dentist syndrome) but learn broadly beyond the walls of dentistry.

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[2TH MVR]

Mr Shak .... all good questions. You're definitely asking the right questions and it's definitely wise to set the proper groundwork. But remember .... you need to accomplish steps 1-2-3 before you get to steps 98-99-100. You need to graduate and become a better than average dentist with GOOD people skills. Your practice needs to thrive in order for you to service debt, have $$ for living expenses and have disposable income necessary to invest. Unpredictable life events typically will show up between steps 1 and 100. Family. Health issues. Recessions. Divorce. Etc. Etc. Trust me. Things never work out EXACTLY as you may have planned. **** happens. Unpredictable **** that you have no control over. You're going to learn that your goals will change as you get older.

Become a good, personable dentist ..... then build on that.

 

[753698]

There are tons of books that I read over the years; some before dental school (like Rich Dad, Poor Dad), others during dental school (like Millionaire Next Door), and some after dental school (like You Can Retire Sooner Than You Think by Wes Moss). Those are some examples, but I learned 30% what I know by curiousity and looking things up (like following local real estate market and meeting good local older realtors for coffee once a month for real estate investments), learned another 30% talking to older dentists (on dental town forums and some guys I network with locally), and 40% by reading and watching things (financial books, WSJ, Alpha, YouTube subscriptions, even from apps on my phone, movies and Netflix shows that are based on real business stories). There is wealth of information around us, and the goal is always to know more from as much or little as possible from different sources. Books alone are not enough. I learned a lot from my CPA. I learned a lot from my retired neighbor who teaches part time at a local business school. I learned a lot from average folks I meet as patients (like the lead manager at a local grocery store who tells me how her store performs at $200k a day in sales, and the Starbucks inside that grocery store with no drive-thru that makes $12,000 a day, all of which tell me how local businesses are doing). Some information you may come across may not matter today but will be someday in the future - like when I worked at a laundrymat or a call center before I got into dental school, but those experiences came back as gold when I opened my first practice few months after I graduated.

It’s all about living life through learning, don’t be too specific and too focused in learning few things (the dentist syndrome) but learn broadly beyond the walls of dentistry.

I know what you mean. A lot of what you learn about real life doesn't come from textbooks, and it takes real life experience. It's just that I'm so eager to learn everything now, because not knowing to me personally is the worst feeling in the world. I still have about 6 years till I would be done with dental school, so I've got some time to learn. I'm the type of guy who likes to jump into the deep end though, so as soon as I'm done with dental school I want my career to take off. I want to maximize my potential. So most importantly, I want to be as close to 100% ready for real life as I can be.

 

[DrJeff]

I know what you mean. A lot of what you learn about real life doesn't come from textbooks, and it takes real life experience. It's just that I'm so eager to learn everything now, because not knowing to me personally is the worst feeling in the world. I still have about 6 years till I would be done with dental school, so I've got some time to learn. I'm the type of guy who likes to jump into the deep end though, so as soon as I'm done with dental school I want my career to take off. I want to maximize my potential. So most importantly, I want to be as close to 100% ready for real life as I can be.

One of the things that you often find out through dentistry, that carries over very well in many general life situations, is that it may often take years before you figure out what you did was the right or maybe even wrong thing to do. In dentistry, if you restore a tooth, it may look and function great immediately, however after a few years of intra oral, real life wear and tear and patient home care, what you thought was a great restoration may end up failing, and sometimes it will fail because of something clinically that you may have missed, or not been aware about at the time you restored that tooth, and you will learn from it.

Same thing with running a practice, you may make a decision today that ends up working out for you and your staff as you hoped it would, or 5 years from now, you may find out that it would of been better if you chose a different way. That's just life sometimes, where successes or failures are something that you end up learning after an extended period of time. The ability to be patient and then at times accept that you may have made the wrong choice and "pivot" from there if needed is a key lesson in dentistry and life.

This is why I am a big proponent of having written goals in a 6 month, 1 year, 3 year and 5 year time frame. Occasionally on some items, I even have a 10 year "grand vision" plan as well. I then will asses the successes and sometimes failures of what I am doing to achieve those goals, but have learned that it's very often better to make those interim assessments not on a daily basis, but on a quarterly basis to allow the normal ebbs and flows of day to day life to do its things on my goals. It's tough sometimes to manage one's eagerness with the reality that experience over time can bring, but that's a crucial thing, and something that frankly I didn't fully appreciate until I was roughly 10 years into practice which was also when I was roughly 10 years into my marriage and 5 years or so into being a parent

 

[longhorns21]

Exactly. I feel like those same dentists could be earning the same while treating half the patients if they were in their own practice. They would also have higher satisfaction + sense of achievement with their work if they build their own practice. Not sure why dentists want to buy into corporate practices. It just seems like a terrible deal from my perspective.

If you're still pre-dental and 100% set on the entrepreneurial aspect of growing a DSO, why waste your time and money to go to dental school? In several states, you don't even need to be a dentist to own the dental office, so why not jump straight to business ownership and save hundreds of thousands of dollars and years of your life? To answer a couple of your Qs; you'll have a very hard time getting a loan for 1.5mil+ straight out of dental school with no assets to use as collateral so you would likely need a secondary guarantor (in addition to you signing as a personal guarantor, outside of your holding company) that is willing to risk their assets on your practice's success. I would assume if you were an associate at said office for 1-2 years that would increase the chances of loan approval bc you would hopefully retain more patients after owner doc's exit. If the selling doc is so adamant about the future success of the practice, why not utilize them for financing the deal? Even if you threw them 1-5% of equity for the option to carry the financing so that they still have a vested interest, that commits the selling doc to retain as many patients and employees for your future success as possible. To touch on your discussion of utilizing future cash flows for financing future offices, the answer is yes - if banks see your steady cash flow from one office, you will be able to more readily borrow funds for future business endeavors due to your existing positive FCF. In regards to dentists partnering with DSOs as opposed to going solo, the reason they do that is multifaceted; mostly because when the corporation eventually sells to a private equity firm for 8x EBITDA that 50% owners one office just sold for millions more than it would have if it were a stand alone office, another reason they partner is DSOs often alleviate all of the marketing/billing/insurance, etc. headaches associated with owning an office outright.

 

[753698]

If you're still pre-dental and 100% set on the entrepreneurial aspect of growing a DSO, why waste your time and money to go to dental school? In several states, you don't even need to be a dentist to own the dental office, so why not jump straight to business ownership and save hundreds of thousands of dollars and years of your life? To answer a couple of your Qs; you'll have a very hard time getting a loan for 1.5mil+ straight out of dental school with no assets to use as collateral so you would likely need a secondary guarantor (in addition to you signing as a personal guarantor, outside of your holding company) that is willing to risk their assets on your practice's success. I would assume if you were an associate at said office for 1-2 years that would increase the chances of loan approval bc you would hopefully retain more patients after owner doc's exit. If the selling doc is so adamant about the future success of the practice, why not utilize them for financing the deal? Even if you threw them 1-5% of equity for the option to carry the financing so that they still have a vested interest, that commits the selling doc to retain as many patients and employees for your future success as possible. To touch on your discussion of utilizing future cash flows for financing future offices, the answer is yes - if banks see your steady cash flow from one office, you will be able to more readily borrow funds for future business endeavors due to your existing positive FCF. In regards to dentists partnering with DSOs as opposed to going solo, the reason they do that is multifaceted; mostly because when the corporation eventually sells to a private equity firm for 8x EBITDA that 50% owners one office just sold for millions more than it would have if it were a stand alone office, another reason they partner is DSOs often alleviate all of the marketing/billing/insurance, etc. headaches associated with owning an office outright.

The thing is without a dental degree I assume you already have to have a good amount of money to own a practice. I mean if it's difficult for a dentist to acquire a practice today, just imagine how much more difficult it is for a non-dentist to acquire a practice today.

As in, do you really think if I didn't go to dental school at all they would be willing to loan me X amount to purchase a dental practice? And if somehow I do purchase that first practice, my cash flow will be relatively low since I'm not taking in 35% of my production etc. I will only be taking in the profit after I've paid the dentist working in the practice + overhead fees. So in this case it might not even be enough to cover the loan. As a dentist though, since you take home a good portion of your own production + any additional profits you will have a ton of cash flow that you can then use to not only pay off the loan but also reinvest into other practices, and grow into that DDSO concept.

That's why I believe the most logical path for me would be to become a dentist, since I don't have anybody to give me a small loan of a million dollars to start my dental business.

Not to mention, I would enjoy being a dentist. I actually have interest in the sciences. I just cannot see myself doing stagnant dentistry for 40+ years, I need growth in a career + an exit strategy which would be what you described, where I can grow my dental group and eventually either sell it to a larger DSO for a huge sum or live off the passive income of my groups profits.

 

[Cold Front]

The thing is without a dental degree I assume you already have to have a good amount of money to own a practice. I mean if it's difficult for a dentist to acquire a practice today, just imagine how much more difficult it is for a non-dentist to acquire a practice today.

As in, do you really think if I didn't go to dental school at all they would be willing to loan me X amount to purchase a dental practice? And if somehow I do purchase that first practice, my cash flow will be relatively low since I'm not taking in 35% of my production etc. I will only be taking in the profit after I've paid the dentist working in the practice + overhead fees. So in this case it might not even be enough to cover the loan. As a dentist though, since you take home a good portion of your own production + any additional profits you will have a ton of cash flow that you can then use to not only pay off the loan but also reinvest into other practices, and grow into that DDSO concept.

That's why I believe the most logical path for me would be to become a dentist, since I don't have anybody to give me a small loan of a million dollars to start my dental business.

Not to mention, I would enjoy being a dentist. I actually have interest in the sciences. I just cannot see myself doing stagnant dentistry for 40+ years, I need growth in a career + an exit strategy which would be what you described, where I can grow my dental group and eventually either sell it to a larger DSO for a huge sum or live off the passive income of my groups profits.

This may sound intriguing to some, but when I go to work every day at my office, my goal for the day is to “just do it” for whatever that is on my patient schedule that day. After a while, being a dentist becomes a second nature and the whole “I’m clinician” or “a person of science” is not something that crosses your mind. I have developed some of my techniques to make dentistry more efficient for me, and more enjoyable as a result. I would be super bored if I didn’t have this approach, and made dentistry more interesting by thinking using the “just do it” approach after you have reached a certain degree of a “seasoned” experience.

 

[753698]

This may sound intriguing to some, but when I go to work every day at my office, my goal for the day is to “just do it” for whatever that is on my patient schedule that day. After a while, being a dentist becomes a second nature and the whole “I’m clinician” or “a person of science” is not something that crosses your mind. I have developed some of my techniques to make dentistry more efficient for me, and more enjoyable as a result. I would be super bored if I didn’t have this approach, and made dentistry more interesting by thinking using the “just do it” approach after you have reached a certain degree of a “seasoned” experience.

Since you are planning on retiring rather early, I assume that you still want out eventually right, even if dentistry is enjoyable?
Would doing dentistry for 20+ years be desirable for you if retirement were not an option? Will you do some part time dentistry in your retirement? (Locum tenens etc.)

I feel like for me, once I am a dentist I won't even lose my passion for dentistry. But I also wouldn't want to do it 40 hrs a week for the rest of my life. I would like to reach a point where I have financial freedom, and I'm doing dentistry not because I have to but because I want to.

 

[percyeye]

I always love to see Pre-whatever on any thread fired up trying to tell established practitioners how it'll be different when they start working. Gives me a chuckle every time.

 

[753698]

I always love to see Pre-whatever on any thread fired up trying to tell established practitioners how it'll be different when they start working. Gives me a chuckle every time.

But it's usually the other way around. The established people are telling the pre's about how the profession is declining and will be crap by the time they start working.

Maybe it's just a really good tactic to reduce competition by keeping pre's from entering their profession lol

 

[2TH MVR]

But it's usually the other way around. The established people are telling the pre's about how the profession is declining and will be crap by the time they start working.

Maybe it's just a really good tactic to reduce competition by keeping pre's from entering their profession lol

Having posts on either side of optimism and pessimism is healthy. Can't all be peaches and cream or fire and brimstone. It is refreshing to see the unscathed, un-scarred, optimistic views and dreams of the pre-dents with a balanced dose of reality from those in the trenches. There is good and bad with any profession. It all depends on your relative position.