Im currently in my last year of dental school and I am planning on doing a GPR to boost confidence and speed. I hope to own a practice one day once I feel that I am ready. I was wondering how do/did most owners afford the practice. Did you take out loans/etc...?
Owning a Practice
- Thread starter bkim7777
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Your first startup or acquisition will likely be financed. You'll get a loan to buy or start the practice from one of the banks that has a dental/medical specific department like Bank of America, Citi, Wells Fargo, or US Bank. There's also Lendevor and other smaller companies. Very few dentists would use cash to acquire a practice. Banks were providing 100% financing pre-covid, what they'll do post-covid is not necessarily clear. There was a temporary freeze on lending but lending has begun to proceed now (Aug. 2020).
You should watch a few webinars, they're usually free. Brian Hanks has a good book about buying a practice available on Amazon that would answer most of your questions.
You should watch a few webinars, they're usually free. Brian Hanks has a good book about buying a practice available on Amazon that would answer most of your questions.
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Worked hard for a year, saved up enough for an office, started real cheap and paid for everything with cash.
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In my case, I got a simple Line Of Credit from the local bank.
(It helped a great deal that I had zero student loan debt at the time!)
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It might be really difficult to save for only a year unless one lives rent & bills free with no student loans (like I did).
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If you set it up from scratch, you should continue to work P/T or F/T for someone else since your new office will not have enough patients to fill your appt book 5 days/wk at the beginning.
When my sister set up her office, she told the landlord that the 2000 sf space was too big and she only needed 1200 sf. The landlord agreed to put in a partition to shrink the space to 1200 sf (at no charge) and this helped save my sister a lot in construction cost. It was plumbed for 4 operatories but she only bought 2 chairs. She later added 2 more chairs because I came to do in-house ortho at her office. At the beginning when it was slow, she only worked 3 days/wk (Saturdays and Sundays) at her own office and she worked 4 days/wk at the corp office. In addition to the $100k loan for office contruction, the bank also gave her $40k working capital but she didn’t use it because of the positive cash flow from her corp job. Instead, she used this $40k amount (+ $60k of her and her husband’s own saving) to invest in a commercial building with our uncle, a family MD doctor, who became very rich from estate investments. She had earned about $1k/month in rent from this commercial building. This commercial was later sold for 4x the original purchased price.
I set up my office 3 years after my sister set up hers. I hired the same contractor who built her office. Like my sister, I also kept my F/T associate job at the corp when I started mine. It was much easier for me than for my sister because my ortho associate job paid me a lot more and my wife is also a specialist. My sister and her husband don’t make as much as us but they are currently ahead of us financially. That’s because they continued to live like students right after graduation (ie living with our parents for 3 years), they didn’t drive fancy cars, and they started investing very early. When I started investing (in 2008), my sister already had 2 rental properties.
As Tanman pointed out earlier, you should start cheap….only buy things that you need. You can always upgrade to more fancy equipment later. A new office doesn’t have to cost $3-400k to set up.
When my sister set up her office, she told the landlord that the 2000 sf space was too big and she only needed 1200 sf. The landlord agreed to put in a partition to shrink the space to 1200 sf (at no charge) and this helped save my sister a lot in construction cost. It was plumbed for 4 operatories but she only bought 2 chairs. She later added 2 more chairs because I came to do in-house ortho at her office. At the beginning when it was slow, she only worked 3 days/wk (Saturdays and Sundays) at her own office and she worked 4 days/wk at the corp office. In addition to the $100k loan for office contruction, the bank also gave her $40k working capital but she didn’t use it because of the positive cash flow from her corp job. Instead, she used this $40k amount (+ $60k of her and her husband’s own saving) to invest in a commercial building with our uncle, a family MD doctor, who became very rich from estate investments. She had earned about $1k/month in rent from this commercial building. This commercial was later sold for 4x the original purchased price.
I set up my office 3 years after my sister set up hers. I hired the same contractor who built her office. Like my sister, I also kept my F/T associate job at the corp when I started mine. It was much easier for me than for my sister because my ortho associate job paid me a lot more and my wife is also a specialist. My sister and her husband don’t make as much as us but they are currently ahead of us financially. That’s because they continued to live like students right after graduation (ie living with our parents for 3 years), they didn’t drive fancy cars, and they started investing very early. When I started investing (in 2008), my sister already had 2 rental properties.
As Tanman pointed out earlier, you should start cheap….only buy things that you need. You can always upgrade to more fancy equipment later. A new office doesn’t have to cost $3-400k to set up.
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About how much would the cheapest startup clinic be to get an idea?
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Without having a signficant initial bottleneck? Around 100k. It can be done with 60k-ish with maybe 2-3 chairs, but you will hit production bottlenecks really fast.
