When is Selling my Property and Leasing Back the Right Decision?

As a dentist or doctor, you carry a lot of responsibility to stay current in the industry and keep the practice running at the same time. Not only are you a medical professional, but you are a small business owner and entrepreneur, which adds other unexpected tasks to your list of obligations. Are you putting enough time and money to grow your business, hire the right staff members, and maintain a property that serves the needs of your patients?

Benefits and Burdens of Owning Commercial Property

The location and care of your practice is a big part of the business side of things. Many medical professionals choose to purchase the commercial property, giving them an asset owned by the company. Property ownership can be a way to build your financial portfolio by owning a hard asset that can be sold in the future.

But you might find it too much of a burden to keep up with property maintenance and needs. Do you have enough time and expertise to focus on the needs of your patients, while also caring for the needs of the property?

Sale-Leaseback Option

One financial decision you might consider is to choose a sale-leaseback option. This solution means you sell the building to an investor, with an agreement that your business will continue operations in the building. You will become the lessee in the building, and the new owner will take over ownership of maintenance and other required upkeep.

This method frees up cash from the sale of the property, plus you will simplify your schedule since you no longer have to worry about the work required for property maintenance.

Changing ownership of the building can be a smart move for your business when it is done right. The cash influx can be used to pay down business debt and improve liquidity. You might consider an investment in new marketing services or technology. Plus, you will have more time and energy to focus on the expansion of your practice by hiring staff members and business experts that will have a positive impact on your bottom line.

Should You Consider a Sale-Leaseback?

Every situation is unique, which is why you need to think about your practice and your long-term financial goals. These are some of the benefits you can expect if you chose a sale-leaseback solution for the commercial property where your medical practice is located:

  • Higher Tax Write-Offs: When you own the building, then you have the option to write off the interest paid on the mortgage. Selling the building and paying for a lease increases your write-offs because the entire lease payment qualifies as a tax deduction.
  • Pay Down Debt: Carrying high debt balances can make it hard to keep up with the cash flow needed for your business. If you are looking for a way to improve your debt-to-income ratio, then the sale of a property is a fast way to come up with cash that can be used to pay off the debt balances. Additionally, you can take the mortgage, depreciation, and interest off the business balance sheet and financial reports.
  • No Business Disruption: Writing in the lease agreement with the property sale means that you can stay in the building. This benefit is a key factor to consider when you are making any changes with your practice. Avoid the moving costs and disruption to your business operations so you can avoid the risk of losing patients.

What is the right real estate strategy for your medical practice? If you are thinking about buying or selling a commercial building, then our team is here to offer advice based on your personal situation. Contact our team at Joseph Rossi & Associates to learn about the available expert services.

Ready to start your own office?

Let's get started!