Dental Practice Purchase Question? Which Dental Practice is Best?

I have a couple of opportunities presenting themselves to me and I need help deciding whether anything is good for us. We are located in a suburb of Philly.

Option 1: Purchase brand new brick free-standing building on busy road (40,000+ cars/day) for 425K. 1700+ sq ft inside, one floor. It is just a shell now so I would need to fit it out. Does anyone know how much that would cost? We were thinking around 250K? This would be a start up. There is another dentist about 200ft from this property, but not directly on road. I would market this practice as a “dental spa” since there are none in the area. The dental demographic consists of several older docs not ready to retire just yet.

Just some very quick math: $425k x 1.05 (closing costs) = 446k + $200k improvements + $150k equipped & ready to go + $60k working capital = $856k with no real patients from the get go AND you say money will be tight, doesn’t seem like your first choice.

Option 2: Purchase existing practice from doc. This practice has about 600 active patients, 1 doc op, 1 hyg op. Current doc/hyg is working 3 days. Producing 400K+, 5 new patients per month (no marketing done). Practice is small 700+ sq ft and attached to the house. Potential to expand but limited. Located on street with steady traffic all day in upper middle class suburb. He is looking to sell the home as well. The home is roughly 2700 sq ft. with nice size yard. Everything is maintained immaculately (house & practice). He is asking 175K for the practice and 510K for the house.

I’ve seen this somewhere before. If 2 ops in 700 sqr ft attached to your home is your idea of the perfect practice this might be heaven for you, if not, it’s not even a consideration. You need to think about how you want to practice for the next 10+ years.

Option 3: Purchase practice from 77 y.o. doc looking to finally retire. He has been practicing at this location for 25 years and hasn’t updated anything since. He is currently only treating patients on a emergency basis. This would essentially be a start-up as well. 1700+sq ft office that would need to be completely redone. Located on a busy road in a middle class area. Also looking to sell home upstairs (1700+sq ft). Doc is looking to get 355K.

This seems like the best of the 3 and you’ve provided NO info. There must be a patient base, what is it? 1,700 sqr ft is the average size practice, especially for starters. redone can mean alot of things; if you mean the layout is good & simply needs redecorating that might be less than $25k, if everything needs to be ripped out and REALLY redone you might be looking at well over $100k. Updated equipment for 2-3 ops might be $50kish depending on what you get.

So again, some quick math on the high end: $355k (is this for practice AND house or just practice or just house? You’re unclear) + $100k for improvements + $100k on equipment + $60k working capital = $615k AND AT LEAST YOU’LL HAVE PATIENTS FROM DAY ONE.

I don’t know which route would be best for us. My husband just started his third year of dental school and would like to be a pedodontist so his lack of income is also playing into this. What do you think???

Again, very limited info provided, so if you really want to know which direction to take you’re going to have to hire a consultant to help you analyze the numbers of the options.

Good luck!

This post first appeared on DentalTown.

Send your questions to Tim Lott, CPA, CVA at

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