Short answer: owning the building your practice operates in can be one of a dentist’s best long-term wealth-builders — your practice pays rent to you instead of a landlord, and you build equity and a future income stream. But it ties up capital and adds concentration, so it isn’t always the right move.
Should you buy your practice’s real estate?
If the right building is available and the numbers work, ownership is often attractive — but it depends on your capital, your other debt, and how long you plan to stay. It’s a real-estate investment layered on top of a practice, so it deserves its own analysis rather than an automatic yes.
The case for owning the building
- Your practice pays rent to an entity you own instead of a landlord.
- You build equity and, over time, a paid-off, income-producing asset.
- It can become retirement income — you keep the building and its rent after you sell the practice.
- Control: no landlord deciding your lease terms or whether you can renew.
The case against (the real risks)
- Concentration — more of your net worth tied to your practice’s location and success.
- Illiquidity — commercial real estate isn’t quick or cheap to sell.
- Capital — the down payment competes with buying the practice, funding retirement, and reserves.
- Management — you become a landlord, with the responsibilities that brings.
How is it usually structured?
Commonly, the real estate is held in a separate legal entity (often an LLC) that leases the space to the practice at a fair-market rent. That separation has tax, liability, and transition advantages — and it means that when you sell the practice, you can often keep the building and its rental income. Coordinate the structure with your CPA and attorney.
What happens at a sale or transition?
Owning the building gives you options at transition: sell the practice and keep the building as income, sell both, or lease to the buyer. Just be mindful of overall concentration — a practice plus its building is a lot of eggs in one location.
Frequently asked questions
It often can be — your practice pays rent to you and you build equity in an income-producing asset. But it adds concentration and ties up capital, so it should be weighed against buying the practice, funding retirement, and keeping reserves.
Many owners do, keeping the rental income as a retirement stream while selling the practice itself. Whether that’s right depends on your income needs, diversification, and the buyer’s plans.
Founder & Financial Planner · Investment Adviser Representative · Series 63 & 65
Ian McGinnis is the founder of Dental Wealth Partners and a fee-only financial planner dedicated to dentists. As an investment adviser representative (Series 63 and 65), he built the firm to give dentists coordinated, fiduciary advice across their practice, taxes, investments, retirement plans, and long-term goals — the whole picture in one strategy. A graduate of Belhaven University, Ian previously worked at Davis Private Wealth, MML Investors Services, and Northwestern Mutual, and is based in the Jackson, Mississippi area. He is the author of The Wealthy Dentist and hosts the Smiles & Cents podcast.
Keep reading
- Why your dental practice shouldn’t be your whole retirement planConcentration risk is the quiet danger for successful dentists. Here’s how to think about building wealth beyond the practice.
- How to buy a dental practice: a financial due-diligence guideThe financial due diligence every dentist should do before buying a practice — testing the price, modeling cash flow, and preparing for lenders.
- Selling your dental practice: process, timing, and taxesWhat to expect when selling a dental practice — how to prepare, evaluate buyers and deal structures, and plan for the tax impact.