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What should office rent be as a percentage of gross collections for a general dental practice?

Ideally, office rent should account for 4% - 5% of the gross revenues for a general dental practice (+ or - 1%). If the rent is less than 4% then the current owner either (i) owns the building and has not kept the rent up with other rents in the same area, or (ii) it is a sub-prime location that may require moving the practice to another location if this practice is under consideration for acquisition, or (iii) this is a rural practice where rents tend to be much lower than in metro areas.

On the other hand, if the office rent percentage is more than 8% of gross collections, then (i) this office is either too large for this practice, or (ii) this office is over improved and the leasehold improvement costs are included in the rent, or (iii) the building is owned by the practice owner and this owner is charging an artificially high rent in order to justify paying off this expensive property.

If you are considering purchasing a practice whereby the current rent is high, then it is possible that only a practice merger (where an existing practice in the same area would be merged into this office) should be the primary consideration since it would not work well for a new purchaser (unless this practice is greatly underproducing).
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Client Testimonials

"My AFTCO Analyst was exceptionally talented, knowledgeable and proficient!"

Anthony J. Warren, D.D.S.
Alamogordo, NM

"AFTCO made the difficult process of selling my practice very simple, and helped me in every phase along the way. My AFTCO Analysts were very nice to work with, were as attentive as could be, and always available to discuss any hiccups along the way. They made everything very simple for me, in other words, THEY did all the work, and this was a BIG bonus for me, as other companies wanted ME to do all the work, and pay them to evaluate my practice. Overall, I would gladly, and enthusiastically recommend anyone I know to work with AFTCO on buying or selling a practice."

George F. Kirkland III, D.D.S.
Durham, NC

"We have completed three successful practice purchases and transitions with my AFTCO Analyst. My AFTCO Analyst is very knowledgeable and extremely helpful. He will always get back to you with an answer ASAP. Even after the deal is done, he will remain available. My AFTCO Analyst's chief concerns are fitting you with the right practice and ensuring the most successful transition."

William H. Taylor, D.D.S.
Tucson, AZ

"My AFTCO Analysts were amazing! They found me a great practice and helped me from start to finish. They made it clear I could ask them anything and were fair and professional through the entire process."

Christopher J. Wahlers, D.M.D.
East Norriton, PA