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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

"Working with AFTCO was great! My AFTCO Analyst was very professional and answered all of our questions. He was readily available for phone calls and really helped us through the entire process. We had a few bumps and my AFTCO Analyst was very accommodating to help us with a work around."

Ashley M. Paschal, D.M.D.
Sunrise, FL

"It was a pleasure to deal with my AFTCO Analyst. He made the process as easy as possible and was extremely helpful at every step of the way. My AFTCO Analyst helped me select a practice that would be most suitable for my expectations. I look forward to working with AFTCO again in the near future."

Afshin A. Azmoodeh, D.D.S.
Plano, TX

"My AFTCO Analysts were extremely professional, available, supportive, and knowledgeable throughout the whole process. If I hear of anyone selling their practice, I wouldn't hesitate to refer them to AFTCO."

Ronald I. Lefton, D.D.S.
Virginia Beach, VA

"I found working with my AFTCO Analyst to be a true joy. He is knowledgeable, courteous, and he definitely goes the extra mile in helping make the process go as smoothly as possible. I have thoroughly enjoyed working with him and will highly recommend him to anyone I come across who is looking for practice transition assistance."

Kenneth B. Rundle, D.D.S.
Highland, IN