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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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"My AFTCO agent was easy to work with, professional, and helped sell my relatively small to medium size rural practice in a little over a year. Excellent result. Thanks AFTCO!"

Stephen Spyrison, D.D.S.
Freeport, IL

"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

"Overall it was a great experience. My AFTCO Analyst was very knowledgeable about the process from start to finish. He also put us in contact with people to help us move the process along. The due diligence that was given to us for the practice we purchased allowed us to analyze and make the decision of purchasing much easier. We look forward to working with My AFTCO Analyst and AFTCO again in the future."

Jeff McGee
Tucson, AZ

"My AFTCO Analyst did an excellent job with helping guide me through the transition process! I would highly recommend AFTCO to anyone who is looking to sell their practice."

Jason W. Mullen, D.D.S.
Clayton, NC