Dr. Patel’s first practice in Orange County is booked solid and patients are travelling from across town to see him. He knows there’s demand for a second location, but the process of buying another dental practice or building a new office feels daunting. With interest rates higher than they’ve been in years and practice valuations fluctuating, making the wrong move could eat into his profits for a decade. If you’re a dentist weighing expansion in 2026, you need more than a dream—you need a plan.
Evaluate the Opportunity: Acquire or Start from Scratch?
Here’s what most dentists don’t realize: your expansion decision starts long before you sign a lease or purchase agreement. You must decide whether to buy an existing dental practice for sale or open a location from the ground up. Each option has its own set of financial and strategic implications:
- Acquire an existing practice. Buying an established office can give you immediate cash flow, an existing patient base and trained staff. Perform a thorough dental practice valuation by examining adjusted EBITDA, payer mix, hygiene production and patient retention. Don’t rely on headline revenue numbers—dig into collections, insurance reimbursement rates and how dependent the practice is on the selling dentist. A practice listed at 5× EBITDA may look appealing, but if collections are declining or the lease expires in a year, the real multiple could be much lower.
- Build a new office. Opening from scratch offers control over location, layout and brand, but you’re starting at zero patients. Factor in construction costs, permitting, equipment purchases and the time it takes to ramp up production. In today’s market, a turnkey build‑out can easily exceed $400 per square foot. On the plus side, you can design the ideal workflow, install state‑of‑the‑art technology and choose your own team.
Whichever route you choose, model the numbers under conservative assumptions. A second location should complement—rather than cannibalize—your existing practice.
Real Estate Choices: Own or Lease Your New Office
This is where deals are won or lost. Should you buy your building or sign a lease? Owning the real estate builds equity and can insulate you from rent hikes, but it typically requires a larger down payment and exposes you to property management responsibilities. Commercial mortgage rates in 2026 hover around 7–9 %, and lenders may require 20 % down on an owner‑occupied dental office. Over a 20‑year loan, each additional percentage point in interest can add thousands to your monthly payment.
Leasing offers flexibility and lower upfront costs. A long‑term lease with renewal options can secure your location for 10–15 years, freeing capital for equipment and marketing. Pay attention to rent escalations, assignment clauses and exclusivity. A triple‑net (NNN) lease means you’ll cover taxes, insurance and maintenance; a modified gross lease may bundle some of those costs into your rent. Negotiate an option to purchase the property down the road—this gives you the chance to build equity once your second location is established.
One common mistake we see is dentists taking on a building and a practice purchase simultaneously. Separating the business and real estate transactions often yields better terms and preserves cash flow. Want to explore whether buying or leasing is right for your expansion? Contact us to discuss your specific numbers.
Financing Expansion in Today’s Market
In February 2026 the Wall Street Journal Prime Rate sits at 6.75 %. SBA 7(a) loans for practice acquisitions and expansions typically price at prime + 3–6.5 %, resulting in rates between roughly 9.75 % and 13.25 %. SBA 504 loans—used to purchase real estate—tie their rates to the 10‑year Treasury and currently land around 5–7 %. Conventional and practice‑specific loans from banks and specialty lenders range from 8 % to 12 % depending on your credit profile and collateral. The difference between a 9 % and 12 % loan on a $2 million project can mean nearly $5,000 a month in extra debt service.
Prepare three years of tax returns and current profit‑and‑loss statements before approaching lenders. Dentists often underestimate how documentation drives rates. Having 10‑20 % of your project cost in liquid reserves demonstrates financial strength and can shave a point off your rate. Shop multiple lenders, consider combining fixed‑rate and variable‑rate loans, and align financing with your exit horizon—if you plan to sell in five years, avoid loans with hefty prepayment penalties.
Thinking about buying a dental practice or financing a second location? Our team can connect you with healthcare‑savvy lenders and help you structure the right package.
Common Pitfalls and Hidden Risks
Expanding without a roadmap can cost you hundreds of thousands. Avoid these errors:
- Ignoring demographics. The busiest intersection isn’t always the best. Analyze patient density, competition, parking availability and referral patterns. A beautiful office in the wrong neighborhood will struggle to fill chairs.
- Overleveraging. Don’t stretch your cash flow thin by taking on too much debt. Stress‑test your projections at interest rates two points higher than today’s and factor in realistic collection estimates.
- Neglecting lease details. Short lease terms, high rent escalations and restrictive assignment clauses can scare off future buyers. Secure at least 10 years of total term and the right to assign the lease if you sell.
- Underestimating build‑out time. Permitting delays, supply‑chain issues and contractor schedules can add months to your project. Factor these into your timeline and budget.
Strategic Steps for a Successful Second Location
An expansion isn’t just a real estate deal—it’s a strategic business move. Follow these steps to maximize your investment:
- Conduct a market study. Use demographic data and competition analysis to identify underserved areas with strong demand for your specialty.
- Value both your current and target practices. Understand what your existing practice is worth and how a second location affects overall enterprise value.
- Assemble your team. Engage a dental real estate broker, CPA, healthcare lender and attorney early. They’ll help you evaluate sites, structure the deal and navigate regulatory requirements.
- Negotiate real estate intelligently. Whether you buy or lease, align terms with your business plan. Plan for growth by negotiating renewal options and tenant improvements that allow you to expand or renovate as needed.
- Monitor cash flow post‑launch. Even profitable practices take time to ramp up. Track collections versus projections and adjust staffing and marketing accordingly.
Opening a second dental practice in 2026 can be a transformative growth move—if it’s structured correctly. Burnett Facer of the Schilling Team, who specializes in dental real estate and practice transactions, can help you evaluate opportunities, secure financing and negotiate the right real estate strategy. Our integrated approach ensures you maximize value and minimize risk.
Ready to explore expansion opportunities? Reach out today to discuss your goals and receive tailored advice. Reach out to the Schilling Team and connect with Burnett Facer at (949) 212‑1246 for a confidential consultation and real numbers on your next move.