Should Dentists Own or Lease Their Dental Office in 2026? Dental Real Estate Insights

Picture this: Dr. Lee runs a thriving dental practice in Orange County and is eyeing a larger space to keep up with patient demand. A commercial broker offers him a great lease in a new development, while his bank suggests buying an older building nearby. Both options seem attractive, but which one will grow the value of his dental practice and protect his personal finances?

In the current market, dental practice owners need more than a gut feeling to decide on real estate. Real estate is the second largest cost after payroll, and the choice between owning or leasing can impact your dental practice valuation when it is time to sell. Here’s how to make a strategic decision in 2026.

Ownership vs Leasing: Dental Real Estate Fundamentals

Owning your dental office means purchasing a commercial property and assuming all responsibility for maintenance, taxes, and financing. Leasing, on the other hand, gives you flexible occupancy without tying up capital in real estate. Both options have pros and cons:

Equity vs Flexibility. Ownership builds equity that can increase your net worth and offset a portion of your retirement planning. Leasing frees up capital for new technology, hiring, or even buying another practice.
Control vs Scalability. Owning offers control over renovations and long‑term stability for your brand. Leasing makes it easier to relocate if patient demographics change or if you expand to multiple locations.
Financing and risk. Buying requires a down payment and qualifies you for long‑term loans, including SBA loans that can cover both the real estate and the practice. Leasing limits your liability but exposes you to rent increases and limited renewal options.

Here’s what most dentists don’t realize: your building is part of the dental practice for sale package. Whether you own or lease affects your practice’s marketability and financing terms for the buyer.

Market and Financial Factors in 2026

Interest rates have moderated from the peaks of 2025, but commercial financing is still more expensive than it was a few years ago. Dental real estate transactions in Orange County and across California are being scrutinized by lenders, and banks prefer well‑structured deals. The following factors should inform your decision this year:

#### Capital outlay and opportunity cost

Buying a building often requires 10%–20% down. Even with an SBA loan, you could be tying up hundreds of thousands of dollars that might otherwise fund a satellite location or a cutting‑edge digital scanner. Leasing preserves liquidity, but you miss out on potential appreciation if the property value rises.

#### Tax benefits and cash flow

Owners can deduct mortgage interest, property taxes, and depreciation, which lowers taxable income. Lease payments are fully deductible as an operating expense, but you won’t capture the long‑term tax benefits of ownership. This is where deals are won or lost: miscalculating depreciation schedules or not understanding how rent escalations compound over time can cost you hundreds of thousands.

#### Practice valuation and exit strategy

A buyer assessing your dental practice valuation will look at future occupancy costs. Owning the building can increase the practice’s perceived stability and allow you to negotiate a higher price. Leasing may appeal to buyers who prefer lower upfront costs. If this is structured incorrectly, it can reduce your valuation or complicate a future sale‑leaseback.

Thinking about buying, selling, or refinancing your dental practice? The Schilling Team can help you map out the smartest strategy for your situation.

Common Mistakes Dentists Make

From our experience advising dentists, these are the pitfalls we see most often:

Choosing a location purely on price. Lower rents or sale prices often correspond with poor visibility, limited parking, or undesirable demographics. A seemingly cheaper building can shrink your revenue base.
Ignoring lease clauses. Renewal options, assignment rights, and escalation clauses can make or break a sale. A poorly negotiated lease can deter buyers or lenders when you decide to exit.
Underestimating maintenance costs. Owners must budget for roof repairs, ADA compliance, HVAC replacements, and more. These expenses can erode profits if you don’t plan for them.
Mixing practice and personal real estate decisions. Some dentists buy a building because they like the idea of being a landlord. Others lease because it feels safer. Your decision should be driven by numbers, not emotions.

Avoid these mistakes by working with a broker who specializes in dental real estate and understands both the clinical and financial sides of your practice.

Thinking about buying, selling, or refinancing your dental practice? The Schilling Team can help you map out the smartest strategy for your situation.

Strategic Recommendations for 2026

Early‑stage owners: If you’re within your first five years of ownership or planning rapid expansion, leasing is often the smarter move. It keeps your cash flexible for marketing, technology upgrades, and hiring associates. Negotiate renewal options and assignability to protect your future sale.
Established practices with stable cash flow: Consider owning when you’ve maximized chair time and plan to stay for at least seven to ten years. An SBA 504 loan can finance up to 90% of the purchase price, often with favorable terms. This can effectively lock in your occupancy cost and build equity.
Multi‑location or group practices: Evaluate a hybrid strategy. You might own your flagship location and lease satellite offices. This approach balances equity growth with flexibility and can improve overall dental office financing.
Preparing for exit: If retirement is on your horizon, consult a dental real estate specialist before committing to a long‑term lease or purchase. The timing of a purchase or sale‑leaseback can significantly impact your tax burden and the terms of your dental practice for sale.

This is where deals are won or lost: structuring the real estate component correctly can be the difference between a seven‑figure sale and a disappointing outcome.

The Bottom Line

There’s no one‑size‑fits‑all answer to the ownership versus lease question in dental real estate. Your decision should reflect your growth plans, cash position, and exit strategy. Burnett Facer of the Schilling Team, who specializes in dental real estate, can analyze your financials, compare ownership scenarios, and guide you toward a solution that maximizes your long‑term wealth.

Thinking about buying, selling, or refinancing your dental practice? The Schilling Team can help you map out the smartest strategy for your situation.

Reach out to the Schilling Team and connect with Burnett Facer at 949-212-1346 for a confidential consultation and real numbers on your next move.