Your Dental Office Real Estate: Sell It or Keep It in 2026?

An owner phoned me in the spring, a fortnight after signing his letter of intent, wanting to talk about the lease.

He owned the building. Nineteen years, no mortgage left on it.

Nobody had raised the subject until the buyer’s attorney emailed a draft lease with the rent already typed in.

He read me the figure and asked whether it sounded about right.

It did not. But that was the smaller problem.

The bigger one was that a document setting the value of his second-largest asset had arrived after his leverage on the first asset was spent. That sequence is the norm.

It is also backwards, and it costs real money.

Key takeaways

• The practice and the building are two assets with two buyer pools. Most groups shopping for dental practices are shopping for the practice. Whether they also want your property is a separate question, and the answer is often no.
• The lease you sign at closing fixes the building’s value permanently. An investor buying a leased dental office is buying an income stream. The lease is not paperwork attached to the property. For pricing purposes, the lease is the property.
• A rent dollar is worth more in the building than in the practice. Which is why the generous, below-market lease is the expensive gesture, and why almost nobody spots it until afterwards.
• Keeping it makes you a single-tenant landlord in a purpose-built space. The income is genuine. So is the concentration, and so is the awkward question of what twelve plumbed operatories are worth to anyone who is not a dentist.
• Decide before you go to market, not after the letter of intent. The property answer reshapes the practice deal, and every week of delay spends leverage you cannot get back.

Should you sell your dental office building or keep it when you sell the practice? Most buyers want the practice, not the property.

So the real choice is selling the building separately or leasing it to the new owner. Keeping it turns practice income into rent.

The lease rate you sign decides both values.

Why this is two decisions, not one

Owners picture the sale as a single event. One closing, one wire, one Tuesday when it is finally done.

Financially, it is two.

The American Dental Association says so in its own guidance: the practice is valued separately from the real estate, and a lender may apply completely different terms to each.

The shoppers differ too: a group buying dental practices wants patients and cash flow and a team and a chair count, while somebody buying commercial property wants none of that and only ever wants a lease.

Rarely the same person. Almost never the same afternoon.

A DSO is a dental support organization: the management company that owns the non-clinical side of a practice and handles everything outside the operatory, while a licensed dentist keeps ownership of the clinical entity.

That pool is deep. The Association of Dental Support Organizations counts more than 80 member companies supporting over 15,000 dentists at more than 8,500 practices across 48 states.

Becker’s Dental Review reported that 69% of DSOs said their sponsors expected a moderate or high increase in acquisition activity in 2026.

Deep for practices. Considerably thinner for buildings.

Some acquirers will take the real estate too. Many will not, because property ties up capital they would rather spend on the next affiliation.

One operator put that mandate bluntly on the Group Dentistry Now podcast: real estate was simply not what his balance sheet was for.

So the question landing on your desk is seldom “do you want to sell the building.” It is “will you be our landlord, and on what terms.”

The ADA poses the same fork in its pre-sale checklist. If you own the building, do you want to sell it alongside the practice — and if not, are you willing to become a landlord, with everything that entails?

That second option is a retirement-income decision wearing a real-estate costume.

The lease is the hinge

Here is the part nobody explains while there is still time to use it.

Keep the building and the lease you sign at closing does two jobs simultaneously. It sets what the practice earns.

It sets what the property is worth, from that morning until the term expires.

Both effects are durable, and they pull in opposite directions.

Rent is a cost to the practice and income to the building. Push it up and the practice earns less while the property earns more.

Push it down and you reverse that.

Adjusted EBITDA, if nobody has defined it for you plainly, is what the practice earns in pure operating profit after paying a market-rate dentist to do the work you currently do yourself. Rent sits inside that figure as an operating cost.

DrBicuspid described the circularity neatly: restate rent to market and the difference lands straight on EBITDA.

Which sounds like a wash. Shift a dollar between pockets, nobody is hurt.

It is not a wash, because the two pockets multiply that dollar at wildly different rates.

The practice values a rent dollar at the multiple. Say 8 times, purely as an illustration rather than a quote. A dollar of rent you decline to charge becomes a dollar of extra EBITDA, and roughly 8 dollars of extra practice price.

The building values it at the inverse of the yield. An investor divides annual net rent by the return they need. At an illustrative 7%, a single dollar of yearly rent underpins about 14 dollars of building value.

Fourteen against eight. That spread is the entire argument.

Run it on a realistic shape. Collections of $2.6 million, adjusted EBITDA of $620,000, and 4,200 square feet you own outright. An appraiser sets fair market rent at $132,000 a year.

Three leases you could sign at closing:

The lease you sign	Effect on practice price (8× adjusted EBITDA)	Effect on building value (7% yield)	Where you land
$96,000 — $36,000 below market	+$288,000, and only if the buyer lets it stand	−$514,000	−$226,000 at best. Nearer −$514,000 once rent is normalized in diligence
$132,000 — appraised market rent	Neutral	Neutral	The baseline both sides can defend with a document
$168,000 — $36,000 above market	−$288,000	+$514,000 on paper	Uncertain. Appraisers and lenders mark contract rent back toward market, and the buyer may decline to sign

Look again at the first row.

The owner signing a cheap lease is usually trying to flatter the practice’s profitability so it fetches more. The arithmetic says the gesture costs him about a quarter of a million dollars even when it works.

Usually it does not work. A competent buyer restates rent to fair market value in the add-back schedule before pricing anything, an exercise we walk through in the piece on dental practice add-backs.

Which leaves the cheap lease doing nothing for the practice price and half a million dollars of harm to the building. Not a trade.

A donation.

The above-market lease is no windfall either. More rent supports more building value on paper, yes.

But an appraiser will test contract rent against the market, and a lender financing the purchase does the same. A tenant paying over the odds is also a tenant who leaves at renewal.

That renewal risk is precisely what makes an investor demand a fatter yield and pay less.

So the answer is unglamorous. Market rent, established by independent appraisal, maximizes value in nearly every case. Unusually for a negotiation, it is also the honest position.

Commission the appraisal before the lease is drafted. Your own sense of what the space is worth is not evidence, and the buyer’s figure is not neutral.

What buyers actually require from the lease

Park the rent for a moment. Three other things matter, and they bend far less than price does.

A term long enough to protect the investment. Nobody paying several million dollars for a practice will accept being homeless in three years. DrBicuspid’s lease guidance for dentists points toward a total of 5 to 15 years, usually a shorter base term with renewal options stacked behind it.

Options matter more than owners expect. Ten years with two five-year options hands the buyer twenty years of control while giving you a decision point every five.

Assignability. The right to hand the lease to somebody else. If you rent from a third party rather than owning, this clause decides whether the practice can be sold at all.

Landlords sometimes make the term and its renewal options personal to the current tenant, which quietly removes them from the sale.

Others carry a recapture clause letting the landlord terminate rather than approve an assignment, which is a polite way of saying the landlord may want a slice of your proceeds before signing anything.

Mandelbaum Barrett observes that a tremendous amount of goodwill attaches to the location of a dental practice, and that most transactions need the landlord’s consent to the new tenancy.

A short remaining term is a live problem, not paperwork. Re-paper it before anyone knows a sale is coming. The timing sits in our article on how to prepare a dental practice for sale — roughly 18 months out, while you have no urgency and the landlord has no information.

Who signs the lease, and who stands behind it. Constantly missed, and worth more than most of the rent negotiation.

The corporate practice of dentistry — state law restricting who may own or control a dental practice — usually leaves a dentist-owned professional entity as the clinical practice after a DSO transaction, with a management services organization handling the rest.

An MSO is the entity a DSO uses to own that non-clinical side, precisely because most states bar non-dentists from owning the clinical practice.

Which of those two signs your lease is a very different proposition. The clinical entity may hold almost no capital.

The management company or its parent has a balance sheet.

Ask for the credit you are actually relying on to appear on the document, as tenant or as guarantor. Benesch’s dental industry reporting and Nixon Peabody’s transaction guidance both treat entity structure as a front-end question rather than a closing detail.

Keep it: you become a landlord

Suppose you hold on. What have you bought yourself?

The income case is clean. Dental offices typically run on a triple net lease, meaning the tenant covers taxes, insurance and maintenance on top of rent. Your $132,000 arrives with very little leaking back out.

Negotiate fixed annual increases and it carries some inflation protection. It also postpones the sale decision until you know what your post-practice life looks like.

The operator on that Group Dentistry Now episode explained the investor appeal in one image: tenant absorbs the costs, increases are contracted, and the thing behaves rather like a bond.

Genuine case. Now the other side.

Concentration is the honest risk. One property, one tenant, one use. That is not a portfolio.

Your income rests entirely on a single dental practice’s ability to pay — a practice you no longer run, staffed by people you no longer manage, under an owner who will not consult you.

Dentistry has its own weather, too. ADA Health Policy Institute research found about one-third of dentists reported not being busy enough in the first quarter of 2026.

Then there is the end of the term. Owners skip this part, and it is the part that bites.

A dental office is special-purpose property. Plumbed and wired operatories, lead-lined walls, a nitrous manifold, a sterilization bay, a vacuum room.

Fitted for exactly one activity.

If the tenant walks you have two unequal options: re-let to another dental group, which in any single town is a very narrow market, or spend serious money stripping the space back to something a general commercial tenant would take.

That risk lives far in the future, which is why it gets waved off at closing.

Try the uncomfortable version. How old will you be when the second option period ends, and do you want to be negotiating then?

Sell it: your three routes

If you would rather convert bricks to cash, three roads exist, and they are not interchangeable.

Sell to the practice buyer. Cleanest when available. One closing, one counterparty, no landlord relationship afterwards.

The limitation is appetite. Some acquirers buy real estate, plenty do not, and you will not know which you have until you ask.

Ask early. It belongs in buyer vetting, not in a favour requested after the letter of intent.

Sell to a third-party investor with the lease in place. Most owners have never considered this route, and it is frequently the best one.

You are not selling a building to a dentist. You are selling a contracted income stream to an investor, and that market is national, busy, and wholly separate from the market for practices.

Becker’s Dental Review reported one investment firm acquiring a 12-property dental portfolio in Florida for roughly $28 million, all twelve carrying long-term triple net leases.

That is the pool you sell into, and it does not care about your hygiene reappointment rate. It cares about the lease, which is why this road only opens once the lease is signed.

Sale-leaseback. Selling the property and simultaneously signing a lease to stay in it. Normally executed by whoever will occupy the space, so in practice this is a structure your buyer may run after they own the practice rather than one you run yourself.

Worth understanding anyway, because it explains a behaviour you may meet.

A group taking both practice and building may intend to flip the property to an institutional investor under a long lease. That is often why they pay more for the bricks than you expected.

A relaxed attitude to the property price is usually that. Nothing to resent.

Something to price.

Keep or sell, side by side

	Keep the building	Sell the building
Cash at closing	Practice proceeds only	Practice proceeds plus property proceeds
After closing	Contracted rent, usually triple net with fixed increases	Nothing further from the property
What you are exposed to	One tenant, one property, one specialized use	Whatever you do with the proceeds
Effort required	Landlord duties, lease administration, renewal negotiations	None
End of the lease term	Re-let to another dental group, sell, or repurpose the space	Not your problem
Effect on the practice negotiation	The lease becomes a term the buyer will push on	Removed from the table
Estate considerations	Heirs inherit a single-tenant property and a landlord’s job	Heirs inherit liquid proceeds
Fits best	Owners who want income continuity and are content to be a landlord into their seventies	Owners who want the chapter closed, or need the proceeds working elsewhere

No column is universally right. There is a right column for your age, your liquidity, your tax position and your tolerance for being somebody’s landlord.

What does not exist is a version where this gets decided well a fortnight after the letter of intent.

Why a signed lease raises the building’s value

For an owner who intends to sell the property, this is the most useful paragraph here.

An investor buying commercial real estate is buying future rent. Not bricks.

Not square footage. Rent.

Their questions are all about that income. How much, for how long, from whom, and how reliably?

An unleased building answers none of them. It is a vacant special-purpose property, and it prices like one — low, and only to somebody with a plan for the space.

A building carrying a 15-year triple net lease to a well-capitalized dental group answers all four. Now it is an income instrument, and it prices against other income instruments.

Hence the sequence. Sign the lease, then sell the property.

Reverse that and you are marketing the least valuable version of the same asset.

Hence, too, why term and options deserve hard negotiation even if you expect to hold forever. You are building the product you may one day sell.

The above-market rent trap in the add-back schedule

If you have been paying your own building entity more than market rent — and many owners have, for perfectly sound tax reasons — expect a buyer to reverse it.

The adjustment is routine and carries no accusation. The buyer is working out what the practice earns under a market lease, because that is what they will pay.

Mechanics, evidence and the full list of what survives that review live in the add-backs article. Two points belong here instead, because they are property decisions rather than accounting ones.

The adjustment cuts both ways, and the second cut is the one people miss. Establishing market rent at $132,000 does lift adjusted EBITDA if you were charging more.

It also fixes $132,000 as the rent the buyer will agree going forward. You gain once, at the multiple.

You surrender the difference every year afterwards.

The same logic disqualifies the friendly gesture. Charge below market and you are inflating adjusted EBITDA; a buyer’s accountant adjusts it down. Whatever you hoped the cheap lease would do for the price, diligence undoes.

Both directions arrive at the same instruction: get the appraisal, sign at market, and stop arbitraging between two pockets that both belong to you.

What the buyer’s accountants hunt for is covered in our guide to dental practice diligence.

Sequencing: decide before you go to market

The property call belongs before the practice reaches the market. Not after a letter of intent, and certainly not when a draft lease lands with a number already filled in.

Three reasons, in order of what they cost.

It changes what you are selling. “Practice, building available separately” and “practice with a 15-year lease attached” are different offerings. They attract different bidders and different prices.

It changes your leverage. Before exclusivity several parties are competing and the lease is one of the terms they compete on; afterwards the others have gone home and you are negotiating with a single counterparty who knows it.

It changes the tax planning window. Property and practice carry different treatments, and some useful moves take months to arrange and cannot be done retroactively.

So the question belongs about 24 months out, alongside the financial cleanup. Get the rent appraisal.

Choose keep or sell. If you are keeping, know what lease you intend to sign before the first buyer conversation.

Process guidance from Mandelbaum Barrett and Cranfill Sumner maps where the lease surfaces in a DSO transaction. It surfaces late.

Which is exactly why the thinking has to happen early.

This is also where a competitive process earns its keep twice over. A prepared practice shown to one interested group is priced by one opinion — and so is its lease.

The same practice with several vetted buyers bidding gets both priced by the most motivated of them.

That is what the Elite Selling System produces. We approve every buyer before they see your practice, the way a doorman decides who gets past the rope, then run a private competitive window inside that approved group.

A brief word on tax

Two transactions, two tax treatments. A paragraph rather than a chapter, because this deserves your CPA more than it deserves an article.

The building behaves differently from the practice. Depreciation claimed over the years returns at sale as unrecaptured section 1250 gain, taxed at a maximum rate of 25% under IRS rules. No line in the closing statement startles long-tenured owners more.

Section 1031 survives for real property. A like-kind exchange defers gain by rolling into another investment property, and since the Tax Cuts and Jobs Act it applies only to real property. Live for the building.

Unavailable for the practice.

Holding the building changes the character of the rent. While you own and work in the practice, rent charged to yourself is generally non-passive under the self-rental rule.

Once you have sold and are no longer materially participating, that rental income can turn passive and fall within the 3.8% net investment income tax.

How the practice price itself is divided across asset classes is a separate matter, handled in our piece on asset sale versus stock sale.

None of this is tax, legal or investment advice. It is general information about how these transactions usually work.

Your outcome turns on your entity structure, your basis, your state and your income. Those belong to your CPA and your attorney, before you sign anything.

Where this leaves you

Practice ownership among US dentists has slid for two decades, from 84.7% in 2005 to 72.5% in 2023.

So a growing share of the dentists who might one day rent your building are employees rather than owners. Your future tenant pool is consolidating into fewer, larger, better-advised organizations, and they will negotiate leases accordingly.

Worth sitting with if you plan to hold for twenty years. It does not make keeping the building wrong.

It makes clear-headedness necessary.

The owner from the opening kept his. He also got an appraisal, moved the rent to market, extended the term with two options, and put the management company on the lease as guarantor rather than the clinical entity.

None of that was available to him a fortnight after the letter of intent. We recovered most of it only because the buyer still wanted the deal enough to reopen the point.

Not something to count on.

What to do next

If you own both, the first useful step is not choosing. It is measuring.

What is fair market rent for your space? What is adjusted EBITDA at that rent rather than at what you currently charge?

What would the building fetch from an investor under the lease you would genuinely sign?

Three answers turn an argument into a decision.

We will give you that read free and in confidence, including the unwelcome version when the honest answer is to fix two things and revisit in a year.

It starts with a free, confidential practice value estimate, and where there is real estate we look at both sides of it.

Our fee varies depending on the value of the practice and is entirely success-based. If we do not get you a result, we do not get paid.

Which tends to concentrate the mind on the numbers that actually move.

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Frequently asked questions

Do DSOs buy the real estate when they buy a dental practice?

Sometimes, though it is not the default. Many acquirers prefer to lease rather than tie up capital in property they would rather deploy into the next affiliation.

Ask early, during buyer vetting, because the answer changes how the whole transaction should be structured and sequenced.

Should I sell my dental office building or lease it to the buyer?

Both are defensible. Selling converts the property to cash and ends your involvement.

Leasing converts practice income into rental income and leaves you exposed to one tenant in one specialized space. The right answer depends on your liquidity, your age, your tax position and your appetite for being a landlord.

What rent should I charge the buyer if I keep the building?

Fair market rent, established by independent appraisal before the lease is drafted. A below-market rate destroys more building value than it adds to the practice price, and a buyer’s accountant normalizes it in diligence regardless.

Above-market rent gets marked back down by appraisers and lenders.

How does the lease affect what my building is worth?

Enormously. An investor buying a leased dental office is buying the income stream, so rent, remaining term, renewal options and the tenant’s creditworthiness set the price.

A building with no lease is a vacant special-purpose property and prices like one.

How long a lease term will a buyer want?

Long enough to protect a multi-million-dollar investment. Guidance for dentists commonly points to a total of 5 to 15 years, structured as a base term with renewal options behind it.

Options give the buyer control while leaving you a decision point every few years.

What happens if my tenant leaves at the end of the lease?

You own a purpose-built dental office. Re-letting means finding another dental group in your specific market, which is a narrow pool.

The alternative is spending real money converting the space for general commercial use. Weigh that before committing to a long hold.

What are the tax consequences of selling the building?

Different from the practice. Depreciation claimed over the years returns as unrecaptured section 1250 gain, taxed at up to 25%, and a section 1031 like-kind exchange can defer gain into another investment property.

This is general information, not tax advice — take the specifics to your CPA.

When should I make the real-estate decision?

Roughly 24 months before going to market, alongside the financial cleanup. Before exclusivity you have competing bidders and the lease is one of the terms they compete on.

Afterwards it is a one-on-one conversation with a counterparty who knows the others went home.

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Sources

ADA guidance on the building, the lease and what buyers examine

1. American Dental Association. “10 Must Dos to Prepare Your Practice for Sale.” ada.org
2. American Dental Association. “What Dental Practice Buyers Want.” ada.org
3. American Dental Association. “Buying or Selling a Dental Practice, Start with an Accurate Valuation.” ada.org
4. ADA Health Policy Institute. “Practice Ownership Trends in Dentistry: A New Look at Old Data.” ada.org
5. ADA Health Policy Institute. “The State of the U.S. Dental Economy, Q1 2026 Update.” ada.org

The lease, landlord consent and transaction structure

6. Mandelbaum Barrett PC. “Pitfalls to Avoid When Buying or Selling a Dental Practice.” mblawfirm.com
7. Mandelbaum Barrett PC. “The Four-Phase DSO Transaction Process: What to Expect When Selling a Dental Practice.” mblawfirm.com
8. Cranfill Sumner LLP. “Selling Your Dental Practice to a DSO: What to Expect Before, During, and After the Deal.” cshlaw.com
9. Nixon Peabody LLP. “Five Issues Dentists and DSOs Should Address Before Signing a Transaction.” July 2026. nixonpeabody.com
10. Benesch. “Dental/DSO Industry Newsletter, May/June 2026.” beneschlaw.com

Rent, lease terms and dental practice valuation

11. DrBicuspid. “How Rent Can Affect Your Dental Practice Valuation.” drbicuspid.com
12. DrBicuspid. “What You Should Know About Rent and Lease Renewals.” drbicuspid.com
13. DrBicuspid. “Negotiating Your Dental Office Lease: Part 1.” drbicuspid.com

The dental property market and the buyer pool

14. Group Dentistry Now. “The Group Dentistry Now Show: The Voice of the DSO Industry, Episode 241.” groupdentistrynow.com
15. Becker’s Dental Review. “Real Estate Investment Firm Buys 12-Property Dental Portfolio in Florida for $28M.” beckersdental.com
16. Becker’s Dental Review. “69% of DSOs Plan to Boost Acquisitions in 2026: Report.” beckersdental.com
17. Association of Dental Support Organizations. “About ADSO.” theadso.org

Tax treatment of the property

18. Internal Revenue Service. “Like-Kind Exchanges: Real Estate Tax Tips.” irs.gov
19. Internal Revenue Service. “Publication 544, Sales and Other Dispositions of Assets.” irs.gov
20. Internal Revenue Service. “Net Investment Income Tax.” irs.gov
21. Internal Revenue Service. “Publication 925, Passive Activity and At-Risk Rules.” irs.gov