What if the standard advice to “find a private practice where you’ll see a lot of production as an associate and then buy” just won’t do it for you personally? What if you think you want to buy a dental practice straight out of dental school?
It can happen.
But I strongly advise against it. (Sorry, gunners.) I will share with you what you have to do if you do insist on moving forward with that course of action, but will follow up each rule with my thoughts on why you’ll probably want to wait at least 12 months.
Before I get into the nuts and bolts, I want to be clear that I’m only talking about students who buy immediately after a 4-year dental school program. Dentists who go into the military, specialize, or do a 1- or 2-year GPR or AEGD residency get looked at a little differently by banks and would have different rules than I’ll describe here.
This section of the chapter is strictly for the D3’s and D4’s out there who want to know how to own NOW.
The first hurdle you’ll need to be aware of is that many of the large dental lenders in the country won’t lend to a new grad. Full stop. There are regional and smaller national banks who will lend to new grads, but they typically have strict requirements.
The most common requirement is that the total loan amount is usually around $350,000. That limits the type of practice you can qualify to buy. Smaller practices aren’t typically the ones you want to buy.
The second hurdle you’ll see as a brand new grad is the bank will look in extreme detail at your business plan as the practice owner. You’ll need to be able to tell an underwriter, in detail, the exact steps you’ll take as the owner of the practice to manage staff, attract new patients and increase case acceptance. All while taking the necessary CE to fill in the inevitable gaps in learning from dental school. To be blunt, only the experienced dentists I speak with have the tangible, specific steps in mind or experience needed to move forward confidently here. Students…usually not so much.
Most banks who will lend to a new grad also want to see (and some require) that the buyer have a connection to the geographic area where they are buying. If you grew up in the town where you’re looking, or are buying from a family member you’ll likely check this box. But if not, it’ll be a major strike against you with the bank and you’ll likely not qualify.
So…can you buy a practice right out of dental school? Technically, yes. But it’s a tough fit.
I’ve helped a handful of dentists buy right out of dental school. A couple of them have doubled the practice collections in less than 12 months and been phenomenally successful. I’ve talked with them about their transition and asked them candidly, “If you could do it again, would you?” The universal answer I hear is, “No.”
They tell me they underestimated how difficult it would be to learn the clinical skills and speed necessary all while trying to get a handle on the business side of practicing and admit they’d probably make a different choice in which practice they bought if they’d had more perspective.
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