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This podcast covers from START to FINISH How to Acquire a Dental Practice. Michael Dinsio, founder of Next Level Consultants has literally seen hundreds of deals as a banker in the industry & he has personally consulted hundreds of dentists as a Buyers Representative. Michael talks with GUEST SPEAKERS about Due Diligence, Legal, Demographics, and more... He invites experts to the show to help you avoid those headaches and heartbreaks. So start at the TOP w/ Episode 01 and work your way through the transition process. We break it down step by step in a true #UNSCRIPTED and genuine way.
00:00
Oh yeah! Here we go! Practice acquisition!
00:11
There are pitfalls throughout the entire process.
00:25
Folks?
00:36
And now your host, Michael Dinsio. Hey, hey guys, another great episode on Acquisition Uncensored. We are going to be deep diving into leases today and I've got an amazing speaker. Great person to have in your camp as you approach leases on an acquisition. We covered
00:57
things like how to negotiate a deal with an acquisition, much different than startup, just like startup uncensored, acquisition uncensored, the lease has a different angle, different, you have to have a different play to it. So we get into that. We talk about assignability and that's really a hot topic in the acquisition world of how to assign appropriately the lease over to you when the seller has a lease and you're gonna be assigning it.
01:26
We talk about some deal killers. You cannot miss that part. There aren't a lot of them, but there are a few. And if you have those deal killers in your lease on an acquisition, it is probably a done deal. No matter how great the acquisition is, you've got to really consider walking away if you have a few things in your lease. So we cover a lot. Stay tuned. Let's get this party started.
01:56
Alright, alright another great episode here. Let's get it going. This is Acquisition Uncensored. I'm Mike D'Incio. You guys know who I am. This is episode 10 and we are deep diving into the lease today. If you've been following along in the entire season, you know we're working through the entire process from
02:17
you know, how to find a practice and then all the way to close. And today's episode, like I just said, is lease specific. And if there's anything that could be more of a deal killer in this entire process, it could be the lease. And so to have somebody like my guest in your corner to navigate you through this process that knows leases and understands where you can get into trouble.
02:47
it's these guys and that's best practices folks. And so we just came off of due diligence and LOI and through that, the lease is a big thing that you need to check into and really dig into. So today I am fortunate enough to have a friend of mine that I've known for a while and have done lots of deals with. He happens to work for the largest real estate agency or company or however you want to say that in the country.
03:17
in dental, uh, car Dan Gleisner with car. He's a regional director there and, he's a wealth of knowledge, Dan, thanks for being on the show, man. I, it's a pleasure. Good seeing you. Thank you. Yeah, it is a pleasure. I'm excited to be here. Talk everything lease, lease, lease, lease. If you've ever heard Dan speak on the, on the podium, you're in for a treat. The dude drops tons of knowledge. I love his,
03:43
his nature and his sense of humor. It's a great dry sense of humor. That's my style. If you don't like it, it is what it is. But Dan, you always make me laugh. So let's get right into it though. I've learned that if we don't pop right into this, start losing people. So when you're looking at the lease on an acquisition, let's walk through some of the biggest pitfalls because
04:11
It's a tricky situation. Unlike a startup, and we talked about a lot of stuff in startup uncensored with leases, and we went through Shark Week and that whole craziness. This is a lot more strategic in my opinion, and you've got to play your cards right. So all the more reason why to have someone like a Dan to help you navigate. So what are the pitfalls of a lease in an acquisition? I know that's a loaded question, but let's just see where it goes.
04:39
Yeah, number one pitfalls expectations that everyone's at from a timing perspective. Because most times there's a lease already in place and the terms are what the terms are and there's a time to negotiate and there's time not to negotiate. Right? For those that been looking for the right practice for 18, 24 months and you finally found one, it's not time to go in with guns blazing against the landlord in order to negotiate. That's not, that's not it. So timing is it. then
05:07
the appetite for the landlord to want to do the deal as crazy as it sounds. Because what do mean by that appetite? Yeah. Uh, for them to meet the timeline of the practice broker, of the doctor's expectations, the seller expectations, uh, because they don't care. They usually have a tenant in place that's paying their rent on time and full. And in most cases we're coming in with a doctor who's going to be riding off into the sunset. It was probably worth a couple of million dollars.
05:37
And the new doctor has a most likely a negative net worth with their student debt. So the securitization is not there from the landlord's perspective. And they're saying, hey, let's drop this warm, fuzzy blanket that's worth, you know, $5 million and bring on somebody that has a negative net worth of $500,000. Yeah, let's that's huge. Let's let's let's let's break it down. Denzio style, layman terms, uncensored. Dan, Dan tends to talk.
06:06
on another level, he's a super smart guy. in really simple layman's terms, yeah, the landlord has someone already. That's the seller in this scenario. We tend to have a lot of buyers listen to our program. So buyers, you're the ones that have a negative net worth that Dan was talking about. So here we are, you're the buyer, you're trying to get the lease, the seller is already on the hook.
06:33
the landlord already has a deal with that seller and that seller has been paying their bills for years and there's all kind of safety there with the landlord. So why would a landlord, this is actually great, cause it kind of transitioned. Why would a landlord want to work with a young doc with no business experience, negative net worth? Like, how do you get around that? Cause you're right. That's a big problem.
07:03
That's the true negotiation. That's what we're trying to convince the landlord of. We're not trying to come in and reduce base rent or get free rent or get tenant improvement allowance like we would on a startup or a renewal. That's not it. We're trying to convince the doctor to say yes to the buyer. And in a best case scenario, we can get the seller removed from the lease, meaning that they're no longer a financial guarantor, that they're going to secure that lease.
07:32
That's a lot of heavy lifting and that probably happens probably 20 % of the time. 20 % of the time I'd say that the selling doctor gets off the lease. So the expectation from a seller for those sellers that are watching, as much as you can get in the process of assignability into your lease, as you have the good faith and goodwill during negotiations, do it now. So you can get teed up so you can get removed off the lease. when you're sitting on the beach, sipping your mojitos,
08:00
You don't have to worry about, hey, I wonder if Dr. Smith is paying the rent because if they're not, I'm on the hook. Yeah. Timing. You said timing is like the first pitfall. We're going to keep, I have a feeling we're going to keep coming back to that. timing for the sellers to get their house in order before maybe they put it on the market for the buyer to inherit. So if they have that assignability, they can assign it over to the buyer. That's what I heard you say. Yep.
08:26
So every lease has an assignability clause and it usually states something like, you know, based upon landlord's review of financials and their approval. If that happens, great. But again, in most cases, we have a seller who's worth a lot and a buyer that's worth not a lot. So it's not going to meet the criteria. So there's a couple of scapegoats that we could have in there based upon lending or just get the guarantor removed as a whole because the seller has had great history with the landlord.
08:56
then that's something that we can have while the landlord and seller have a relationship. On the 18th hole, we try to get that done. It's not going to happen in most cases. then most the seller, the seller's broker, and the buyer are unhappy with the process because the lease is the number one time killer. Yeah, it is. You're right because everybody thinks that the purchase and sale contract is the time sucker and it's
09:26
It's not, it's always the lease. It's the lease and the banks, the PSA flies. Cause actually if you have good attorneys, if you have good attorneys that do this on a day to day basis, I mean, and each size represented well versus, know, my uncle's an attorney, your uncle's an attorney. shouldn't be doing that. They have a research. Actually that that's a good question, Dan. And I'm sorry, I'm bouncing around.
09:51
Do the attorneys handle that piece of it or do you? Like how's that work? I think that's a really good thing to talk about because here we are saying car is gonna help you. And then the buyers have an attorney and they're working with the PSA, the purchase and sale. And we talked to Robert Montgomery who's the best in the industry on the show. And so that was a treat. And so does Rob handle that or does Dan handle that or how do you guys work together?
10:20
Yeah, so Rob's great. Rob's one of the best in the nation and I've had great experience with Rob and his team. I'm free, Rob's not. For negotiation. And a lot of times there's a lot of back and forth and rattling of cages and using the relationships that we have in each local market or to get some headway with these landlords.
10:45
because if we've pulled a tenant out or put a tenant in, we have goodwill in some form or fashion with these guys and we can check or cash in our chips the right way in order to get some movement. So if you use relationships within local markets, then we can move the needle from a timing perspective. Everything's gonna be ran through somebody like Rob to make sure the terms are good and everything lines up because nothing happens out of good attorney. So it's a team approach.
11:12
but I'm the one usually spearheading the communications with the landlord and with their representation. I like to think that you guys, as the real estate Kings, you look at leases. This is your whole world. Like it's literally your whole world. Not to take anything away from Rob or any of the attorneys out there, but if you're staring at leases every single day in the dental space,
11:41
you would think that you would have some knowledge that others don't. And so I think that that's a key thing here is you guys been doing this forever. You're the biggest and probably have done by far the most in the entire country as far as leases go. So having that experience definitely matters. I wanna go back to one of the first points that you made.
12:09
And that is there's a time to negotiate and there isn't a time to negotiate. so I don't want to skip over that. Because I think experience matters, like I just said, and having experience, you would know when to push and when not to. And let's set the stage here because you really don't have that much leverage in these deals.
12:38
You might with a startup and that's a whole different conversation. Yeah. So, So yeah, the, the stage is set that part of the goodwill that you're buying when you're buying a practice is the location and the familiarity from a lending perspective, from a patient's perspective, right? So the lender wants that goodwill when they're buying it. So I don't know of that many lenders out there that will allow you to buy a practice and relocate it right away because of way the lenders work is that they take the equity out of the practice. If you're buying the practice.
13:08
You have zero equity within the practice. You're a hundred percent leveraged. So there's, can't relocate it. And in real estate, whoever has the most options wins. In this case, we can't have options unless there's a turnkey office right down the way, but there's still no guarantee that we can get the approval necessary. And it's going to be bluffing, which we don't love bluffing. So the process is understand what's the deal and how long you have to live with it.
13:37
So if there's three years left on the lease and you have a five-year option, it's gonna check the lender box so that we can move forward. So if the deal is out of whack, say it's X dollars above market, well, pay the freight for the three years and then we can re-negotiate that at the time. The landlord's not gonna renegotiate the deal when there's three years left on the hook when they know they're getting above market rent, by the goodness of their hearts. That's not how it works. And we can't get lost in fair. Real estate's not fair most often.
14:06
Right? We said, well, market is blank. Well, that doesn't matter because there's a three-year lease in place and the doctor's paying the rate. They're not going to reduce it. Let's go after the landlord in two years when there's a year left to remain on the lease and go get you the market concessions that you need and deserve. But right now what we need is a lease so you can buy the practice. Yeah. I think that, and that's the key right there, right? Is unfortunately we already set the landlord is on the hook.
14:35
and they've been paying for years. Why would a landlord give a buyer a better deal? They're not, why would they? They already have a contract. That'd be like offering somebody a crown. And how can we relate this back? And then someone, the same patient comes in and I suppose says, redo my crown, but it's a perfectly good crown. mean, there's just no reason to do that.
15:04
Why do you reduce if you don't have to? Yeah, what I mean, the analogy for the crown to be, yeah, you have to pay for a crown, but we're going to give it to you at a composite price. But it's not going to happen. Right. Like you're going to pay the full fee. You're to pay the crown fee. Especially when the crown is perfect. Yep. Why would you redo it? So so with that being said, OK, so we have we have a situation where the landlord is not going to bite on any concessions.
15:32
But then the buyers on the other end of this, on the other end of this, audience listening is like, we'll screw this landlord. I'm about to commit to this dude or gal or landlord for maybe 10, 15, 20 years. So why wouldn't they want to lock down a good relationship with me for a long period of time and give me a fair deal, fair, back to fair.
16:03
What's, do you get into that situation with, with buyers? mean, it's so in the real estate world, if you try to apply conventional wisdom, you're losing, right? Because it's, it's not, it's not fair. So that, that's where it's at. So yes, they are setting the stage for a 10 year relationship, but that's the brutal world of real estate is that everything's a spreadsheet based, right? It's securization of the tenant, which they want to hide that worth of whoever that's going to be. You're not, most buyers are not checking that box.
16:32
And they want the highest lease rate possible, which most buyers don't want that. So we want the exact opposite of what the landlord wants. But overall, what the buyer wants is that practice. And you're not getting that practice unless you get that lease. So let's do what it takes to get that lease. And then when the timing is appropriate, go after them guns of lasin. And trust me, there's nothing more fun than being a landlord.
17:00
Right? Like that's what I live and breathe for. Right? Winning those deals, a very competitive nature, probably have a problem when it comes to that. But if we can do that, I want to do that. But we don't want to blow a deal because we're chasing fair. Okay. I think we've set the stage. That's perfect because the startup, it's almost like put that, put on the gloves and let's go. Right? Where an acquisition is, is the primary focus is getting the practice.
17:30
And as long as this lease isn't totally, totally gonna put me in a bad, bad spot, we need to move forward and secure the business that we're buying within reason. And so that's the stage. I mean, if I could summarize this first segment, the second segment in my mind of this conversation is what are the scenarios, I mean, this is acquisition uncensored.
17:59
So let's get uncensored. What are the scenarios where maybe it is a deal killer? Like, you know, as a buyer's rep, I've looked at all of the financials. We went through all the due diligence in previous episodes. We know our transition plan, the practice is cash flowing, the banks approved it, everything is moving forward and this is perfect. Are there scenarios, and I think there are, I'm gonna just say that, but are there scenarios where
18:29
we look at a lease and we're like, oh shit, like we cannot move forward with this deal. Yeah. I experienced one right now. It's a demo clause. So anybody in the Pacific Northwest gets to see a demo clause all the time in Seattle, primarily dealing with one in Denver currently where it's six months notice and they can terminate the lease. So you imagine you spend $800,000 on a practice.
18:56
you are fully leveraged, you give you the six month warning, which you cannot go find a space and build it out within six months anywhere, unless you have a perfect turnkey and you have no money to go get. You have to go projection based, potentially SBA lending at best. You're just, you're out there floating. It's the worst. So demo clause means that the landlord has the right to take back your lease and then tear down the building. So somebody can come in and do the next building. So a demo clause is by,
19:25
will be a deal killer because you could be up a hill really, really fast. Leading the witness here. What are creative ways demo clauses are in the lease? I've seen wording that's unique to demo clauses. Yeah. Like recreational, like development or just crazy. It's not, it's not a lot of the times it's called
19:53
demolition clause. Yeah. Or termination, or termination, landlord take back. I mean, there's a, there's a lot there. It's, if the landlord has an option to give you notice of anything and take back the space, that's what you're looking for. So when you're taking on the lease for an assignment, you're, you're going to be assigning the lease and all of its amendments that the selling doctor has signed. So if the doctor's been in the space for 30 years, they did a 10, 10 year original lease in five, five, five, five.
20:20
Like you have to go through all of those amendments and all of those leases to make sure what's there, what you're getting into. And a lot of times sellers don't have all of the original documents. And most cases over a 30 year period, that building has changed hand multiple times. So the new landlord probably doesn't have all the documentation either. So sometimes it's just safer to do a brand new lease so you can make sure that all the writing is in front of you and it makes sense. We'll get to that. We'll get to the new leases that I'm glad you brought that up.
20:51
We'll get to new. So demo clause. Yep. Anything else that you could think of that's like, Whoa, that's, that's a problem. Uh, could be pass through expenses. Uh, you know, surprises of how things are going to come through in taxes and think cams, common area maintenance, uh, because you want consistent charges is what you want. Like it's, you know, CPI indexes right now would be a big scary thing for me, because if you're on a CPI index for my annual increase, meaning that
21:21
the base lease rate is X and the next year, calendar year will increase per the CPI index. Well, inflation year over year is a little over 8%. And 8 % increases is a high dollar amount, high, high dollar amount. So you want to be protected on know what you're going to be spending because you can, again, be in a situation where your cashflow is just eaten. Because if it comes from the rent, that fixed expense is just going to eat into the doctor's pocket.
21:50
Yeah, that's probably both startup and acquisition scary right there. Okay. Anything else that you could think of? Deal killers? mean, I can't think of that many, but you're right. Those two are can, definitely the demos. Like that's an easy one. Yeah. You want to be able to control your future. And when you sign a lease, you want that time.
22:16
In most cases, if you sign a five-year lease, that lease is going to roll and stay consistent. If the building changes hands 15 times, legally, that lease is going to stay in place. So you know that you have a home for the next five years. You just want to make sure that there's no take-back option, and then you want to be able to control those expenses. So if you have escalators in your lease, which 99 % of the leases do, you want to make sure those are controlled, a 2%, 3%, 5%, whatever it's going to be. So you know from a cashflow perspective what you're getting into. And maybe even a cap if you can, right?
22:48
You're like, good luck with that. It's really interesting. Mr. Dan here could tell you the differences between all the different markets across the country. And inflation is definitely a hot topic today with a timestamp for 2022 here. And the cost of bread is out of control right now, gas specifically. But who knows? It's going to change over the years.
23:16
But inflation is definitely something that people are looking at when you look at leases. so controlling that. Okay, I'm thinking about something else here. So would you say, you said 20 % of the time seller gets off the lease. It's not a very high, so it's 80 % seller still on the lease and on the hook. So that tells me just logic that 80 % of the time or more
23:47
we're assuming an existing lease and not doing a new lease, right? Yep. Yeah. Okay. So pros and cons quick quickly of a new lease versus assigning a lease. And I know we covered a lot of that already, but yeah. So if you're going to sign the lease, it's the fastest way to do a deal for both the seller and the buyer seller perspective.
24:16
doing a new lease would be way easier because they're off the hook. Doing a new lease from a buyer's perspective, most oftentimes will give you an opportunity to negotiate if you're do a new lease. that opens up the window, but that's a rare situation that a landlord would wanna do a new lease.
24:37
Yeah, you brought up banking. the banks, I don't know if Morgan at Provide, who we interviewed not too many episodes ago, if we talked about this, what are you finding that the banks are requiring these days? I know there's a pretty big spread. Is it still 10 years is kind of what we're shooting for? So five years on paper is the minimum, is what we're seeing in most cases. And this could be a one year lease with four one year options. It's just five years on paper as a whole.
25:06
Right? That's not, that's not, it's not a safe thing if you're buying that lease or you're buying a practice and the lease comes with it. That's not going to give you the warm fuzzies that you're going to be there for the next five years to build equity within the practice and pay it off. But that's what you need as a minimum. 10 years is, would be matching the loan term, which a lot of lenders would like that. They'd like a five year lease with a five year option to protect their investment in that space and give the security that they can build equity in that practice. But it's
25:36
It's usually all over the board, five years is minimum. Okay, so to recap, new leases, you might have some more leverage or you might be able to get into some negotiations. probably could easily secure, nothing's easy, but easier to secure a longer period of, a longer term, quote unquote, with the lease, right? But,
26:04
that's going to take a lot longer to put together than, so that's a downside of, of assigning. Assigning is like, you're inheriting this other lease and then you're putting together with your help, you're putting together options to either make up for what the bank's looking for or just, it shouldn't really be about the banks. I, you know, I was a banker. Everybody knows that it shouldn't be about the bankers roles. It should be about what you want. Like why would anybody want to,
26:34
buy a practice and only sign a five-year lease, like you really want to move in four years? Cause you got to start thinking about moving in four years if your lease isn't five. So that doesn't make sense. It really should be about what you want, not about what the bank wants, but if you assign, then you're putting options together, right? Yeah. So it is unfortunately it's usually what the bank wants is what the doctor wants and the doctor wants to practice. So, and the day the bank's going to dictate, you know, what it takes to get that practice.
27:03
For committing to a space that only has a three year lease remaining with a two year option or five year option, whatever, that's going to probably put you in the best scenario. Like if that's it, you should be excited about that because you're going to have enough term on paper that you can get approved for financing. And then you're to be able to be in there for two years, evaluate your
27:24
future in that practice. then, and with that year remaining on the lease, go after 10 improvements or say, Hey, I want to buy something, or I need less space, more space, whatever the requirements going to be. So I think that that's a position of power. it's, you know, committing to a 10 year term, that's a full decade when you're buying the practice, which there's a lot there. That's just, it feels like forever statement.
27:49
So it's have the options, right? Go after five years, evaluate your process, evaluate the future, make sure everything is in line up with where you wanna be, and then choose your real estate path then. Your recommendation is secure yourself five years to get your feet underneath you. then when you get close to that fifth year, what, a year before? What would you say? 12 months. 12 months before. Take a look and figure out what you wanna do. And then start.
28:18
coming then come from that position of power is what you're saying. And that's really where you guys are gonna really shine the brightest is coming into a scenario like that where even though you're probably not gonna move, you could at least threaten that you would, right? Yeah, we're gonna go to market. We're gonna negotiate on multiple properties regardless, right? So you're gonna, the buyer who's going to be now the tenant.
28:44
There's going to be educated what's going on and they're going to see offers from multiple spaces so they can ensure that they're getting the best terms possible. And then we can leverage these landlords against each other, even though that's a 99.99 % chance that they want to stay and they don't want to do a project. And the other reason why we want a five-year term is that it allows them to pay down their debt. Because once you buy a practice, you're a hundred percent leveraged. You have to have some equity within a practice in order to do a project, unless you're going to do projection-based lending, which is that much more complicated.
29:14
So you want enough time to get your feet underneath you, like you said, and pay down some of that loan so you can have options and plan for the future. See guys, I just want to give kudos or kudos or do. Dan's talking about things that almost don't even sound like real estate. He's talking about things that like set you up for success. Don't put you in a position.
29:43
where you're gonna get screwed or get burnt. It's not about the best deal or fair deal in the market. It's about finding partners like Dan and many folks at CAR that they have that help them do what they do. Understanding your world as a dentist. That's an invaluable thing.
30:09
You just heard him. He's like, just secure your deal. Don't negotiate. Like that's wisdom. That's experience. I kudos to Dan and everybody at car. You guys understand that I, I just wanted to throw that out because it's not just about the lease and the terms and negotiating. It's about when to press and when not to press it. It literally goes back to that first statement you said when we started the program. It's so key, but it's such a such a loaded thing.
30:40
Hey, before we run out of time, one thing that I get that I don't even quite get very well is options. Options are confusing because you think, okay, just because you secured the space for that period of time, that doesn't mean that the terms stay exactly the same. So can you clear up this whole thing about options? And I think it's really important topic for an acquisition podcast.
31:09
Because options are what, 95 % of the time gonna have to be added onto a lease or, you know, even if it is a new lease, you're probably gonna have some options at the end of that. If you're assigning a lease, you're gonna definitely have some options. So options like, is an option really like a secure thing for these buyers? It's kind of a false security, isn't it? Like walk me through that. Yeah, options are all over the board.
31:39
The reason why we want an option is your securitization in the space, that the landlord can't come and lease it out from underneath you at the end of your term. Essentially, you have first right for the space. And a lot of times they'll say options at then market rates, right? And that's kind of what we'd like to see in an option is that, because if you commit to a annual escalator five years from now, we don't know what the market's gonna be. So at then market rates is a little bit of protection from like, you're not gonna get overexposed.
32:07
you're not gonna be underexposed either, you're gonna be fair. that's term that we like to chase is fair. But if you commit to 3 % escalators, which is a very standard percentage, and I think we see a lot of those going up to four or 5 % right now given the market, that it's, know, in six years or year six that your rent, if you elect to take it, will just continue to increase at that 3%. So the option is there,
32:37
for your protection. That option is also there for you to get a loan done. And that option is something that you don't have to take either. So it really secures the time that you can be in this phase so that you don't have to go get another loan, like you said earlier in the episode, another loan to build out later. And that's going to be five, six, seven, 800,000 or more.
33:04
Like imagine throwing that on top of your acquisition loan in two years. Like that's what Dan was saying earlier. And so the option really secures your spot, but the terms, Dan, the terms are. Negotiable. Are they like, is that how that works? Yeah. So it's at that time during a renewal process. So if you do a five year with a five year option, come year four is when we're going to renegotiate. And it depends on when the term is going to be or what the market is, is that. it's.
33:33
come four years from now, then we can start deciphering like, yes, we can let's continue at 3 % escalators, or let's try to bring the price down a dollar per square foot, or whatever the market is going to be. we can't know until we're there. There's no crystal ball. So that gives you a little bit of freedom versus locking you up in an economic
33:55
I don't know, crisis is not the right word, but if you're overspending for your space, I that's just the interior cashflow. Okay. So if a landlord is silly enough to give you some guarantees at the option place, how can you secure? Probably difficult to do, but if you had like you in the corner, are there things that you could build into the option where
34:22
maybe you could pre-define what the rates are gonna be. They probably won't let you, but are there ways to do that? Yeah, you can try to negotiate that. Everything's negotiable. That's the beauty of real estate. That's why I love it. So if anything's on the table, you've got to pick and choose your battles. So if that's one of your battles, you wanna go pick and choose and go chase, then we can go do that. The likelihood that they're going to commit to reduction in rate is incredibly low. Like you said, it's gonna be very, very difficult. You're better off just taking the term and saying, hey, instead of that,
34:51
committing for five with another five, I'll commit to seven or I'll commit to 10 if I can see a reduction come year five. So if you're willing to do that, that's more apt than the landlord saying, yeah, I'm just gonna have you take the option of paying less rent in the future. That's key. That's really key. Last thing about options. So do you ever get TI or spruce up a spruce up budget? No. Not built into the lease.
35:21
when you renew and do a new term, that's when the free rent or any concessions like a spruce up budget wouldn't come into play. So that's a pro for getting a new lease and a con, so to speak, for assigning that you can't get any free rent or, I mean, you can ask, like Dan said, everything's on the table, but the truth is, you just don't have much to go want the practice, not the good deal.
35:51
Cause most people will say, I want a good deal and a practice. You can't have both in most cases. gotta choose one or the other and choosing a good deal can cost you the practice. And that's not where we're at. We got to get the practice done. I think that's the key to this whole episode because if you hired somebody that's just young gun looking for a commission, maybe a local broker trying to cut their teeth and do a really good job for you.
36:21
You know, that's a very dangerous situation for an acquisition. Bottom line. And so working with car, folks that understand the industry, folks that understand transitions and startups, you're not going to kill your deal. And I'm going to be honest, as an ex-banker, never as a consultant, thank goodness, I'm waiting for that day. But there have been deals when I was a banker that
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that something got blown up because someone was getting a little rambunctious on the lease of an acquisition. We've all heard those stories and the buyer was really disappointed. And I've even been a part of deals where a real estate person that did understand dental definitely didn't work for car and went and tried to create leverage in an acquisition. It went out into the market hedged
37:19
that we were going to leave and it actually went so bad where the deal got worse by the end of it. So it was bad news. Yeah. lot of doctors don't realize that if we open up the negotiation door, where the deal is at does not mean it's just only going to get better. It can absolutely go the other direction and it can get worse. Cause if you want to open that door, you have to expect
37:49
both things to happen. You mentioned free, Dan. I don't like the word free. I don't believe in the word free. I think everybody deserves what they deserve for their knowledge. I still don't understand this whole concept and we've had this conversation before. You deserve what you deserve because you know what you know. But help me out, help me and my listeners understand what free means in Dan Gleisner and car world.
38:16
Yeah, as far as commissions go. So commissions are paid by landlords or sellers at the time of closing. And a lot of times they're an acquisition. Our services are free and we don't get paid. It's goodwill to pay into a relationship knowing that come year three, four, five, 10, nine, whatever it's going to be that we have an opportunity to go at bat for you and then go earn that next deal. So it's a lot of times it's goodwill. If any, if any broker is saying, Hey, my flat rate is 10 or $15,000.
38:46
in order to like the services, call someone else. That'd be my suggestion because you gotta put goodwill in here. The dental community is very tight and it's a great community. wouldn't trade this industry for anything else. So goodwill just comes around. The key there is you're in it for the long term. You're in it for the long haul, the long relationship. That's really important because this isn't gonna be the first time they're gonna need you. They're gonna need you multiple times throughout their
39:15
career. And if you did get an assignment, which 80 by our numbers today, 80 % or more do get assigned, you're, you're going to need them. You listener is going to need a Dan at car to step in before that assignment, that term shuts down. So they're in it for the long haul. You're right. That deal that went kind of South, they were after a fee and
39:45
And again, I just said, I don't believe in free. However, because he took a fee, he felt the need to get a better lease. Because once you pay for that exchange, it's like, oh man, I got to work my butt off. And the whole thing, not that Dan wouldn't, but they're trying to justify an ROI for their client.
40:11
So they try to go get leverage and they did all these creative things because they were trying to leverage their fee and not feel like a scumbag for charging you that fee. And in the end, the deal got worse. was terrible. So I appreciate the free thing that you guys are offering because you know that there's opportunity later on down the road. And we know buyer rep, attorney, practice broker, banker,
40:40
us individuals in the community know that if cars on the deal, they're not gonna blow the deal up because they're in it for the long haul. Is that what I'm hearing? Yeah, give us an opportunity to go over and that fee on down the road because I guarantee you will. Yeah, that's perfect. Well, I think that's the perfect time to segue to the close. Final thoughts, Dan, I'll give you the last few minutes here. Final thoughts of.
41:08
Anything else you want to add to this whole topic? Yeah, when buying a practice, it's a whirlwind and there's a lot of pressure and there's a lot of time. So the earlier you can get involved with the lease part, let a professional do it and make sure somebody's in your corner. During acquisition from the buyer side, there's not a lot of people in your corner. So we would be exclusively on your team or find a real estate professional that will be exclusively on your team that doesn't represent landlords, that doesn't have the seller's best interests at heart.
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that has your best interests at heart and get to work on a process because it's so frustrating when everyone's ready to close and that lease is not done yet or the assignment is not done yet. So it's going to take longer than you expect and it's not always going to be fair. That's it. So that's really the takeaway, right? The goal is to get a deal done, not the best deal done. The best deal will come when it's time, but get the practice that you've been seeking
42:07
and get your doors open, get to know that patient base and start crushing. Wisdom, golden nuggets. Dan, I couldn't have had a better guest for this segment. Thank you so much, brother. How do people get ahold of you? We're going to, we are going to have details below here, uh, show note in the show notes, and we're going to have contact information and website information and all of that. But what's the easiest way to get ahold of you guys? Yeah. Call or email.
42:34
It's the best if you're looking for a broker, you can go to car.us and find the broker tab and go to your specific market. Email, text, call, mean, whatever for me. Happy to answer any questions. Car with two R's. Carr Real Estate. Bam. There it is, folks. Dan, thanks so much for your time, brother. I always appreciate our time. You're a busy guy and you carved it out today for us just to give back to the community. And that's what this program is about.
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Education and that's what you did today. You educated us. So thanks so much, my friend. Have a great one and we'll talk to you on the other side. Yeah, I appreciate the platform and it was a pleasure. See you buddy. See you.
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Tune in next time for another truth-filled episode of Acquisition Unscripted. We want to hear from you. Interact with your host Michael Dinsio. Follow us on Facebook, Instagram, and YouTube. Comment and subscribe.