How to Protect Yourself in a Lease (Even If Your Dental Real Estate Broker Isn’t a Rockstar)

How to Protect Yourself in a Lease (Even If Your Dental Real Estate Broker Isn’t a Rockstar)

Let’s talk about something that can make or break your startup dental practice: your lease.

Dental real estate leases aren’t just paperwork. They’re financial weapons — either defending your profitability or quietly bleeding your margins dry. If you're preparing to open your own practice, navigating lease negotiations with clarity (and the right strategy) is absolutely essential.

Now, I’m not a dentist. I’m also not a real estate broker. And that’s actually a good thing for you. I’ve helped hundreds of dentists open their practices, and since I don’t get paid when you sign a lease, I can offer you one thing most brokers can’t: the truth.

Even if your broker isn’t the sharpest tool in the shed, these six tips will help you step into ownership with your eyes wide open.

1. Understand the LOI (Letter of Intent) Before You Commit

Before you even see a lease, you’ll negotiate something called an LOI. It’s a short document — 1–2 pages — that outlines key terms like rent, square footage, and tenant improvements.

Here’s what matters:

• It should be non-binding (and say so in writing).

• It should include your entity name (not your personal name).

• It should strike a balance: enough detail to protect you, but not so much that it locks you in before the full lease negotiation.

A savvy dental real estate broker knows exactly what to put in an LOI — and what to leave out until later.

2. Rent Should Be a Percentage of Production — Know Your Numbers

This one’s critical. Rent should be no more than 8–9% of your annual production. Ideally, you’re aiming for 6–7%.

Here’s what that looks like:

• If your projected first-year revenue is $500,000, your rent should land between $30,000–$35,000.

• If you hit only $350,000 (which is still common in Year 1), that same rent could eat up 9–10% of your revenue.

Solution? Build in a cushion. Use working capital to supplement early rent so it aligns with your long-term profitability targets.

3. Use Your Entity Name on the Lease — Not Your Personal Name

This is one of the most overlooked details in early-stage leases.

Using your LLC or corporation name:

• Reduces your personal legal exposure

• Puts the responsibility where it belongs — on the business

Most landlords will still ask for a personal guarantee. But negotiating to limit that (or at least understanding what it means) is where your broker should earn their keep.

4. Not All Rent Increases Are Created Equal

Some brokers push for rent increases tied to CPI (Consumer Price Index). Sounds smart, right? Inflation-based? Neutral?

Not always.

In fact, in many of the leases we’ve reviewed, CPI-based increases have cost more than flat percentage increases over time. A 7.5% increase over five years? That’s only 1.5% per year. In today’s economy, that might actually be less than inflation.

Moral of the story: don’t assume CPI is the safer bet. Run the numbers.

5. Tenant Improvement (T.I.) Allowance — Read the Fine Print

Free money from the landlord to help build out your space? Sounds great. But remember: if it’s “free,” you’re paying for it somewhere else — usually in higher rent.

A few dollars per square foot can add up to tens of thousands over a 10-year lease. If your rent goes up by just $1 per square foot, you may end up repaying every penny of that TI allowance (plus some).

Also, be cautious if the landlord offers to “help” with construction. You don’t want their contractor. You want yours. Someone who understands dental-specific build-outs.

6. Every Landlord Has Their Own Lease — And It’s Written to Protect Them

Unlike residential leases, commercial dental leases are custom-built by the landlord’s attorneys. And they’re very good at protecting their own interests.

That’s why it’s essential to have:

• A dental real estate broker who knows the dental world inside and out

• A strategy to negotiate lease terms that protect your practice’s long-term health

• An advisor (or team) who’s only interested in what’s best for you

One landlord’s “standard lease” can cost a dentist hundreds of thousands of dollars over time. Don’t go into this blind.

Final Thoughts: Your Lease Is a Strategic Decision — Not Just a Legal One

If you take nothing else from this, remember: your lease is not a side task to check off before opening day. It’s a foundational element of your business. It deserves just as much attention as your equipment, your team, and your marketing plan.

These six insights are drawn straight from real client conversations — dentists just like you who had the courage to ask better questions and expect better answers.

And when in doubt? Ask. We’ve helped hundreds of dentists avoid costly lease mistakes and negotiate terms that actually work in their favor.

Let’s help you build a practice that thrives — starting with the lease.