Owner-Occupied Real Estate

Owner-occupied real estate is the model behind most healthcare practice purchases: the practice buys the building and becomes its own primary tenant. This structure changes the financial picture in several ways. It unlocks favorable financing such as the SBA 504 loan, which requires the business to occupy at least 51% of the space and allows as little as 10% down. Instead of paying rent that builds a landlord's equity, the practice's payments build its own — the principal portion of each amortized payment converts an expense into an asset. The practice also gains control over its location and buildout, and can lease any unused space for additional income. The trade-offs are the upfront down payment, responsibility for maintenance and operating expenses, and reduced flexibility to relocate. Whether ownership makes sense depends on the practice's stability, growth plans, and capital needs.

Owner occupancy transforms real estate from a recurring cost into a wealth-building asset and unlocks financing unavailable to passive investors — but it commits capital and ties the practice to a location.

A dental group buys a 5,000 sq ft building, occupies 3,500 sq ft for its practice, and leases the remaining 1,500 sq ft to a complementary provider — covering part of the mortgage while building equity in the asset.