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SOCIAL: PRACTICE PROFILE: PREMIER EYECARE

HOW TO BECOME A LANDLORD

Steps to own the land and building your practice operates

Many of us in private practice dream of building our own office and being our own landlord. There are many ways to go about this, but it can be difficult to get started.

Here, I share my story on how I was able to build a 10,000 sq. ft. office, with space to lease.

DEVELOP A PLAN

The plan is the most important part of execution and, as optometrists, we are used to developing and executing plans. My plan: Start my practice cold, and then grow it to the point where I could build my own office.

IDENTIFY THE TIPPING POINT

I opened my business in 2002 in a suburban area of Knoxville, Tenn., where I grew up — just blocks from where I went to school. By 2010, my business had grown — to serve a growing number of patients I went from two employees to five — so we needed more space. Because my gross income did not support a much higher occupancy cost, I negotiated with the landlord to acquire another 800 sq. ft. adjacent to our office. With this addition, we were able to add another exam lane and another pre-test room. However, there was no room to expand the optical, and we soon outgrew the expansion.

1 Dr. Fry’s practice, Premier Eyecare, in its new home.
Photo: (1) courtesy of Stan Bass Photography

EXECUTE THE PLAN

In 2015, my practice reached a milestone in growth and I was ready to finally build my own office. This made good business sense because the projected rent of a 5,000 sq. ft. office, which was my goal, was just barely in line with the standard recommended rent expense for an optometric practice. (Of course, real estate expenses vary greatly throughout the country and may be different in your location.) We moved forward with the following steps:

Reach out to a commercial realtor. I worked with a local commercial realtor. A wooded lot next to my current office was below the main street elevation and sloped down away from the street, making it less than ideal for our purposes. However, my realtor felt like we could get it for a good price due to the fact that it had sat undeveloped for decades.

Seize the opportunity. While inquiring about the lot, we realized the lot next to it, which was smaller and, theoretically, difficult to sell on its own, was also available. We negotiated the price of the smaller lot and were able to get an acceptable price for both. If I was going to buy this combined lot of more than 2 acres, I would need to optimize the size of the building to maximize the use of the property. This optimization took the form of a 10,000 sq. ft. building with parking, giving me the 5,000 sq. ft. office I desired and a space to lease and cover the mortgage payment.

2 Aerial view of the 10,000 sq. ft. office Dr. Fry built with the help of two investors.
Photo: (2) courtesy of Daniel Beckner

Identify investor(s). I needed to find another investor or two. The price for this size building and property was out of my budget and, most likely, out of my ability to secure a loan of this size by myself. After talking with a few local investors (through my connections to the area), I settled on two unlikely partners: my brother, a physician, and one of his best friends from high school, a businessman, who saw the opportunity as a good investment. We formed an LLC and with this partnership, we were able to purchase the lot and secure funding to outfit the land. My optometric practice and other tenants then rent from the LLC, for which each investor is an equal partner.

3 Optical and reception area at Premier Eyecare
Photo: (3) courtesy of Dr. Brent Fry

4 Dr. Fry and members of the staff at Premier Eyecare.
Photo: (4) courtesy of Stan Bass Photography

Mold the space. The lot needed to be raised to street level to create visibility for the building. So we had an excavator bring in 1,500 dump truck loads of dirt and raised the grade nearly 20 ft. This excavation work was factored into our total cost for the property when presenting this to the bank for the loan. This requirement of excavation also helped us negotiate a favorable price for the land.

REAP THE BENEFITS

Since moving to our new office in April, our practice has seen a 30% increase in gross profit. This is an increase of 20% compared with the same time the previous year. We employ a full-time office manager, three licensed opticians, two full-time certified paraoptometrics, two front desk coordinators and an associate! Also, we have an optical showroom that is about our previous office’s size, six exam rooms and three pre-test rooms.

Patients continue to complement the new office, and we all are blessed to have such a beautiful office. OM