Your Lease, Your Practice, Your Future // Brian Mills // Carr Healthcare Realty Experts

Me on here. I appreciate it. I usually open up with hey, all you cats and kittens, but people who haven't seen Tiger King are like, what's this weirdo talking about? And the other group is probably thinking, I'm going to get sued for that line. So anyway, Car Healthcare Realty, what do we do? Why am I on here? Why does it matter to you? So there's two things that we really do. So Car Healthcare is a national firm. We're actually the nation's largest firm that's dedicated to two things and number one is definitely the most important and that's tenant and buyer representation. So we're. This is not a sales pitch for car, but it's important to know who we are and who's legally representing you in it in a transaction on your team. So again, the most important thing that we do is tenant buyer representation, meaning we are not a listing company, which makes us wildly different from 99.9% of all the other commercial real estate firms out there. We do not represent landlords, developers, sellers, owners, etc. Our fiduciary, which is a fancy word for legal, at the highest level, our fiduciary responsibility starts and stops with our clients who are primarily dentists. Number two is we only represent healthcare clients. So number one, the most important is we only represent tenants and buyers. Never landlords, never sellers, never owners, and number two, only health care. For 17 years I have specifically worked with dentists.

Our job is really to save you the most amount of money in any transaction and protect you. So we do get involved in some of the legalities at a base level, but really at the highest level, our job is to try to save you as much money as possible. But there are legal points that we're watching out for that are extremely important for you to understand.

So again, we try to save our clients as much money as possible. We, I would say I'm personally known in the Southern California market by people in the financial world for saving clients hundreds and hundreds of thousands of dollars. We would never guarantee anything that's highly inappropriate. But we're not trying to save you, you know, five bucks on your lease. You know, our savings are typically 2, 3, 4. In one instance, my partner David, the savings over a 10 year term was $850,000. So these are.

You know, huge negotiations that you're dealing with. Again, we're always making sure that our clients are interests are protected first over anybody else. So what, what do we areas that we assist in, we do tons of startups, lease renewals, that's what we're going to be talking about today. That's something that's a huge part of my business in the California market is pure lease renewals. Meaning if you're in a space already and your lease is up for renewal, which is a hot topic at all times in my business. But right now, even more so, expansions, you want to expand your current location or you want to do an additional location, move into a bigger location. Relocations, additional offices, purchases, building purchases we're talking about. So in California, you can often buy your own building. Oftentimes you cannot. So it's important to know when and where it's available to buy. Sometimes you just, you know, if you're in certain coveted areas, you'll never be able to buy your own building. It's understood. It's important to understand that practice transitions. This is a big one that we help out a ton with.

You know, instructing sellers. They get to that sort of season or twilight of their career. How do you do a proper transition? You know, what do you do in terms of the real estate so you don't set yourself up for failure? We represent tons of buyers who are buying practices. Most people unfortunately put their head down and simply buy a practice without understanding that you can actually, you have leverage in that situation and you can come in and you can often significantly improve the lease over what the seller was paying. So buyers and sellers do not just put your head down and sign what you've been doing for the last 25 years. This is an opportunity to really right that ship and improve upon that lease.

Our services are always free no matter what. And I know people are like, oh, what's the catch? So in real estate, you as a tenant or a buyer is in residential or commercial, you are always, always, always afforded free representation no matter what. So are there people that will charge you? Absolutely. Does that mean they're bad or no good? No. But you also, you have to understand what is somebody's leverage? What is their agenda? Again, our legal responsibility is to always protect you at the highest level. We will represent you even in a transaction if we have to do it for free. And I do maybe a half a dozen to a dozen deals a year pro bono. Some instances are tricky to collect a standard real estate fee, but that never gets in the way of us representing you at the highest level. So our promise to you as our doctor clients and to the network at large, your cpa, your attorney, your consultant, et cetera, is we will always represent you even if there's no fee involved. If Gene sends me or refers me a client, I'm not going to send it back to Gene and say, you know what, Gene, I'm sorry, but I couldn't collect a fee here, so the client's on their own. That's just not how we do business. That's not how I've grown my brand personally over 17 years and what I'm known for. So the client always comes first, looking to do things at the highest level possible.

So we're this slide we're representing with actually thousands of clients at one time across the country.

So the importance of your real estate, in case you didn't know and it shocked some people, is your real estate is actually the second highest expense behind your payroll. But the cool thing is, is your real estate or your lease is highly negotiable. Your payroll is not. You can try to negotiate payroll on Friday, but nobody's probably going to show up on Monday.

These are very impactful negotiations that you get maybe once, twice, three times in your career. So it's important that you understand the significance of these negotiations and these time periods and act accordingly.

So again, sometimes we're talking about legal points of a lease. There are things in there that can highly or dramatically affect your ability to sell your practice. There's certain clauses in there that are just pure deal breakers that you need to know. If you make a misstep on these, you may find yourself not able to practice in your current space or not able to sell your practice. And that's the sad thing is when I talk to doctors at the twilight of their career and I point to an assignment clause or language in there that doesn't allow them to sell their practice or requires them to continue to guarantee stay on as a personal guarantee in perpetuity. So you sell it to somebody else and you have to stay on for the life of that buyer's practice. These are standard clauses, so you have to be very, very careful about assignment death and disability relocation development clauses, percentage rent clauses. These are things that can make a dramatic impact on your practice.

So terminology, that's what we were talking about. So let's get to the meat of this. So current market conditions, that's what everybody kind of wants to know is, you know, what is going on today. We feel like the sky is falling. What is the real estate market doing? Do I have any leverage to improve my situation or just get some breathing room? So, you know, Southern California is a little bit of a different animal. California in general.

Is quite different than a Lot of other markets except for maybe the pure East Coast. I'm going to geek out a little bit on some real estate stuff here, so just hang with me. But it's important that you understand the market before for this right now and after we recover, hopefully. So.

Real estate cycles are expressed in really long terms. It's about an 18 year cycle. So every 18 years the real estate market, commercial real estate market, and even the economy really predicts and expects a correction, a major correction or that bad word or recession. So every 18 years or so we're really looking at a major correction in the marketplace. The economy now at that halfway mark. So every about eight to 10 years we see sort of this mini correction. So if we look at like 2010 as coming out of the last major recession that we had, then you look at today, we were really expecting, landlords were predicting a minor correction in the marketplace. Now we didn't all expect that we'd be at home doing zoom calls, dressed from the waist up or trying not to kill our kids over homeschool or eating cookies for breakfast, such as myself. But we were preparing for this correction in the marketplace.

So landlords were expecting this. Again, we weren't expecting it at this level, but we were prepared for it. You also have to understand that long gone are the days where we have an individual landlord who owns a small retail center or an individual medical office building. Not that that's not out there. But by and large the California market in general is really dominated by large institutional landlords or REITs, publicly traded REITs, real estate investment trust companies. Right. So their portfolio spans across millions and millions of square feet.

Most of those landlords are not concerned with solvency. Right. Paying their bills tomorrow or immediate cash FL.

They have. You know, we're coming off a big market high. So if you look at just a few months ago, we were at an all time high, really across the country and especially in California where we had less than a 2% vacancy rate. And I always joked, but it's true. Anywhere that was safe to be after dark, we probably had a less than 1% vacancy rate or even half a percent vacancy rate. So if you went to the market looking for your dream space, you may have one space to choose from or two spaces to choose from. So landlords could really cherry pick the best of the best. What we call national credit tenants. These are Whole Foods and Target and Hogue and St. Joseph and Kaiser Permanente. These anchor stores are really what keeps everybody afloat. And their business is not subject to these Large swings right now, actually, if you look at the grocery stores and the large hospitals, they're probably booming. You know, I saw on the news the other day that the grocery store market is up. Like I don't know what it was, 25% or something. That's an astronomical number in any retail business. Again, the hospital networks are probably doing amazing right now, unfortunately. So those large anchor stores are really what impacts a landlord's business. Where a dentist would go, where an optometrist would go, where a veterinarian would go, where a retailer would go, where a hair salon, a nail salon, where an individual private practice dermatologist. Those are called shop spaces. So they're not overly concerned with the outcome of the shop spaces. Yes, they want everybody to stay in business and do well, but that's not their major concern right now. So again, solvency is not their biggest concern issue because they have those anchor tenants and that's why those anchor tenants are there. So do we have leverage? Yes, if you use it correctly and you understand how to posture. But just in general, you know, the market isn't subject to these large swings. So.

It'S, it's important to understand your leverage and how to use it effectively.

So lease relief, rent relief. What do I do if I can't pay my rent Right now? That's questions that I got day one. So this is all really kind of timeline specific and we're going to get into, you know, which category you fall in. But if you can't pay your rent right now or you're struggling, the first thing you should do is look for this funny thing called business interruption insurance. Now, I can tell you probably 99% of you do not have business interruption insurance. But you need to call TDIC or State Farm or whoever your insurance broker is and find out, do I have something called business interruption insurance? Some of you out there may have that, but you need to find out and check that box because guess who else is going to ask you? Your landlord is going to ask you, right? So first thing you do, ask for business interruption insurance.

Again, be prepared that you're probably not going to have it. It's really for like boutique insurance companies like Lloyd's of London. So if you're a supermodel and you want to insure your legs, you know, you may have business interruption insurance, but your average dental practice probably does not. Number two, some of this is probably gone already and you've probably applied for it, but if you haven't for some reason, paycheck protection, these are Some really unique programs out there that the government is really lending a helping hand. Which I'm not always the first to say that government programs are the best, but these things, if you can catch them, they can really be a lifeline to you right now. So the paycheck protection program, you should apply through your current bank. So whoever you're doing your business banking with right now, reach out for paycheck protection program. If you haven't done it, do it immediately. SBA Disaster relief, this is different. You apply through this, directly through the sba, which is the government backed Small Business association loans. So both of these are supposed to be highly forgivable. So while we're on this topic of financing, let me preface this, the first part of this and the rest of this by saying I am neither an attorney nor a cpa, a wealth advisor. This does not constitute as advice in any of those arenas. So always said there's two people you need to have in your corner even before me, and that's number one, a dental specific attorney and number two, a dental specific CPA wealth advisor. Somebody in your corner in the financial world, they need to be dental specific. No, you cannot use your brother in law who is a divorced attorney. You need to have a dental specific attorney and a dental specific cpa. Some of you are finding that out the hard way right now, but these are people you need to have in your corner.

Okay, so the next thing on the list is call your current lender. So if you have a practice loan right now, call B of A, call Wells Fargo, call Sunwest California bank and Trust, whoever it may be, call your current lender and find out what their forgiveness plan is. Most of them have proactive forgiveness right now where if you just call them, they're going to say, yeah, we already have 2, 3, 4 months deferred payments or we're going to forgive it, whatever it may be. But I think you'll be surprised. So call your current lender, ask them about your paycheck protection, but also ask them about any forgiveness that they're doing right now. I think a majority of them are refinance your practice debt or your building. It's a phenomenal time to take advantage of all time interest rates. I just refied my home a couple weeks ago to a phenomenal rate. Just inherently by doing a refinance, you're going to buy yourself typically two months of no payment. That's how refinancing works. In an up market, a down market, it doesn't matter if you do a refinance you're going to skip a couple payments. That may be enough to get some people through or provide a cushion. So if you own your own building, right now is a great time to refinance out again. You're gonna find that your overhead probably goes down significantly. Alright? Lastly, force majeure, or this act of God clause. People have been calling me around the clock since day one going, hey, what about this force majeure? They call it this act of God clause that lets me out of paying rent, right? I wish that were the case, but it's not. There's no magic bullet here.

There are force majeure clauses and many, many leases. It's standard in a lot of leases. And the first three sentences start out really, really good. You get excited, then you read that last one. And the last sentence always says none of the above get you out of paying your rent, unfortunately. So it may give you relief from staying open. You know, there's clauses in your lease that says you have to stay open all year long and you can't shut down for a month. But that last sentence is always going to be the kicker and it's going to tell you, unfortunately, none of the above gets you out of paying your rent. So you're still obligated to pay your rent. But check your force majeure clause. They are all written differently. But I would say by and large, that's not going to provide you any relief. But you should still go through and take a look at it. If you're under maybe new construction right now, that can extend your construction period. But if you've been in business for, you know, 5, 10, 15 years, enforcement clause is probably not going to be the help that you're looking for. But still, read it and understand that some of you may be in the minority where it could provide you some help.

Okay, should I ask my landlord for rent relief? It really depends on how much time you have left on your lease. So if you have more than 18 months, if you have more than a year and a half on your lease, you do not have leverage. Okay? My job always, always, always is to tell you the truth. Whether you like it or not, if you have more than 18 months left on your lease, more than a year and a half, you do not have leverage that you need to renegotiate. So if you need to, you may need to call your landlord and ask for some rent help. Some of the major landlords, like the Irvine Company.

Have a proactive program where they're already providing three months free rent so they may be actively doing that already.

What I would advise is do not stop paying your rent. Right.

That can trigger a lot of clauses in your lease that can trigger a default that can really become sort of boat anchor to you down the road, and it can really hurt you in the long run. So I would say, if you're going to stop paying your rent, call your attorney, okay. And make sure that that's not going to trigger something or put you in default. You have to be very, very careful about just stopping the rent. So the first thing you need to do, if you want to, if you want rent forgiveness, if you need help with the lease, is call your landlord. You're going to get one of three answers. Yes, a no, or possibly, or with a contingency. Right. Again, some larger landlords are saying, hey, yeah, we want to get you through these times. We're not so concerned with our smaller private practice spaces. So, yes, we want to help you. Here's an olive branch. They may say, yes, that's great. Thank you, landlord. They may say, no. I have had many landlords say, hey, sorry, that's not my problem. I still have to pay my bills. You have to pay your bills. And then you may have some that are contingent, yes, we'll help you. But, you know, we're looking to.

Amortize those free months over the term of your lease or add those back. You may even have to give the landlord ideas on how that works. If the landlord says, well, I'm not really sure. You may have to craft that strategy for them. Well, how about you give me three months free rent and we just add it to the latter part of my lease? Not meaning that you have the last month of your lease. All of a sudden you have three months that are lumped onto that. But maybe they just extend your lease. So if you have 10 years left on your lease, instead of 120 months, maybe it's 123 months. So the landlord's still getting their rent. They're just skipping this immediate rent schedule. If that doesn't work for a lot of landlords, you may have to say, well, how about I amortize it over the last.

Year of my lease? If that doesn't work, well, how about we amortize it over the next year or the next six months? This will be a dialogue that you may have to sort of massage here. So you want to start at the highest level that's at your benefit and then kind of scale your way down. So this will be maybe a back and forth you have with the landlord and you can always reach out to somebody like me and I can try to help you kind of craft some of these things. Your attorneys in this market are really, really good. But again, you have to be prepared that you may have to help with the strategy with the landlord on what that looks like. Landlords asking for financials. This is another big one that I get all the time. Should I comply with that? Hey, my landlord's asking to see my books. Why are they asking? Well, it can be for two reasons. Number one, can be for nefarious intentions, right? They want to see if you're coming and saying, hey, I can't pay my rent, I need three to six months worth of free rent. The landlord's gonna say, okay, well I want to see your financials. If you have a two million dollar practice, what's the landlord gonna say? They're probably gonna say you should have saved for a rainy day, right? It doesn't look like you were as responsible with your business as you should have been. So you have to be prepared for that. If you have an established business and you've been doing very well over the last few years, the landlord might not be in a position to say, it's not my fault you didn't save for a rainy day. Okay, Again, I'm not pro landlord, but you have to understand what you're going to be in for. Number two, they may. And conversely on that, they may see, well, you know you're not doing that well right now, right? You do need some help or you're a startup, you've only been open for a year and you know you're doing okay, but this is going to be really impactful to you over the next couple months. So they're going to see, you know, what your financials look like and if you really need the help. And then lastly, they're also going to want to know how is the business doing if you've been here for 10 years and you're struggling to pay your bills every single month, am I simply putting a band aid on a tenant that may not make it through or that I don't want to have here any longer? There are landlords who are concerned with the overall strength of the business and they can get in front of a failing tenant. They may want to do so sooner rather than later. So. So there's definitely intentions. You just have to understand what the intentions are. If you're reaching out to the landlord, asking for help, you really don't have any choice here. If you're saying, hey, give me something. And the landlord's saying, I'll take a look at it, but I need to see what your financials are. You really don't have any option if you are in this position where you have more than 18 months on your lease. Be very, very careful of landlords looking to retrade the important lease terms like exclusivity, assignment, relocation, etc.

You do not want to give up these very important hard fought, negotiated terms. You don't want to give your exclusivity and your assignment language again, that's the one that allows you to sell your practice down the road. You don't want to give up a relocation clause where the landlord says they can pick you up and move you anywhere in the premises, in the retail center or the medical building without any cost to them and you have to pay for a brand new build out. So there are certain things that are just deal breakers. It's important to know what's a deal breaker and other points that may not affect you that much. But you don't want to sort of horse trade back and forth and give up something that can be.

You know, put you in a perilous situation down the road. Lastly, and again, I am not an attorney. Threat of eviction even in a good, you know, an okay market. Six months ago. Boy, an eviction process is a long, long process. I remember looking at a space with a tenant last year that we really liked and they had just removed a restaurant that stayed and continued to serve sushi for two years without paying rent. Because the eviction process is so long and costly in the state of California. Whether you love it or hate it, one thing that they typically do is they do not look favorably upon landlords evicting small business owners. So. So if you absolutely cannot pay your rent and you're forced in a situation where you just can't pay, are you going to get evicted? Again, this is not legal advice, but I would probably say with my experience, no, the courts just aren't even prepared to hear an eviction process right now. So the chances of you getting removed are probably not good. So I say that just to say, don't think that you're ever going to find yourself professionally homeless out there. That's just not the way it works. So hopefully that maybe helps you a little bit sleep at night.

So negotiating a renewal, this is the big one. So do I have leverage? You do have leverage right now and you always have leverage as an existing tenant. So most tenants in any market are Always scared of the landlord. And that's what the landlord banks on is your fear. Fear of finding yourself without a place to continue to practice. That's just not a reality. That is a fear tactic that landlords use every day. And unfortunately it works against tenants who are scared and not educated on the market. So in any market, if you have less than 18 months, especially if you have less than a year, you have leverage in your lease renewal. You have to be careful not to give away your leverage right now. So what I mean by that is if you go, if you have less than 18 months and you go to the landlord and you ask for rent relief, you know, I need help, you know, can you give me some free rent right now, you've just given up your leverage for something that, that I would say is rightfully yours. Okay? So what you do today greatly impacts your future negotiations. So if you have less than 18 months, you should be going and not asking for free rent. You should be negotiating it as part of a standard renewal. So don't ask for three months worth of free rent. Come and renegotiate a long term lease and negotiate that rent abatement up front, okay? But if you ask for it now for a handout now, you've just really blown your posture and your leverage for this impending negotiation that's right around the corner. So again, be careful what you do today and what you ask for, because these may be certain things that you need to negotiate in conjunction with other things. So, you know, when we come in and we do a lease renewal, we're typically asking for or negotiating for free rent up front for ti tenant improvement money, definitely to reset or lower the rate. So if you have less than 18 months right now, you may be in a great position to renegotiate to more favorable terms now and in the future. But don't ask for it if you have leverage, because you're going to blow your leverage right now. So taking advantage of a market influx. Okay, do I have leverage? The last one is really key. Tenants are going to think right now, well, the market is really down and I have all the power. Be very careful, double exclamation point on this one. If you think the market is in flux, you may find that the landlord has all the leverage if you don't understand how to use posture correctly. So you do have leverage, but the only time you have leverage is if the landlord thinks you are ready, willing and able to move. Listen, people, I understand that you do not want to move. Most of the time you can't move. Most of my clients, when they engage with me, are very nervous and they say, brian, I can't move, I don't want to move, I'm not able to move. You cannot tell the landlord that. The first thing they do is typically rush and tell the landlord how much they love the space and what a great tenant they are and how they pay their bills on time and they don't want to move here and they come to terms and the landlord just starts salivating like crazy. Like you're saying all the things that they want you to say, right? And the only thing that's going to happen is your rent is going to continue to escalate or you're going to get minimal, minimal concessions that are not where they should be. So be very, very careful about thinking that the landlord is desperate. They may be in a position to strike a deal to get a new tenant, but if you're an existing tenant, it's all about leverage. It hasn't it. What the market is doing around you has no bearing on you unless the landlord thinks you are ready, willing and able to move. Now, if they think that, right. Then a market that's in flux right now is only going to help you. But be very, very careful about thinking you can bully a landlord because you again, it's based on the posture that you're able to move.

So let's talk about that, right? People say, what is posture? What is leverage? How do you use that, Brian? So leverage is only established on the perceived reality of a threat, right? Whether you love our president or hate our president, I don't really care. But he has said one thing that is very true in the art of a negotiation that rings true across all negotiations. Your power is the ability to walk away or the other side's perceived reality that you will walk from a deal. So your leverage is only if the landlord thinks that you have options and you will exercise them by moving somewhere else. Again, we're not looking to move you as a client. That's not something that we do. We've never had a client who's found themselves out of a space that's not. We're known for. We're known for high level negotiations. But if anybody tells you there's a way to use leverage at the highest level without this, they don't know what they're doing or unfortunately, they're lying to you. So don't ask for rent relief. Negotiate it. It's rightfully yours, along with many, many other concessions. So free rent right now, that's a big ticket item. We're looking to get free rent immediately even if your lease expires in a year to a year and a half. We're trying to set that free rent right now. Okay. TI's, that's a big one. Tenant improvement money. You've been in a space for 20 years or you're gonna buy a practice that's 30 years old. It's important that you get some money from the landlord to upgrade that space. Whether it's new paint, carpet, ceiling tiles, built in cabinetry. About the only thing you can't use it for is equipment. So you can't go out and buy, you know, new a deck chairs with it or a new ceranic cone beam, but you can use it for anything that's built inside the space. And it's important that if you're going to continue to add value to the space by improving and building it out, that we at least get the landlord to contribute a portion of that lowered rent. That's always one of the number one items is most leases go up somewhere between 3 to sadly 8% every year. Inflation is only one and a half to 2%. So year two, you're already above where the market is. And sadly a lot of doctors go their entire 30 year career and they've never reset their rate. So they've been escalating 3 to 8% every year and now they're way over market. So the first thing we have to do is come in and we have to evaluate where is your rent versus where I'm doing deals around you. Not what is advertised, but where is the actual market, what is advertised versus where I'm actually doing deals for clients. The Delta is hundreds of thousands of dollars in difference. So you don't take, hey, what's advertised in my building or next door, where have I done a deal in your building or immediately around you? Okay, I'm also going to take you to the market, at least virtually, and I'm going to negotiate other spaces on your behalf and show you where we're doing deals. I may have done a deal in your building right next door to you, right, with a startup that got, you know, $50 a square foot in TI's and you've got nothing for the last 20 years or they're paying significantly lower rent. So it's important that you know where the real market is. And again, I'm also going to show you other spaces and negotiate on those spaces so that you know you're getting a good deal.

So lower rent, that's a huge one, obviously. Additional renewal options. This is big. If you do not have a renewal option, you do not have a legal right to stay in your current space. You can be vacated with a 90 day notice. Again, we talked about evictions and that's a long, drawn out process. But if you do not have a renewal option, you do not have a legal right to stay and you have nothing to sell to a buyer if you're at that point in your career. So every time you exercise one of these renewals, it's important that you add one or two five year renewal options or as many as you can to the back half of that. So as a standard rule, I try to add two more five year renewal options beyond the renewal that we just exercised. If you find yourself without any renewal options, the landlord has all the leverage. They hold the cards. Okay? So do not exercise a renewal without getting some sort of backup renewal options in the future. This is what allows you to sell your practice. Legal language. This can be hard, but if you didn't have your lease reviewed by a dental specific attorney in the very beginning when you started your practice or bought your practice, and now is the time to have a dental specific attorney come back and read through your lease if you're worried about it, most dental attorneys are really, really good. They're going to tell you, hey, it's hard for me to make.

Edits to the legal language in your lease. Now, if you have Brian and he's using leverage, this is one of the items where you can use leverage to also change the legal language in your lease. So if you're assigned a assignment language is really, really bad, that can be a deal breaker for you to stay in the space. Right. If you have a two million dollar practice and you can't sell it because your assignability language is really, really heavy. Landlord favored. We're going to have to use this leverage as well to get that legal language change. But most attorneys would say, let me just review your lease for a smaller set fee and I'm going to identify the areas that may be concerning. If there's no concerns, then, hey, at least you know, and you can rest easy at night. But these are the items I found that are most concerning and detrimental to you. Okay? And if you aren't able to change them, here's what the real impact would be. And then they'll say, well, we can try to negotiate these and then the fee continues after that. But most attorneys will have sort of a smaller fee just to review that. So that you know what's in there. And then if they can make changes, then they can talk about a retainer following. But again, let me harp on that one more time. Leverage is only established on the perceived reality of a threat. The landlord has to believe that you're ready, willing and able to move. And if they don't, you're going to continue to get what you always got.

Oh, boy. Should I pay someone to negotiate my lease? I can't say yes or no, but there's people out there that do take advantage of dentists and use scare tactics. And especially right now, there's people taking big advantage of dentists and just people in general. So I'm going to read this. Okay? I think this sums it up as best as I possibly can. I can't say you shouldn't pay somebody, but you just have to understand what their leverage is and how they're going to use that. I'm not talking about an attorney. Review your lease, because most great attorneys are going to tell you it's going to be hard for me to do anything past this review. But let me tell you where the danger points lie, and then we'll try our best to see what we can do to improve upon that situation. But anybody guaranteeing you that they can make changes to the legal language or even guaranteeing you that they can make adjustments to the finances, these are really hard negotiations. That's probably why I'm one of the only guys does this at this level is because it's really, really hard. You have to understand the small nuances and how you're. How to accomplish these things. So tenants should always be afforded free representation in real estate. Okay? I'm not talking about legal representation. That is a paid service by your attorney. Any party representing you in a transaction should be able to clearly define how they can use posture or leverage to positively affect change. Simply asking the landlord for better terms is not a negotiation strategy that produces results. At the highest level. Posture and leverage are key. It's advisable to always, always, always seek legal advice from an attorney. But be cautious of anyone charging an upfront fee to make changes to a lease. So anybody who says, hey, it's $10,000 and I'm going to change your lease, boy, you got to be really, really careful about that because that's a, that's a big matzo ball, as people would say. You don't want to be spending tens of thousands of dollars for somebody guaranteeing you to find out that, well, I couldn't make any changes. But at Least I reviewed it for you. Again, most dental attorneys, or any attorneys that are really good and caring about the marketplace and their clients are going to do something for maybe a smaller upfront fee, knowing that there's another bucket of work behind that. And if they proceed, then that's another fee. But again, I'm saying be careful. If somebody saying, hey, it's 8, 10, $15,000 and I'm going to be able to renegotiate your existing lease, the finances or the legal language, boy, that just seems very dangerous to me. In my career, I have not seen that work at a high level. So somebody charging a small fee to look at your situation or provide you with an evaluation, that's one. My evaluations are always free, no matter what. But somebody charging for their work up front and then saying, you know, if I can make changes to your lease, significant changes, then yeah, I'll charge you. But there's some people out there who have found themselves on the other end of that 10,000, $15,000 check going, what did I just pay for? Okay, so just be very, very careful and understand this part. They need to be able to explain to you how they're going to posture and use leverage. There's a very clear way that I use use posture and leverage here, and I've just told it to you, my leverage is always based on the perceived threat that you're gonna move. I'm a dental specific real estate agent. People know what I do. The landlords know what I do. They have seen me move many, many tenants in and out. So they know when I come to the table, I mean business. And it's typically a risk they don't want to take. But you have to ask yourself when engaging with a party, what's their leverage? And they need to explain that to you.

Because if they're just asking, there's no difference in you as the doctor asking, you know, it's like my eight year old asking for more allowance. Well, you know, what's the leverage? What's the ability for them to affect change in this situation? They're just asking me for five more bucks at the end of the week. The answer is no, right? Somebody has to have leverage and posture to affect change and they need to be able to again describe how they're going to get there. So new projects, let's see.

Hope I didn't screw my PowerPoint.

Come on.

So new projects.

Startups, relocations, additional practices. What are you crazy? You want to do a new startup right now? That sounds insane, right?

Well, you Got to be a little bit crazy to open up your own business anyway, right? So are you crazy to proceed with a startup right now? I have dozens and dozens of clients who are in the startup phase right now who are adding additional locations, buying buildings, you name it. So to each his own. You got to really have faith in the market, number one. And I can talk to you a little bit at the end of this about what I see the market doing coming up in the very near future and historical data, but.

If you were opening right now or in a month, I may be a little bit concerned. Right. But if you're starting the process right now, anything that I start today is not even going to take it effect for nine to 12 months. So that's a standard deal for me. You know, if I'm signing a lease today, you're probably not paying rent for maybe almost a year. So anything that we do today is going to look much different in probably 6 months, 9 months, 12 months, a year and a half. So if you're starting today, I'm actually probably pretty excited for you. And I think most of my clients have gotten over those jitters and have said, yeah, this is a phenomenal opportunity for me to reach more people than ever sitting at home in front of Facebook or in front of their TV or zoom calls or whatever it may be. I can reach a large audience right now.

Knowing that when people come back out and the market is really itching to get back out, I mean, you look at the beaches when they open, people are just scrambling to get out and do whatever they can right now. So I think people are going to come back very quickly, by and large, and they can either go back to their existing dental practice or they can come to that new one that they've been seeing on their social media or advertisements in their mailbox while they're sitting at home. So you may be in the driver's seat when this thing opens back up to see a huge influx of new patients come through the door. What you have to be careful of is landlords offering crazy deals. And this is what people have said, well, landlords are going to be offering crazy deals right now. Number one, the offered deal is never the best deal. So if you're taking the deal that the landlord is offering you, you probably haven't maxed out that deal. And if you're getting some crazy deal right now, respectfully, one of two things, a, that may not be the place that you want to be. Most landlords in most major markets, again, that we talked about in the beginning, are not worried about immediate cash flow insolvency. So if they're offering you some absurd deal, that may not be the best place for you to open your practice. Okay, number two is if I can better some deal, you know, by exponentially, by leaps and bounds, or somebody says that to you, respectfully, you probably weren't achieving the greatest deal anyway. I play with every single dollar of yours like it's my own. I fight tooth and nail for it. So I don't leave any money on the table. So if I've done my job appropriately six months ago and I have maxed out what the market is willing to do, if we're in an area where we have, you know, it's a, it's a decent space to open a business and it's somewhat coveted, you're not going to trump that deal with another year's worth of free rent or half price rent or, you know, another crazy TI allowance. I would say that, you know, not to toot my own horn, but the deals that I do, even in an up market, I would say have people rear back and say, man, how did you get that deal? You know, how did you get $150 a square foot in TI's or a year's worth of free rent? You know, we take pride in the deals that we do. So there's not a lot of meat left on that bone, so to speak. So if you're getting some crazy deal right now, there's probably two things happening. A, it's probably not the best place for you to open your business. And then number two, whoever was negotiating that deal, whether it was you or somebody else, they probably didn't do the best deal up front. They may not have known the market, or you may have not known the market appropriately. It may not have been a great deal in the beginning. So again, any deal that I do today is probably not going to start for a year in terms of paying rent. This is a big one. TI concessions used for a rainy day. So I did a startup in a phenomenal super cool building six months ago. And we got like, I negotiated like $160 a square foot in ti tenant improvement money. The space was 2,000 square feet. So that was $320,000 I negotiated for my client. That was a phenomenal deal. I can never promise and say everybody can get that. That was a really, really good deal. We got the lease right down, we got tons of free rent, et cetera. So my startup doctor looked at me and she said, brian, I Didn't expect that you were going to get the build out paid for 100%. Do I still take out a loan? And I said, you know what? If I were you, I would. The money is so cheap. I would take out a standard B of A or Wells far.

And I would take that $320,000 and I would stick it in your bank account. So believe it or not, you can take those TI's, the tenant improvement money, after your build out is finished, that can be reimbursed directly to you if you do the deal right, which is not hard to do. So she took that $320,000 and she put it in her bank account? Yeah, she bought some extra equipment and technology, maybe a CEREC or cone beam right off the bat that most startups don't do. So she was really in the driver's seat. But she took a couple hundred thousand dollars and she put that in her bank account. She said, I can put this and rest easy knowing that I have this huge stash of cash should I need it. And so right now, if you're doing a startup, you may take those TI dollars, you may stick them in your bank account. When it's all said and done, find yourself with an extra 7,500, $200,000 in your bank account that can easily weather any storm, and that may provide you with a lot of relief and comfort.

Spoils go to those who act. And I really believe that. So Warren Buffett always said, you should be very cautious when people are greedy, and you should be greedy when people are scared. And I know that sounds a little bit harsh, but spoils are going to go to those who act right now, who invest, who are doing new businesses. Because when this thing opens up, a lot of your colleagues are going to be sitting at home watching the news frozen. And that's not the best place to be in terms of just entrepreneurship and opening a business. So those who act right now may find themselves reaping all the spoils when this thing opens up shortly. The other thing is, you really have to have faith in your business. So since they've tracked dentistry, and dentistry is a part of what they call ambulatory health care. So since they've tracked ambulatory healthcare, and dentist is a large portion of that, for 50 years, through five major recessions.

Dentistry has never failed to grow. And that kind of shocked me. I've been in this business my entire professional career for 17 years. And I thought, well, surely we've stalled or we've, you know, we've gone backwards at some point. Right. In the history of that. 50 years. For 50 years, the recorded numbers have never failed to show that dentistry has grown year over year. I thought that was a really cool number. You know, there's. Dentistry is just an in person modality. Yeah, there may be some cool things that come with teleconsults and those sorts of things, but darn it, a Crown on number 19 is just not going to be done over the Internet. Okay. Or not very good anyway. If you got an endo that needs to be done, you're going to be rushing out. I was with an endodontist client of mine yesterday and he was stacked with emergency patients. There's just no replacement for dentistry and what you guys do every single day. So when this turns back on, people are going to be rushing out to get caught up on missed prophy appointments and teeth that are hurting. Kids are going to definitely come first and foremost. I got three little ones myself. And we're going to be rushing out to miss to catch back up on our missed appointments for sure. So have faith in your business. It will rebound. Anybody who says that dentistry will never, ever be the same. I'm sorry, guys, I know I may be a little bit harsh here, and I don't mean to, but I just don't believe that. And I think that's a false narrative. Again. It may change. It may change for the better. There may be some really cool stuff that comes down the pike, but by and large, I think we're going to get back to the old normal faster than you think. And those who act right now are really going to reap the benefits of it.

So your homework today is to really go out and check your lease expiration date. You got to dig through your lease and find out when that thing expires. And you need to have your lease evaluated by an expert. So we always provide free lease evaluations no matter what. So what you do is you got to dig, dig through your fire folder. You've got to be able to scan that and send it to me. And I will always give you an evaluation. Right. I'm never going to say, hey, I can't help you. There may be, it may not be an official client relationship. If I can't help you, I'm definitely going to direct you to somebody who can. I'm going to do my best to guide you. But don't let your lease expiration creep up on you and find yourself with, you know, two months left with an expiration. There's ways that we can act that actually provide you more leverage the closer that you get. But you just don't want to stress yourself out like that. You need time to plan for these things. The first thing you need to do is go dig through your lease, okay? And you need to have it evaluated, have the financials evaluated and see where you are within the market.

Again, if you're in the twilight of your career and you're thinking about selling your practice, you need to know, am I paying 30% over market? That's going to be a huge sticking point point for you as a seller. And probably the number one reason that practices stall or.

Practices transitions don't go through is because of the lease. So if you're going to sell your practice in the next one, two, three years, you actually need to renew your lease long term, as if you're going to stay and you need to have it negotiated to below market rates. You, your practice broker can, there's a big feather in their cap and say, hey, you know, seller paying lower than current market, you know, by 15%. And you can really use that to better your, your overhead and your take home. And that's a huge selling point for anybody. So you don't want to have, you know, you're left on your lease and then go try to find a buyer and then put that on their plate to renegotiate their lease. That's how most people do it. That's the number one reason that practice transitions fail or stall is because of the lease. So you have to be very, very careful. That's not a successful way to put a practice on the market. So again, have it evaluated by an expert. I'm always, always a free resource to you guys, no matter what. I know that sounds weird and like overly giving, but the dental industry is very, very small. I do my business by referrals and by the people that are in your network. So just like you guys, we work by referrals and we're trying to make sure that we protect you guys and gals at the highest level. So send me your lease, we'll do a free evaluation and then we can help you devise a strategy from there. The biggest thing that you cannot do that will shoot yourself in the foot is do what? Call your landlord. Do not call your landlord. Do not talk to your landlord. They are not your buddy. They do not work in your favor. I don't care if they are your best friend from college and you've been in that space for 25 years and they would never take advantage of you, those are the worst ones. Those are the ones where it's like your friend who owns the bar and they've been charging you $8 for a Coors Light and the market rate is $3. Those are the ones that are really painful. When I say, you know what, I just struck a deal with somebody else in that building who's your, you know, the landlord, your buddy, and they're paying 40% less than you are and we got these concessions. So business is business and you have got to be able to separate the two. So you do not reach out to your landlord thinking that they're going to have good intentions. You need to have an expert on your side to at least educate you and let you know where you are within the market and then you can decide how you proceed. Do you proceed on your own? Do you have your attorney try to make a go of it? Do you pay somebody to have a go at it? Do you have a real estate professional like myself who focuses in these areas, make a go of it. But the first thing that you have to start with is education so that you know where you're at.

So hire a professional, right? You need to have somebody like myself in your corner. More importantly, a cpa, an attorney, dental specific. You need to understand the market and the options that you have out there. Staying in your spot just because you're comfortable and you've always been there is not a good reason to stay there. Far too often I find doctors who are in spaces that the space does not match their personal brand or the level of dentistry they're doing. You may be a wonderful dentist, you may have a phenomenal practice, but you're in an old tired space. I guarantee you, your clients know that and that's hurting your business. You just don't know it yet. So going out to look at other options, buying real estate if you're in, if you have an existing practice, typically you can go out and you can buy your own building, medical, condo, do a complete brand new build out, buy all new equipment, technology, your dream equipment, for 100% financing. That means zero money out of your pocket. That shocks most people who think they have to come with 20 to 30% out of pocket. You can do your dream forever home with all new equipment and technology, typically for no money, down 100%, financing on Wonderful terms. So I'm a big, big spreadsheet person. I always spreadsheet the tax implications and everything else to show you what your true payment looks like. But educate yourself on what that looks like. Maximize the opportunity. That's what we're here to help you do. Really understand what your opportunities are and how you leverage those. Some of you have some false ideas out there. And again, whether you like it or not, it's my job to always be honest with you and tell you so that you know and you're educated at the highest level so that you can make those decisions to protect yourself.

So there's my contact information.

Maybe you blur out my cell phone number on there, Jean. So I don't get a lot of calls with just heavy breathing on there. But there's my email address. You can always pick up the phone and try to reach me. Just know that because I'm highly specialized, I'm always busy. I'm super busy right now. Just doing my best to help out the market in general. But the first thing you can do is dig up your lease and scan and send that to me and just say, hey, Brian, I saw your webinar, your zoom call, and I think I need some help on my lease. Go ahead and attach the lease.