Dental Unscripted | Getting into Ownership and Practice Management Insights

welcome to Dental Unscripted

for Mike Dinsio and Paula Quinn

break down the practice ownership journey

one episode at a time

starting up

buying and running a successful dental practice

all right all right

welcome back to another episode of Dental Unscripted

my name is Michael Dinsio

uh we also have uh

our other co host star of the show

Miss Paula Quinn

and today we're talking about all things dental leases

so super fun super fun topic

however it comes up all the time

somehow I get dragged into the conversation

yet there's a real estate person and an attorney

and all these people

and I get asked some of the most basic questions of a

of a lease and I don't wanna answer them

so I figured let's have a podcast and uh

bring in a professional that really knows this stuff

like it's their everyday job

so welcome to the show Dan Gleissner

Dan's been on the program before

welcome back my friend

thank you for having me

I'm not sure I want to answer those questions either

though haha

well it's your job

so you're gonna have to um

no man uh

welcome back we had

we had a great uh

episode the last time you were on

and I think just like Dan is

they're you know

they they're very

very important

and it gets overlooked and how important they are

and it's super important to have the right people

look at these things and

um you know

they're complex situations and so I

I think for any doctor that's um

buying or starting or even owns a practice and

you know their lease is coming due

all this stuff is really really important

um

and so thank you for being on the show and contributing

a little housekeeping if you're watching this

on startup unscripted or Dental Acquisition Unscripted

we're merging to one brand that's easy and simple

called Dental Unscripted and the goal is

is to have

episodes that don't just talk about start or buy

but also how to run your practice and tips and tricks

uh Paul and I just did one this morning about hygiene

if you if you caught that

how to boost your hygiene department

we've talked about culture in a practice

we talked about some leadership stuff

so all things that you guys need to be thinking about

if you are buying or starting

but also a lot of you own

now we love to have new content

so dental and script is the answer there

um okay

without further do

we're 3 minutes in and I know if I don't hit it quick

we're gonna lose you

and you'll turn it off on your way to work or home

so with all without further do Dan

why don't you give us a little bit about your

your new company

congratulations on launching your new uh agency want

want you to tell us a little bit about

like that and then we'll get into some fun lease stuff

yeah um

Allied Healthcare

Real Estate is a commercial real estate firm

we're based out of Colorado

we specialize in healthcare

I specifically work with dentists day in and day out

I've been in the dental field since 2008

that's it short and sweet

I love it um

I think it's really yeah

there's no there's no reason to mix words um

I think it's really

important to have a dental professional

obviously handle the situation

I I sometimes get into the whole well

I've got a buddy or

this guy has negotiated a couple dental leases before

I think he can do it

I cringe when I hear that

how would you respond to that

because no a real estate agent can't do this stuff like

and so like what are the risk

is that what you mean Michael

like yeah

like why why yeah

what like don't you catch if you're not

if you haven't done this you know yeah

there's there's a lot of nuance to dental lease

I mean the

the analogy would be like hey

my chiropractor should be able to clean my teeth right

they're both doctors how dare you go there

so but it's

that's that's the reality of it

so it's I mean

if you specialize in something

you're gonna know the ins and outs of

of it all

and then what it takes to put a project together

I mean if we're looking at a startup

there is a lot that goes on and uh

majority of it has to involve around the bank

so we have to understand the parameters of the bank

and negotiate with the bank

and get their blessing before we sign anything

a lot of commercial real estate

brokers will just go out and find a space

and get the doctor sign right away

because that's their job they don't understand

what's on the back end with financing

or do they truly care right

they're they just want to move on

get their commission and call on the next general

commercial real estate requirement yeah

no I

I

I'll never forget a comment from another broker and Dan

you know him

his name is Christian Gyle and he's out of Arizona

and we did a

a week of Shark Week with real estate folks

and he said that brokers have commission breath

all the time oh yeah

and I'll never forget that comment

um and it's so true

brokers can real estate professionals

brokers whatever you want to call them they

they have a job to do and they're trying to make money

and right they work for free until they

until they get paid and um

I think I think it's um

it's it's

it's it's the reality

and I I think it's great that you

I've started this organization that thinks something

thinks a little differently and um

what are some of those

ways I know you do lease renewals

I know you look at leases for for free as a service

like what are some of those things that you guys do

that won't require a fee but every doctor needs to do

oh yeah so a lease assessment

understand if you're where you are within your market

uh in general right now

the press does a pretty good job of saying

that commercial market is down right

if you hear about commercial real estate

you're thinking like

I'm gonna go steal a building right now for

for pennies and that's not the case

but sometimes it can be the case

it's variable right like I'm

I'm in Colorado

and I can get you a screaming deal downtown

I promise you a really

really good deal on a general office space

because there's vacant towers and

but do you want to be downtown

and if I'm a startup doctor

and I want to be on the north side

where all the growth is happening northeast

I can't get a piece of commercial real estate

it's not being built fast enough

it's at all time market highs

and the landlords are being super picky

so it's

it's understanding where you are within the market

I think that's first and foremost

understanding the value of your build out

and whether the landlord understands that value or not

uh because there is significance

I mean

we're talking about hundreds of thousands of dental

infrastructure that's

built into that space

that's different than the next door suite

uh it's understanding when your renewal date is

and how to leverage that we like to talk to tenants

two years out and put a game plan together

I mean if they're looking to go ground up

we probably need a little bit more time

but given the cost of construction

depending where you're at

ground up hasn't really been an option

in the past couple years so you guys have done a

you guys have done a great job helping me

and some of our clients um

specifically in Colorado

where you'll look at acquisition leases

and before we actually ink the deal

you'll give us some comparisons

you'll you'll take a

a look at a lease review if there's room for you

you're you're there

but if there's no room for you you'll

you'll sit on the sideline

and I love that about you

you've always done that uh

even at your previous company

and that's a huge service to the industry to me

to dentist I

I don't think people really appreciate good brokers

like you guys are in

the great information

you can offer without asking for a fee and um

knowing your lease and really getting into it matters

and and um yeah

it's awesome that you guys do that

so thank you for that let's

let's let's pivot

um and Paula

when you owned uh

you might not have even remembered any of

this stuff but uh

we're gonna cover one of the topics that was really

important to you when you sold your practice

and so if you remember any of this stuff

when you were looking at your lease

maybe you will maybe you won't

but I'd like to get into like

some of the intricacies of the actual lease that cause

people a lot of like the

you know I don't know anxiousness

I think everybody really thinks about the price

the price the price the price

the escalation the I

it just like I used to be a lender

they think about interest rates

the interest rate the interest rate

interest rate and there's a lot of other shit

they needed to be thinking about

other than just rate like payment terms and uh

interest only periods and how much working capital

like

there's so much more than just the dang interest rate

and I think that's what happens in your world Dan

and in the lease rates

so I wanna get out of the lease rate

let's not talk about lease rates

but let's talk about the other things

that you need to think about

when you're when you're looking at a lease

what are some of those things Dan

that you would like to highlight

I didn't give you much preparation so uh

in in typical unscripted fashion

but what do you get a lot of questions about

with these leases if they actually read the lease

oh yeah

it's understanding um

assignment language is is a big one

exclusivity is a big one uh

understanding uh

triple nets is is always a gotcha

and then especially if you're a business owner

and you've been in the space for more than a year

the triple nets will come up

and there's a lot of questions around that um

uh you know

a lot of the lease is gonna be attorney based

and there's always should be an attorney on the team

I'm not an attorney

my goal is to negotiate the business points

and get the business points

right in the lease and some of those teeter on illegal

and should they be talked about

in the letter of intent

the non binding letter of intent

and then those ideas then inserted into the lease

that will be legally reviewed

so it's

it's depending on where you're at in your career

what you're looking for

how to separate yourself or how to protect yourself

yeah well

let's hit the big one

exclusivity and assignments because I think

well what

what the hell is it I know what it is you

you tell everybody else what

what does that mean exclusivity and it's two topics

but let's hit them both yeah

so if you have an exclusive in the building

that means that no other

we'll say general dentist as the example

that no other general dentist can

can practice in that building

so you're it for for

the building and um

a lot of doctors get caught up in that

and it's important if you're looking at a retail space

so if you're in a strip center

you're likely gonna be spending more on rent

than you would in a general office building

and that's because you have signage

and that signage is you know free

quote unquote free marketing

so you have to pay for that right

that's the air quote free

so you'll get concessions like exclusivity for

other general dentist that can't practice in there

and that's because again you're already paying for it

and if another general dentist were to move in

then there's no

point in paying the additional rent to have it

so that's where it's standard

and we

we see that in strip centers or stand alone buildings

then we transition to a general office

or a medical office building

and we'll start with general office

where there could be a CPA

next door to a dental office

next to an attorney next to a chiropractor

and those lease rates tend to be a little bit less

and you don't get as much with that right

so there's no signage there's no nothing there

it's just you get office space

very cheap rent and you go uh

to have that exclusivity there is difficult

cause now you're hamstringing the doctor from

leasing the rest of the building

right

so or the the owner of the building your your hands

yeah

the landlord the landlord

so the landlord's not able to

to lease more of the building out

so they don't want to do that so um

and if you're driving by a general office building

you don't know if a dentist is in there or not

the reality of having a dentist right next door to you

and a patient walking by office a

when they're going to Office B and saying hey

I'm gonna switch my doctor is very very low right

it's that's a that's an astric type situation

so when negotiating business points in a office space

spend your time on lease rate

spend your time on free rent

spend your time on tenant improvement allowance

things that will actually help your cash flow and in

help separate yourself when you need the separation

versus you know

trying to have exclusivity

cause if a general Dennis was to be in that area

they're gonna be in that area

regardless if it's in your building or not

it could be a block

I almost think like if you switch dentist

you're probably gonna

wanna stay away from the building

you're probably not gonna wanna walk by your dentist

to admit you're probably gonna be like

I'm just getting out of this building in general right

I mean right

absolutely right yeah

you're gonna yes

you're not gonna go back you don't wanna be seen

you don't wanna have that awkward conversation right

right exactly oh

like slide her

away and like especially if you owe money

you're not going back right

Dan Dan

I've gotten I've gotten into weird

conversations about the exclusivity thing

where a general dentist wants to do Ortho

or wants to do some pedo some pediatrics

and they're fighting for this exclusivity

and then it starts getting real weird

where it gets very specific

like can't do children's trophies or like

like it starts getting real specific

and I've heard you correct it you debunk this

but I've heard the more specific it is

the more it hurts you kind of a thing

or do you want to stay broad

like what's the strategy there

because again GPS could ask for exclusivity

and then want to do clear liners

and next thing you know

you're in a lawsuit or whatever

so what what's the idea there

yeah so again

if if your business model is

general dentistry and orthodontics

and you want to advertise that on a on a sign

then you can negotiate for general dentistry

and orthodontics in a retail center

if you're in a medical office building

or office building again

the the chance that you get exclusive is very low

to begin with and and if you are going for that

you have to call out what your use is

general dentistry is a little tricky right

cause that means it encompasses all dentistry

whereas if you're pediatric or ortho or oral surgery

you're very specific in what you do

so you can't call out like hey

I I have this broad term

where I can do a whole bunch of different procedures so

uh it's

that's always a catch and it

I've seen it ruin relationships uh

within the market if they're in the same building

because again doctors have the right mindset of

they're trying to protect themselves

but this general dentist was already doing

child procedures to begin with

most likely right

it's gonna be a family practice and the

that general

dentist is gonna know where their boundaries are

and when to send off to a specialist

but if that general dentist was across the street

they'd still be doing the child trophies

and it's all you're doing is creating detention with

your partner in the industry

for no reason right

both practices can be successful

if a general dentist is

is stealing trophies from a pediatric dentist

and the pediatric dentist is not succeeding

it's not because of that general dentist right

there's other problems

yeah get

it gets very weird like I

I feel like uh

you know in the moment a

a lot of our clients a lot of your clients

they get caught up in the negotiation

and I feel like it's our job as professionals to just

like hey

let's take a step back and

and talk about what this actually means

for your business and I think

I think that's why they've hired us

but in the in the in

the world of negotiating

it's like you start narrowing down on this clause

and they're like well

what if I do want to get into Ortho

let's box everybody out it's like okay

let's just take a deep breath

but um yeah um

once it becomes more real

that's usually like the deals happening

especially if you're a startup

and you haven't owned your own business before

and you're about to go $750,000 in debt with a loan and

you know risk everything

push your chips all in to do this uh

that's when the narrow focus on one or two

it's emotional items really come out because it's not

it's probably not really the exclusivity

it's more along the lines of

it needs to be perfect in my mind

in order for me to move forward

so we have to take a step back and take a look at

look at the economics that you're getting

look at the area look at the demographics

look at this opportunity

you're about to start your own business in

and whether you have this exclusivity clause or not

it's really not gonna change how you do

no that's well said okay

let's pivot Paula

when you sold your practice

when you sold your practice

how would have it how would have it felt

I said that weird but how would have it felt

if you were trying to sell to

the doctor that you sold to

and the landlord said

I don't think so

that'd be a problem if the landlord didn't let you

give your lease to the next person

that'd be a problem yeah

I didn't even know that was possible

yeah that's what assignments are

so let's talk about assignments

my landlord was my landlord was super cool

like he didn't give a dude your land

your landlord was so cool

like half the stuff he didn't care

but but it is a real thing

I didn't know it was a real

I remember you saying something and I was like what

yeah he was like whatever sure

you know whatever yeah

so Dan how often do you see assignments being a problem

on the first draft lease and you read and you're like

dude that's not gonna work

like how how often does that come up

uh about half the time

the language is pretty pretty severe

so uh

sometimes there's language

in the assignment that if you request an assignment

the landlord can terminate your lease

so the whole immediately terminate

so wait I

so I was gonna ask you about some pit balls

of not having someone like you

and this is probably one of the biggest ones

they're gonna sign something and yeah

well it's back well it's back to being a

it's back to being a dental specific broker

if a residential broker was looking at this lease

they wouldn't think anything of it

but Dan sitting here thinking

this doctor's gonna sell it

some point right the whole point of having a commercial

space is to own a business

and that business is worth

as much as you can sell it for

or how liquid it is and

majority of the goodwill is tied up

within that location

so if if we don't have the goodwill

I don't know what we're selling for

it's gonna be a chart sale

so

now we're talking about pennies on the dollar versus

you know over production so it's

sorry I just Learned something

ha ha ha yeah so Michael handles all this I

I stay in my clinical world but wow

so so 50

55 0% of the time

they'll be an aggressive assignment clause

or favors the lender yes yeah

not that aggressive that's

that's more outlier type situation determination

but that we see that we'll call it 5% of the time uh

majority of the assignment is just saying uh

landlord's pure discretion whether you can do it or not

and what we're looking for is

we're looking for the levers

to have the assignment happen

so a lot of times we're explaining to the landlord

why this needs to happen right

because one day we will be able to sell the practice

or we'll need to sell the practice

so we have to have the opportunity to

so there's the assignment of just

moving the practice into someone else's name

and then there's the bigger issue

that most people get tripped up on

is the financial guarantee piece

whether we can get

whether we can get off the lease or we have to stay on

the tricky part

the tricky part is when you sell a practice

in your midterm so say you have five years remaining

and you have a five year option

so we have 10 years on paper

that practice is financeable

we hope that it's assignable right

we can get go from Doctor a to Doctor B

but does Doctor a have to stay on the lease

after the sale

and 50% of the time I'd say yes

so and it's

let's let I wanna ask one question on that Dan

is there ever an assignment of where it's specific

that it has to be another dentist

like not okay

a like business yeah

okay yeah

and usually like that is that usually a requirement

okay and I

and I want to bring this full circle because this

this idea of assignment so

so important let's back up

the landlords aren't jerks

I mean that some of them can be total jerks

but the landlords aren't jerks

they have a deal with Paula

Paula owns the practice

Paula's been paying her rent for years

they trust Paula now all of a sudden

because Paula wants to sell to Dan

they don't know Dan

but they have an agreement with Paula

so the landlord sitting back saying well

I signed a 10 year deal with Paula

I I don't necessarily

want to deal with Dan unless Dan is a good dude

and that's where the landlords are coming from

but wait but

but a contract is a contract and even if dance I mean

if dance has a contract he's in it

he can't not pay if he doesn't pay he can be sued right

so but yeah so professional

sorry Dan we're taking over in the

in the example that I'm buying your practice Paula

if you're retiring you're probably

you probably have

a net worth of a couple million dollars

I'm a brand new dental student

I've been practicing at a corporate office

for two years I have a negative net worth

that doesn't give the the landlord financial fuzzies

warm fuzzies security that I'm coming in

so it's like wait

I

I want the security of Paula because she's worth this

if something happens

she can pay for the lease cause at the end of the day

all I care about is for this land this

this payment to come in on this

on the space dance coming in

he's not worth anything I'm nervous

I got I got no teeth here

what do I do so that's yeah yes

so um

so that's the

the nuance of the negotiation at that point right

is what how can we bridge the gap

is it additional security deposit

is it Paula you have to stay on for 12 months uh

and then burn off is it that you

have to stay on the entire time for this five years

and then Dan will take over the option in year 6

so all that's going through the landlord's head

because all they care about is the money coming in

and how how can they secure it

so it's a lot of education with landlords about that

and it's it's always very touchy

because

it's such an emotional process to sell your business

like it's

it's your child and you think that you're done

but all of a sudden you have this least Lumen over you

right like I'm trying to go and it's one

and it's one of the last things that gets addressed

which it it almost should be one of the first things

but just by the way the cadence works and why the

the bro I'm a lawyer yeah

you gotta make sure you like the practice first

or it's like

there's so much stuff to figure out before

but I see what you're saying yeah

cause you get here and now like dance talking

there's this

there's this other thing and so like we're

what we're talking about is

I don't wanna get into acquisition stuff

cause that's exactly what we're doing right now

is kind of discussing acquisition stuff

but like when you sign a lease as a startup

or you're relocating and building your

your brand new beautiful office

you're an established doctor or start up someday

you you're gonna wanna transition it

to someone if

even if you're in distress

and you can't make your bills

you're gonna I had a a DOC in Colorado actually

she got she found out she was sick really quickly

after she opened her doors

she was stuck and we had to

we had to get her out of the situation

and she had zero sales but she had to do that

and having guys like Dan

the hell Dan probably was the one that negotiated

but I I think assignments so important

it's something to check the box it's it's a very again

rates are one thing

exclusivities another thing like this

these little things really need to be touched

we're 25 minutes into the show

I don't mean to keep going

but I really wanna cover something that you said

and that was

uh you know again

it's not just interest rate and escalation

but there's other expenses

and I have a hard time explaining it

because it comes down to hey look

we're renting this building from somebody

or this space from somebody

but now I gotta pay all their bills too

and they own the building

like how's that work

and it's such a I had a problem with that I

of course

everybody everybody does and then what's covered

and what's what is this yeah

what's covered

the roof the a a H back like what is this

and I and I think it it comes down to like well if

I'm paying you money

why aren't you taking that money and paying your bills

but that's just not how the lease world works

so so the question you

you said it Dan

what's triple net uh

Dan what's triple net

and how do you explain this ridiculous and why

why are we responsible yeah

so uh

yeah this is

this is a a long one

so uh

triple nets are a three pass throughs

essentially to the tenant

and you pay your prorated

share of each of these pass throughs

so the first pass through is property taxes

so

if you're in a building where it's 10,000 square feet

you occupy 2,000 square feet

you're paying 20% of the property taxes

for that building the next is property insurance

which is usually pretty small

but the insurance world has gone upside down

in the past couple of years

and we're seeing increases of insurance 100 to 250%

so it's a nominal fee right now

but it's still it's growing

so that prorate share is passed through

so property taxes on the building

and then proper insurance on the building

those are the two

the next one is the enigma of camps

so that's oh

so Cam is the third end right

well why do people okay

let's go to that

but some people pull that out for some reason

it's just how it's built or how

what they see how it's written

but it's it's

it's commonary maintenance

it's what

it is and it's what's it cost to run the building

landscaping snow removal

ha uh it could be if there's

common area restrooms

it could be supplies for the restrooms

it could be water for those restrooms

utilities for those restrooms

depending on the type of property it is

or how the lease is written

it could be roof it could be HVAC

it could be property management fees

could be property management assessment

it could be snow snow

could it be snow removal you said that

oh you did OK

it could be restriping the parking lot I mean

it's wild what it can all encompass

and each landlord's got it written differently

so depending on how the lease is written

and you wanna just watch out for the catch all

that everything is passed through

and you wanna understand the breakdown of that

triple net prior to signing the lease

like what is the landlord passing through

what's been the historicals the past couple of years

what percent has it increased

because what a triple net is

is

it's an estimated expense based upon historical years

so we'll say that a space is leasing for $30

that's how it's advertised plus triple net

so you you see $30 and you think that's a good deal

then

you come find out that the triple nets are really $12

a square foot

so now we're looking at a lease rate of $42 gross

and that's a marketing scheme that's

done like that on purpose

to attract potential tenants of the building

you're like oh

thirty's good I like that

then you find out the total gross

you're like oh

that's why it's advertised like that

this makes more sense so

that $12 is an estimate based upon either projections

or historicals

if it's a brand new building you're projecting

if it's historicals then you have data at least

and hopefully you're with an earshot

but what happens is January

go ahead

I get sorry

I didn't mean to cut you off there

I wanted you to finish but like I

I guess I'm thinking if so

so you said it and I just want you to say it again

um the landlord does give you a breakdown of how

of what that looks like before you sign it

that that happens if you ask you yeah

you can ask

they should be able to give you some of the buckets

to see what it all incorporates

I mean you could be opening Pandora's box because then

uh tenants think that they can

control some of those expenses

which will get to but in reality you can't right

that's the landlord's in it

to make a profit off their building

they're getting paid base rent

that's the market rate

and then those pass throughs are your expenses

so I have I'm a landlord for a home

and what I'm hearing is

I should buy a building because everything can be

passed through the tenant right

where I'm still responsible for everything

that happens to the house

I like the building idea better wow

yeah I

I guess I'm I

I guess I'm thinking here that like folks

I want you guys to think about this

so you you wanna look at this

because let's say Paula owns the building

cause that's

she just came up with a new business plan tonight

so Paula owns the building and I'm her business partner

which is a true story okay

so I own a small a snow removal company

and I have a contract with Paula

who happens to be my business partner

and I Jack up her rates on snow removal

and I cut her in on that profit of snow removal

so there the the triple net expenses can be

I've seen weird stuff before

like that scenario where expenses aren't respond

like they're not very solid

so do you guys do do you look at that Dan

how does that like competitive

like it's like why are they why is there snow removal

thousand bucks a month

and it goes all the way into June

so it's so for our clients

we'll take a look at year over year

because the way the triple nets work are

it's an estimate

so we'll say the $12 a square foot landlord said hey

$12 for 2025 and 2026

all of a sudden come February January

they get a Bill for $6,000 of

assessments

and that's because the landlord reconciled their books

of what the actual expenses were for 2025

and if they were short tenant needs to pay up

PA Paula

we just got an email from Doctor Rock in Arizona

and he was pissed that he got that 5

600 dollar Bill

and it was because the landlord underpaid

his triple nets

and so he had to pay the difference because they miss

they misestimated it on the space

yeah so it's all it is is an estimate

what about whoever was in the building before

why weren't they responsible

why don't they would have got prorated

they would have got prorated if you leave middle yeah

so Doctor Rock for example

if he was in the building

uh February through December

he would have paid

February through December assessments

he wouldn't have paid for January

uh but that's

that's how that works

so that estimate is just an estimate

and then at the beginning of the year

they'll they'll reconcile their books

if they overestimate estimated

they'll get a credit on their account

if they underestimated the tenant has to pay

but you're looking if it

if you happen to get in a building

that was already there you're

you look at historicals you help the yeah

so it's like we're not there's no way we can

do we ask did you reconcile your books

do we ask them that

so they reconcile their books every year

uh it's just

whether or not they're cooked or not those books

so it's if they have the buddy

that is a snow removal specialist

that charges 500% of what market is

we're doing like

like we don't like we don't own snow removal companies

we don't know how much snow removal should cost

or shouldn't cost

so you're trying to take the landlord at their word

however like

so there's multiple things here with that though

cause if you're the landlord

you wanna have triple nets as low as possible

cause if you have vacancy

you're paying those costs

and if you if your expenses are through the roof

your tenants are pissed you

I mean that's not a good way to keep your tenants

so a smart landlord will not cook the books

they will keep running their business at a low

low cost to keep everyone happy

and when taxes come in which taxes are the lump

majority sum of the triple nets

at least the first n

the first n that you said is property taxes

and then as soon as they get their assessment

and if it's gone up

they should be contesting that assessment

but yeah it's

it's it's tricky and it's frustrating every single year

because every year you're gonna get that Bill

so it's almost

let's let's talk

I I love that

I mean this has been a fantastic conversation already

I can just send this podcast

to every startup that starts asking these questions

be like hey just just watch this

I'll save me a coaching call

and it'll be better than what the way I could say it

but I know enough to be dangerous Dan

help me out in talking about the big things

because I think the big things need to be discussed

and I'm thinking HVAC replacement I'm thinking roofs

how do you protect our lease sir

leases leases on oh shit

I just signed a lease and the H back

remember we had that happen here in a Z

we had that happen yeah

now we're talking about Arizona stuff not snow plow

let's go the other way H back

they're all the air conditioning going out

yeah because I've seen it don't Dan

don't you guys negotiate that out

or something like that no

it it depends on the on the property

so if you're in a medical office building

typically the HVAC's gonna be on the landlord

it's gonna be landlord's expense

general office building they could do an assessment

and charge back to the client for

some of those costs hopefully not a lump sum

it's just and then a retail space

the H back in the roof are typically on

on the tenant on the tenant

so it's trying to negotiate where you're not hitting

you're not getting billed for that capital improvement

all at once you're getting billed over the lifespan

of that H back unit so instead instead of you know

30 thousand

dollar Bill that's now spread out over 20 years

that's just part of the cost

so that makes sense

even though the H back may never go out

you're just paying right

prorata of the life of the life of that asset

so so you gotta

you gotta hire

crane operators to put these HVACs up on the roof

we saw one the other day Paula

and that that's expensive

and so to to replace an HVAC system on the

20th floor of whatever building is really expensive

not to mention the other H backs might be okay

but they could go out at any point

so now

now we have the crane operator there and paid for

so we might as well just do all of them

and then imagine all those leases

paying all of that one lump sum boom

and then you know

the the H vax good for maybe another 50 years

but that poor those poor LC's in that moment

had to pay for all of that

so if Dan's on the job

he's gonna try to spread that cost over

maybe 20 years or something

so that's something that you negotiate Dan or no yeah

no that's that's an item that we look for gotchas right

like we're trying to stay away from gotchas

we're if we're a startup

cash flow is is king for us right

we we have to minimize all of our costs as possible

so if a big gotcha pops up

then that's that could be really bad for us

so it's how do we minimize that risk

like can we first start by saying

hey landlord age backs 100% on you

and then in the negotiations and and go back and forth

and then end up at well

if a large capital improvement goes out

or need is needed

then we can spread that over the lifespan of that

that unit and it's

it's not fun cause you're still paying that Bill

but you're not paying that Bill in a lump sum

yeah so in the residential world

it's kind of called a special assessment of some sort

right

like a big thing that needs to be right like your HOA

you get the HOA dues but then a big

like an elevator goes out of your complex

that's like a special assessment

maybe some of you have heard that before

but same thing in the commercial world

um

yeah I mean

like needless to say like

there's a lot to a lease that you gotta look at

other than just simple base rents

but what I heard there was that base rent

is the actual profit for the landlord

and then their expenses are kind of covered in Cam

aka triple net lumped in

so you're paying all the expenses

and overhead of the landlord's building

including all of the improvements

and then the base rent is pure profit

that's what I heard yeah

assuming that's paid off right

the most you know

probably majority or overwhelming

landlords are in debt for their building

so that's paying for to cover their debt

and then anything remaining after that would be profit

love it

Paul any questions about that

I mean I know you're yeah

um Dan

I Learned a lot I mean

I'm just hoping

I'm hoping that

people don't associate this negativity with me

so when they see see me they're like

oh you're the triple net guy no no

I I think I'm a

you're the guy that protects them from making a

costly mistake when it comes

signing a lease with triple net yeah

I you know

I guess I found that over the years

the more people are educated about what they're doing

the faster they're running towards the deal

if if

if if you're being

if you're in a situation where you feel like

your broker isn't going through all this stuff um

maybe you need to give Dan a call

not that Dan

wants to get in the middle of a relationship

you already have but you gotta look at this stuff

it's important you gotta know your lease

you gotta know what options you have and don't have

and to Dan's point

in the very beginning of this conversation is

sometimes not all the deal points are important to you

so

don't die on the hill over something that's not really

important and maybe that gives Dan the ability to press

on something that is important

that's called a negotiation

I think

that's really important to understand the differences

so um

Dan any

any last kind of minute

last kind of thoughts about complexities of lease

and we covered a lot of really good stuff here

but any anything else you wanna say that

that kind of closes this topic up

yeah so

all of those conversations are the business end upfront

and then all those get inserted into a lease

and then you gotta go through it again

but from a legal ease perspective

which is you know

a completely different lens

so it is it's

it's a thorough process it

it shouldn't

you shouldn't get a lease and sign it within a week

in likelihood it's gonna take

you know

four to six weeks to get through that lease properly

and go back and forth with the landlord

would you say from the moment Dan Gleissner sends an LOI

to the moment it goes through your process

then legal like you just said

what's the average time frame for that

yeah two to four months

two to that's what I thought yeah

two to four months four months would be long

but it but for sure yeah

it could take that long okay

very cool um

thank you so much for your brain

your acumen your service to the industry

it's been it's been really good um

we will be putting Dan's information down below and and

uh and if

if you're seeing this on YouTube or any of the podcast

we'll put in the description links to get

get a hold of Dan like I said

it cost nothing to have Dan look at your lease

like literally nothing

so have a professional like Dan look at that lease

just to spell out everything that you're

you're dealing with

so that you know your lease really well

and what options you have and um

and make make the right decision

I and I will say for those of you that own practices um

or or folks that um

you know though thinking about making a change

one of the biggest things is

look at your lease

at least two years before it expires

because and Dan

I know you'd say the same

because what is Dan gonna do

with a lease that expires in three months

uh he's got no leverage with the landlord

but if if you approach Dan to review your lease

two years before it expires

he can do a lot with that

that time um

a lot of people a lot of people go to you Dan

I'm sure last minute and you're like what

you're screwed buddy

so yeah we have to find a turnkey option

in order to create leverage

but yeah it's you

we want to be on the offense versus the defense

and we want we want to assert our game plan

and maximize that through proper timing

yeah I love it

I love it well again

thanks so much Dan

folks please like subscribe

do all the things but Dan's information will be there

Paula

I think we've got a new business strategy at next level

so let's go buy some buildings

Dan you will represent us on that building

uh without further do

let's shut the program down

but thanks so much guys for your time today

alright alright

thank you

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