Dr. John Meis (00:01.41)
Hey everybody, I'm Dr. John Meis. welcome to this episode of The Double Your Production Podcast. I'm here with one of TTI's newest coaches, Burt Arthur. Hey Burt, how you doing?
Burt Arthur (00:14.111)
Doing great, Dr. John. How are you?
Dr. John Meis (00:17.504)
I'm doing good. I'm doing good. I gotta slow everything down for this Southern boy here because he's a good slow talker and I got my upper Midwest blah blah blah blah blah blah. So Burt, why don't you tell everybody a little bit about yourself and how you came to be here at TTI?
Burt Arthur (00:35.111)
Sure. It's been this is now my 21st year in dentistry. started out gosh, it's hard to believe. It's been 21 years ago, at a little office in Anniston, Alabama, if you can believe that. was fortunate enough to be a part of their growth cycle. held the CFO title there, grew that from one office to 14 before selling to a VC firm. Spent the next couple of years in the southeast jumping from a few different DSOs as they were scaling up, held the COO title, CFO title, and then really just kinda got tired of the grind of that. It's exciting when it's exciting. it's not when it's not.
And so got into about going on six years ago, got into healthcare real estate. Wanted to keep my knowledge base of what I've learned in the dental space and really help doctors secure their locations, whether it's an expansion, whether it's a lease, whether it's a purchase, even dabbled a little bit in the practice transition side and did some coaching on the side as well. Just that naturally flowed from those transactions, but then realized I need a team. It's fun to do it. It's exciting, but there's a lot of structure that has to go into if you're coaching and trying to do something correct, structure wins. And that's something that I knew I lacked and when I saw Dr. Meis, I went through some of your programs, saw the opportunity and said, "Hey, this may be somewhere I wanna be." Great people here, great leadership, and I'm happy to be here.
Dr. John Meis (02:16.92)
Well, Burt, we're excited to have you. We're excited to have another really deeply experienced dental person. You know, somebody, you know, we're talking about decades and you've had different roles and and been in different practices and seen a lot of different things. So we're super excited to have your experience. And your your time spent doing healthcare real estate is something exciting too, because we have not had anybody on our team with that expertise. And so that's so that's yet another reason why we're excited to have you. and that's why I wanted to have you on the podcast, is so that we can start talking through some of the the real estate questions and problems that practices have. And this is going to be one of a series of these as we get through the real estate issues that dentists have.
A lot of dentists don't think a lot about their real estate and their leases, but when you think about a lease that might be seven, eight, ten thousand dollars a month, and it's so that's 120 grand a year, five or ten year lease, that's a million, you know, if it's a ten-year, it's $1.2 million. You got five-year extensions, two of those. It's a $2.4 million potential, you know, expense.
Burt Arthur (03:36.459)
That's right. In a lot of practices, it's the #2 expense on their P & L. It's people first. It's the their real estate or occupancy cost is the second largest item on that P & L.
Dr. John Meis (03:58.786)
Yep. Yep. So it's really an important topic that that I think people glance over and there's a tremendous opportunity to do it well, and there's a tremendous opportunity to get fleeced. So let's take on the first topic, Burt, you and I decided to to get into when it comes to dental real estate, and that is should we own or should we lease? So you have not you and I have not had a conversation about this. So I'm being curious about what you have to say. And so yeah, shoot. Give us some of your point of view.
Burt Arthur (04:35.593)
Yeah. I would say before we get started with should I own or should I lease, one of the things I've told my clients and I continue to tell them today, it's always practice first, real estate second. And it's because where is your wealth going to be generated from for the next several years? I'd much rather you lease a space, even if it's not your dream, because that's where your wealth is going to be coming from. It's not going to be coming from your real estate holder.
So first and foremost, it's practice first, real estate second. Having said that, a lot of this depends on what your structure is. One of the first questions that we start diving into when I'm meeting with a new client, whether it is a first-time practice owner that's looking to go out on their own, or if it's a shop that they're wanting to expand, it's what do you want to get out of this? What does the end look like for you?
And that kind of takes some people back because they're not you what is a real estate guy doing talking about what my 10-year goal is or my exit strategy? But that starts to set the tone. if you're telling me this is where you want to live, you want to operate, this is your dream spot space, then let's talk about ownership. If you're telling me, hey, I want to have 15 locations, five locations, we're gonna approach that a little bit differently. And so the easy answer to, "Should I purchase or should I lease?" My answer is, "I don't know until we start answering a lot of those questions."
Dr. John Meis (06:11.148)
Yeah. Yeah, no, I love that thought process, Burt, and I agree with you a hundred percent on that. And that is what are you trying to accomplish? Because if you're trying to accomplish, you know, multiple locations, then you probably don't want to have your capital tied up in real estate. You wanna have it available for additional practices. But if you're if you're gonna be the traditional dentist that has one practice and you wanna build your dream shop and you do it all the time, completely agree. Owning is probably a better idea.
Burt Arthur (06:48.917)
Yeah. And so when we're approaching, I get approached by a client, the one of the easiest ways to dictate whether you lease or purchase, we do a lease and a purchase analysis. You tell me kind of where you want to be, what the market is. And a lot of this is driven by the market. You come down to the Gulf Coast. I know this area exceptionally well. We're gonna take what we can get, if we identify an area, whether you want to lease or own, because it's such a tight market. We're gonna strike when the when the iron's hot. But what we also do during that process is do a lease versus purchase. We're gonna try to find a couple options for you to lease. We're gonna try to find one or two options for you to purchase and we're gonna put it on a spreadsheet. And we're gonna see the difference in cash flow, what the taxability is. We're gonna share that with our CPAs, our financial advisors 'cause they're gonna know a lot more about your practice than I am.
As a real estate agent. I know what you've told me. I know what the bank has approved you for, but I don't know the ins and outs of your life. And that's why I try to work any deal that I work on the real estate side, I'm trying to work with the bank and I'm trying to work with the CPA just as much as I'm working with the doctor because I want to set them up for success. And so when you're going out, whether whoever you use, and I would tell you, Dr. John, one of the biggest mistakes I see a lot of doctors do is they think, "My buddy's done this, I can do this." Or, "Hey, I've watched some YouTube videos, I've read some books." Now we've got this fantastic tool of AI. But that most of that's where a lot of these issues come in. They can give you a lot of good information broadly, but when you start getting into the specifics on how that impacts you, your cash flow, why is this property maybe better than this other property, it starts to fall apart.
And what you've got to remember as a doctor, as a non-real estate person, when you go drive around and you see a number, a sign that has a number for that property, that agent that's listing that property does not work for you. That agent is working for the landlord. And that's a very huge distinction I see when you're going out, having somebody that knows how to make those phone calls, somebody that knows how to negotiate, what's realistic versus what have you read on some Facebook post from somebody that's in a completely different market than yours. And so as we're going around the lease versus purchase, it's let's find some options for you, let's put it on paper, and then let's start making the decision from there.
Dr. John Meis (09:23.8)
Yep. Yep. Yeah, totally agree. One of the things that I've seen dentists stumble on is falling in love with a particular location without understanding the business side of the decision and does what the what it's gonna cost to to lease it, to renovate it, to run it, to to maintain it, is that gonna fit into a reasonable amount? As far as a business expense.
Burt Arthur (10:05.887)
Mm-hmm. Well, dentistry's stressful enough, I would say. I'm not a clinician, never been, but just talking to dentists over the course of my career, it's not the easiest lifestyle. It's hard work, it's stressful. On top of that, you're adding in the functions of a CEO. You're the HR person, you're the marketing person, you're you've got your hands in all this. And it's frankly, do you have enough time to go out, do the research, find out what market is, find out how to negotiate, find out what's available from the landlord.
And the answer typically is no. And when I'm talking to a doctor, I'm saying, look, whether you use me or another agent, my question to you is, how much do you produce an hour? And you know, they'll tell me whatever that number is. And it's okay, multiply that by 30. And if I can't save you that much time just in letting me do this for you, then you can get rid of me, but that's.. I don't want to say I don't want the doctor to be involved. I want to educate him. The way I view a real estate agent is I'm a curator of information. At the end of the day, I can make it sound very fancy and this big convoluted thing. My job is to take the information that's out there, distill it down to actionable items. So when we're in negotiations, we're talking to the bank, we're talking to the GCs. You know what information's relevant versus whatever else noise is out there.
Dr. John Meis (11:42.774)
Yeah, it really helps to have a professional on your side when you're going through decisions like this. And so, when it comes time to you you've got a handful of options, what is kind of the some of the items on the decision tree, you know, that that that tip you one way or another when you have a couple of options? Certainly lease amount and terms is certainly gonna be one, but what are some other things?
Burt Arthur (12:18.761)
I think well, a lot of it's gonna be, "What type of dentistry do you wanna do?" I can tell you, I was just talking about it on a convention floor. I had a client that she wanted to be a million dollar doctor, which she had the skill set for. She wanted to do implants and crown and bridge, and she had the opportunity and for it was a great deal, frankly. Except when you start pulling the demographics, you realize it's not the type of dentistry she wanted to do isn't going to be delivered in that market. Nothing wrong with it. She could still be a million dollar doctor, but it's not going to be doing the procedures she wants. So that all should be coming in right there. Two, it's expandability. I won't know if that's a real word or not, but I like to say it. In Alabama, we can do that. We can make stuff up. It's a useful word. maybe we should coin that.
Dr. John Meis (13:06.7)
Yeah, no, I think it's a useful word. Yeah. Mm-hmm.
Burt Arthur (13:13.663)
But it's when you're starting out, especially as a fresh owner, whether you've been an associate for two years, ten years, it's we're gonna start with something that we can hopefully grow into for a period of time, which goes into the term and whatnot, but it's the square footage. Parking is another huge thing I think a lot of doctors overlook. Because I can't be in a typical office space. We're not CPAs where people are gonna come, it's gonna be office staff.
Dr. John Meis (13:35.34)
Yes.
Burt Arthur (13:43.625)
We might have a visitor or two, and then parking's not that big of a deal. At a dental office, we've got how many bodies coming and going every 30 minutes to an hour? And so don't overlook that. And that's there are deals that we've not done. Building is beautiful. It's the perfect square foot. It's the right price. We just don't have enough parking, because as you're growing, again, it may be great the first year.
Dr. John Meis (14:07.65)
Yeah.
Burt Arthur (14:10.687)
You get into year three, four, and five when you've established yourself and you continue to grow, if you can't find a parking space, people will go right down the street. Those are kind of the bigger things.
Dr. John Meis (14:22.146)
Yep. And parking is very, very difficult to fix.
Burt Arthur (14:28.113)
It is. And it's either you've got the space to do it or you don't. But even inside, if we got square footage, I'd like to be able to grow into that square footage. I don't want to put you necessarily in a small town here, your typical office is going to be about twenty five hundred square feet. I don't like going too much lower than that. But I also don't want you in six thousand either starting out. And so a lot of it just comes down to feel. Another big one too is what concessions can we get from the landlord?
and when we talk about concessions, we talk we're talking about, you know, rent abatement. We're talking about build-out costs. Will they help support some of that? but that's if you've got options. And those when I say it depends, one real estate's local and it sounds cliche, but it's the absolute truth. The advice I would give, and that's my fear, I think, with AI, my concern with some podcast, even though I know we're doing one is, once you've done one deal, you've done one deal. And the deal can look one way in Atlanta. It can look a completely different way in Alameda, California, than it does on the Gulf Coast, which is where I get, you know, again, consider the source, consider where they're from. If you want to talk to me about generic stuff, more than happy to do it. If you want to talk to me about hyperlocal, we can, but I'm going to have to do some research.
Dr. John Meis (16:02.7)
It's an interesting thing, the way people are using AI. AI might be a good tool to develop a list of questions to ask. but it's a terrible tool for getting answers. And it's getting worse because as it gathers more information, right? It they started out getting maybe the best information and now they just want the most information, which dumbs down everything.
Burt Arthur (16:18.197)
Hundred percent.
Dr. John Meis (16:32.394)
It's bad and getting worse. So it's a useful tool in in brainstorming or developing questions, but otherwise not so useful.
Burt Arthur (16:33.287)
A hundred percent. I agree. And on top of that, what I've noticed is it doesn't have access to paywalls. So if it's got public information, it can pull that, but if you're trying to get into any of the listing databases that we use, it doesn't have access to it. And so it kind of starts to even the clients that I've used when I say, "Hey, here's what market is." And they're like, "Well, here's what Grok said, or here's what Chat GPT said." You start looking at the sources and you realize, okay, it's pulling from office space, not what's actually inside a commercial real estate listing service. And so there's a, like you said, I like it from an overview standpoint. I like being able to say, okay, if I'm looking in this area, what are some questions I should be asking? If you're trying to get into real information, it gets a little scattered.
And that even goes into when you're offering to purchase a practice or a building or you're trying to lease a building, those brokers know if you're using Chat GPT to write a letter of intent. I've seen it several times myself. you can tell the bias that's in there, again, reasonableness for the market, and you're just like, "Okay, this guy's not serious." And so, that's something I think it could hurt the credibility of the negotiation, is what I'm trying to say.
It'd be like me going in and trying to talk to you know, acting like I'm an attorney because I've got all this chat GPT on the side. That attorney's gonna know within about two minutes of a conversation I'm not licensed.
Dr. John Meis (18:23.586)
Yep. And so you look you look amateurish and landlords and sellers both love amateurs, right? Because they know they can you know take advantage. They know they're gonna be more sophisticated than the person they're dealing with, and they are going to you know, of course, try to get the absolute best deal for them.
Burt Arthur (18:29.227)
Mm. Hundred percent.
Dr. John Meis (18:53.461)
And often that means not as good an idea, not as good of a situation for the leaser or buyer.
Burt Arthur (18:54.997)
That's right. Well, and that's there's nothing wrong with that. I want to be very clear. That you know, it's easy to set up aside of they're just mean and mm angry. No, that's what they're there to do. They are in the business of leasing space or selling space. Having somebody that knows that conversation. I can tell the verbiage I use, if I've got a doctor that maybe, you know, they don't know if they wanna have an agent for them.
And it's, you know, again, I go back to I've read the book, I've got some buddies, and I'm like, okay, that's fine. And I said, you know, I've been in dentistry, you know, twenty years, twenty one years. On the way over here, funny enough, I've had a really big interest in implants and I've read a few books about it and I've actually watched all the videos from start to finish and I'm feel very confident that right now, based on what you just said, I should be able to do an implant. Especially if it's got a surgical stint there, guide, I can pop that you're gonna let me do it? No, okay.
So you're about to go against somebody that's done a hundreds of these transactions and you think because you've read a book or you've watched, you know, a couple, you know, what what you know, real estate flip shows that and it's just a different beast.
Dr. John Meis (20:15.724)
Yeah. So if you know, a couple of big lessons from our podcast today. Number one is the rent-to-own decision really depends on your strategy. And you have to figure out the strategy and your long-term goals before you do make that decision. second thing is when you go into this, if you're buying or leasing, you want to make sure that you have a qualified professional on your side.
We have some groups that we some real estate groups that we recommend that we think are are absolutely fantastic at what they do, but this is not something to go into unprepared and without professional help because as we mentioned, it can be a multimillion dollar decision and it can a mistake can go, you know, easily 10, 12, 15% higher than it needs to be.
So those are the big lessons. So Burt, thanks for being on this episode of The Double Your Production Podcast. And we'll see you all later. There'll be more podcasts on real estate with Burt. And we look forward to seeing you on one. Thanks, everybody.
