Buy Chiropractic Practice With Real Estate: Combined Deal Guide
When you buy chiropractic practice with real estate included, you acquire both the clinic and the building it operates in, often in a single transaction. These deals frequently arise when a long-time owner who also owns the building decides to retire and sell everything at once.
Owning the building can give a new owner control over occupancy and the chance to build equity in real estate. It also makes the deal larger and more complex. This guide explains how combined transactions may be structured and financed. Real estate, tax and ownership rules vary by state, and nothing here is legal, tax or appraisal advice.
Why Sellers Offer the Building With the Practice
Many retiring chiropractors bought their office years ago. When they sell the practice, they may prefer a clean exit rather than becoming a landlord to the buyer. For the buyer, purchasing both can remove the uncertainty of a lease and provide long-term occupancy security.
Benefits a buyer may consider include:
- Control over the location without lease renewals or landlord approvals
- Potential to build equity in real estate over time
- Flexibility to renovate or expand the space
- Potential rental income if part of the building is leased to other tenants
- An additional asset that may be sold or leased separately in the future
Considerations Before You Buy Chiropractic Practice With Real Estate
A combined purchase also carries added responsibility. Buyers should weigh:
- A larger total financing request and potentially more equity required
- Property maintenance, taxes, insurance and repairs
- Whether the building suits the practice long term, including parking and accessibility
- Environmental, zoning and condition issues
- Reduced flexibility to relocate if the area changes
If you are still deciding whether ownership makes sense at all, our article on whether to buy or lease a chiropractic office covers that decision.
How Combined Deals May Be Financed
SBA 7(a) loans can be used to finance a business acquisition and owner-occupied real estate together in one loan, which may simplify the transaction. When real estate makes up a large share of the loan, program rules may allow a longer repayment term for that portion, which can help with affordability.
Some buyers instead use separate loans: one for the practice and another for the building. An SBA 504 loan may be considered for the real estate portion in some cases, while a separate loan covers the business. Our guide to chiropractic office building loans compares SBA 504 and 7(a) structures for real estate in more detail.
Eligibility and terms depend on the business, the buyer, the property, the use of proceeds, program rules and lender review. Owner-occupancy requirements apply to SBA real estate financing. Every loan is subject to approval, and nothing here is a commitment to lend.
Valuing the Practice and the Building Separately
Even when sold together, the practice and the real estate are typically valued separately. The building is usually appraised by a qualified appraiser, while the practice is valued based on its cash flow, patient base and other business factors.
Separating the two helps buyers and lenders understand what they are paying for each. It can also reveal whether the combined asking price is reasonable. A seller who values the building at a premium may be offsetting a lower practice value, or the reverse.
Rent Normalization
When the seller owns both the practice and the building, the practice may have paid rent that was above or below market, or no rent at all. That affects reported profit. Lenders and buyers generally normalize rent to a market level to understand the true earnings of the practice.
Once you own the building, the practice’s cash flow will need to support the real estate debt as well as the business debt, so understanding these numbers matters.
Due Diligence for Combined Transactions
Beyond the usual practice review, combined deals typically require:
- An appraisal of the property
- An environmental review, which lenders may require
- A title search and survey
- A property condition inspection
- Zoning and permitted use confirmation
- Review of any existing tenant leases if part of the building is rented
On the practice side, payer contracts, enrollments and credentialing should not be assumed to transfer, and billing practices should be reviewed by qualified billing or compliance professionals.
Plan for Equity and Closing Costs
Combined deals can involve more closing costs than a practice-only purchase, including appraisal, environmental, title and legal fees. Buyers should plan their equity contribution and keep enough working capital for the transition. You can estimate payments with our SBA loan calculator. Estimates are for planning purposes only and do not represent an offer or approval.
When the Seller Prefers to Keep the Building
Some retiring owners want to keep the property for rental income. In that case, the buyer typically signs a lease, and counsel should review the term, renewal options, rent and any purchase option. Our article on chiropractic practice succession planning discusses how sellers think about the building in a transition.
Final Thoughts
Choosing to buy chiropractic practice with real estate can provide stability and long-term equity, but it requires careful valuation, thorough diligence and a financing structure that the practice’s cash flow can support. Planning both pieces together can help you avoid surprises at closing.
US Medical Funding helps chiropractors finance practice acquisitions, including transactions that include real estate. Learn more about our chiropractic practice acquisition financing.
