Finding a Place to Practice

Video Transcription

[RELAXING MUSIC] Hey, hey. I'm back for more fun with starting and running a private practice. So in this lesson, we'll be talking about paying fees for a space, renting a space, and owning a counseling space. Now this is a big and important decision when going into private practice. Specifically, in this lesson, we'll be covering the following topics-- space options and considerations, fee-based space, renting space, owning space.

Here are some of the options when considering space for your practice-- paying a fee to use an office that you do not rent or own, renting an office space, owning a building or space. Now a big note here. How you go about finding space is going to be closely tied to your values and your business plan.

So for example, I share a small office space within a larger business facility. I pay $130 a month, and that gives me up to 16 hours a week to use at my discretion. I only see around six clients a week, and one or two counseling sessions alone covers my rent for the entire month. So my values of flexibility and simplicity and my business plan that aims for low overhead to maintain a small practice size align. And they're a perfect fit for my current situation.

Now as I noted, I share the space. This means that I had to find a compatible partner whose needs were met as well. Now this took some compromise in schedules and negotiation of rent. But we worked it out. So the ideal choice, should you choose to go this route, would depend on the needs and preferences of any partner or group members.

Now before you begin your search, it's a good idea to get familiar with the cost per square foot for ownership and for rent in your area and surrounding areas. Now remember that this information would have been secured during the marketing analysis portion of your business plan. Here are a couple of steps to take if you haven't completed this part of your business plan.

Consult with a real estate agent, as this can be helpful regardless if one chooses to rent or own. Meet with a business mentor and other counselors in the business. This can be extremely helpful in weighing pros and cons regarding obtaining office space.

And who knows? You may even find someone with an opening for space to rent, which is how I made my most recent transition. I was paying too much for rent, and my lease was up soon. And I posted a message on a Facebook page for local counselors. This led to my current office mate contacting me and led me to find an amazing deal.

So one part of this search comes down to whether the space will be permanent or semi-permanent. A couple of things to watch out for. A down payment and contract is needed for purchasing a space or building. And money may be lost if you change your mind early on and decide to sell. So if renting, it can be costly to break a lease if you make a wrong choice.

A fee-based space can be defined as a counselor paying a fee to use an office space belonging to someone else who either owns or rents the office space. A fee can be a per counseling hour, per day, or per month fee. A fee-based situation can be compared to subleasing. Remember my rent situation that I explained earlier? Well, my office mate is on the lease. I just pay her a fee each month. So a fee-based payment can be to any business owner who owns or leases office space.

Now keep in mind, too, that it is not necessary that the individual providing the space have a counseling practice. I once rented a space from an attorney, once from a massage therapist. Regardless, fee-based payment can be a cost-effective way to start a private practice.

Now here are some limitations to consider in fee-based situations. It may limit you in your service hours due to the space owner using times or other counselors using the space. It could be legally complicated due to client perception of who owns the actual business, who the client is receiving services from, and who owns liability if the client is injured. You'll have little to no control over the environment and the decor.

Once I rented an office space from a metaphysical healer. It was a nice office, but each time I'd show up, there would be pyramids and tarot cards and statues and odd artifacts just scattered about. I was asked not to touch them, ever. Well, let's just say that that didn't last very long.

Renting space can be defined as a counselor paying rent to a landlord to use an office space. So once a rental contract is signed, the office space then belongs to the counselor for the duration of the rental agreement. This is the most common approach to obtaining a space for private practice. A rent payment is typically on a monthly basis.

Now renting a space will likely be more expensive than paying a fee to use an office space, but also will specifically identify the space as the unique and sole location of the counselor's business. So for example, if you want to paint your office pink and have wooden monkeys hanging from the ceiling and a bubble machine, then go for it. Matter of fact, you'd probably be a good therapist for me.

OK. Keep in mind that renting may be more cost-effective than owning a space. There are different reasons why someone may choose to rent versus own. Here are a few-- not enough money for a down payment, no desire to own a building or be the landlord to others, the business plan and the current location is not long-term, you don't want to be responsible for logistics related to the building, including regulations, city codes or upkeep, bathroom fixtures and plumbing, the parking lot and roof. You get the idea. Rent payment for private practice is a tax-deductible expense.

So a few limitations include renting relative to buying includes a loss of financial investment in the property, lack of complete autonomy over the building as well. Renting and fee-based space arrangements have always worked best for me, as I've always had a part-time practice and needed the flexibility to grow, or even decrease my practice as needed and when needed. I also needed to keep my overhead low and keep options for lower-paying situations, always a possibility.

Owning space can be defined as a counselor purchasing an actual building or space. Once purchased, the building or space then belongs to you until a time when you decide to sell it. Owning a space may be the most expensive way to procure a location, but also may be the most financially lucrative, because you may make a profit in the space in the long run if you choose to sell it. It's vital to have real estate knowledge if you want to purchase space. Also, the business plan marketing analysis should identify and justify the purchase of a space.

Now a note of caution here. Owning a space can be very time-consuming and expensive because the counselor is responsible for the upkeep of the space. So say you own a building with a lawn. That lawn will need to be maintained, either by you-- which is a time cost-- or by someone else-- which is a money cost.

So what if the pipes start leaking? Well, you're the owner now, and that'd be up to you to get that taken care of. So here are a few limitations to ownership-- the expense of maintenance, the added management stress of taking care of the property, a higher level of responsibility and liability for things that occur on the premises.

OK. Now that you're sufficiently freaked out about owning an office, let's look at the benefits, because there are many. Complete autonomy over the building and space. Remember the pink walls and the bubble machine? Well, you can do that, too.

Your rent will not suddenly increase. Ability for leasing out unused space to make additional profit over and above counseling profit. Ownership and upkeep for the space are tax-deductible expenses. Now to provide an example of why a practitioner would choose to own rather than rent, I brought in a colleague of mine and co-author of this course, Dr. Trevon Clow.

I knew I wanted to open up a practice in the town of New Smyrna Beach, Florida. So when I moved there, I rented an office and did so for about three years. And then I met a couple of colleagues in the area, and we decided that it might be beneficial for us to purchase a property. And so we did. We purchased an office together. And it's been a wonderful experience.

There's a lot more responsibility to it. For instance, we had to form an LLC corporation. We have to pay taxes. We have to pay insurance. And so there's a couple of more details associated with owning, and it's a little bit more complicated. But you do get an investment out of it, and that was the main draw for me.

There is more responsibility beyond those bills. For instance, we recently had to redo the roof. We had a storm come through recently. And that was an office that I had to worry about, because that was my property. But the benefits are that we recently repainted the inside. I get to shape my office the way that I want. I own the key. The rent will never go up. And in about a year, we'll have it paid off, which will be a really nice benefit.

So here's what we covered in this lesson. First, space options and considerations. Next, fee-based space. Next, renting space. Finally, owning space.

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