One of the most important decisions when starting an urgent care business is whether to own or rent your physical space. At first glance, owning the building might sound like a smart investment. After all, real estate can be a wealth-building tool on its own, and you won’t be paying “rent” to a landlord each month.
However, running an urgent care clinic and managing a real estate portfolio, even if it happens to fall under the same roof, are two separate businesses. Each comes with unique timelines, capital needs, and risk profiles.
For entrepreneurs looking to open a new urgent care, the choice between owning and renting can significantly affect both your start-up trajectory and financial flexibility. This article explores what you need to know before deciding whether to rent or own your urgent care space.
Urgent Care and Real Estate: Separate Businesses, Same Goals
Real estate investment, whether in urgent care or in a fast food or retail store, is about long-term appreciation of your investment and cash flow through leasing. Urgent care is about delivering care to patients while managing volumes and revenue cycles to turn a profit. While the two can intersect, they rarely align in an ideal fashion.
If you’re interested in investing in real estate, it’s often prudent to pursue the best available options rather than focusing on urgent care. This could be an apartment building, a retail strip, or a franchised business like Chipotle or McDonald’s. Only occasionally will the smartest real estate investment happen to house your urgent care center. If that’s the case, it should be considered a happy bonus, not a first-line strategy.
Pros of Owning Your Urgent Care Space
There are several reasons some operators choose to own the real estate their urgent care operates in. Property value is a big factor, but not the only one to consider. Ownership can also offer more control of your environment and eliminate the friction of dealing with a landlord or neighbors.
For some urgent care operators, these benefits align with their vision for the business. However, it’s important to consider these pros in context. Here’s what ownership can offer:
- Real Estate Arbitrage: In commercial real estate, arbitrage means building a property and leasing it to yourself, then selling that lease to an investor at a higher valuation. For example, if you build a new clinic for $1.5 million and an investor values the long-term lease at $2 million, you’ve just created $500,000 in capital gain before seeing a single patient. This can give you financial flexibility and leverage to continue expanding your business.
- Greater Control: Owning your space means no landlords dictating signage, hours, or remodeling terms. You can build a space to your exact specifications and maintain full control of your branding and operations.
- Long-Term Asset: Real estate values can appreciate over time and create another income stream down the road. For instance, if you choose to lease the building to a new operator after you retire.
Cons of Owning Your Urgent Care Space
Although the benefits of owning your urgent care space can be compelling, they come with real trade-offs that every operator must consider. Owning property ties you to a single location—both financially and operationally. This can increase risk, slow your expansion timeline, and limit your overall flexibility. Before jumping into an urgent care real estate investment, it’s worth weighing these potential drawbacks against your ultimate goals.
- Longer Development Timelines: Construction of a new building for an urgent care center can take 18 to 24 months. By contrast, leasing an existing space and building it out to fit your needs can get your clinic operational in just six months.
- Development Complexity: Building a new medical space involves lots of red tape. From zoning to environmental studies and water runoff planning to asbestos abatement in demolition, these are costly and time-consuming activities. You’ll need to plan for both budget surprises and time delays to accommodate.
- Higher Upfront Capital Requirements: Real estate ownership ties up capital in a building that could otherwise be used to open additional urgent care sites or invest in your operations. Although the location’s value might grow over time, you’ll have a harder time scaling in the near-term.
- Operational Risk: Owning your space puts you “all-in” on one location. Though you can mitigate the risk with excellent location scouting ahead of time, factors that make an area prime for urgent care development one day can quickly change and are often out of your control. If your urgent care fails, you can be left with a building that may be hard to repurpose or sell.
- Maintenance and Management: When you don’t have a landlord, you become responsible for all upkeep. Landscaping, snow removal, parking lot resurfacing, and routine updates now come out of your budget. When renting space, the landlord handles these maintenance tasks through common area maintenance (CAM) fees shared by all tenants in a location.
- Exit Complications: Speaking of selling, many buyers are only interested in the urgent care operation—not the real estate. This means you may end up acting as the landlord, dealing with property management tasks long after you’ve exited the business.
Why Most First-Time Operators Choose to Rent
For most urgent care start-ups, especially those run by a solo physician entrepreneur without existing business experience, renting offers a faster, simpler, and lower-risk path to profitability. Retail spaces in shopping centers or standalone pads often come pre-equipped with essentials like HVAC, restrooms, and utilities connections, making it easier to get up and running.
In addition, renting allows you to test your business model before locking yourself into a long-term real estate commitment. If your first location succeeds, you can consider buying property for your second or third. Renting early on gives you room to learn, pivot, and expand without the weight of a mortgage or maintenance responsibilities hanging over your head.
If your primary goal is to start an urgent care center, not become a landlord, then renting is typically the smarter choice. That said, if you have the capital and time to manage real estate and the location aligns with your long-term goals, owning could make sense. Either way, ensure you are choosing with the mindset that running an urgent care clinic and buying real estate are separate investments.
Need Help Making the Right Choice?
At Urgent Care Consultants, we help entrepreneurs navigate every step of opening a new urgent care business. We can assist with site selection, staffing, regulatory compliance, and more. Whether you’re leaning toward real estate ownership or just want to launch as fast as possible, we’ll help you build a business designed to achieve your goals.
Schedule a no-risk consultation today to discuss how we can help with your urgent care startup plan.