Level 2

The 10-Year Lease vs.
Own Wealth Analysis

The same facility, modeled twice — once owned, once leased — over ten years. Returns a net worth comparison and a clear recommendation: Own, Lease, or Conditional.

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The question

Most groups answer this with instinct

Own or lease is usually settled by disposition rather than arithmetic. One partner has been burned by real estate. Another believes owning the building is the whole point. Whoever argues hardest sets a decision worth millions over a decade.

The honest answer depends on numbers specific to the project — construction cost, rent in that submarket, the group's cost of capital, how long the partners intend to hold, and what happens to leasehold improvements at lease end.

This analysis runs both paths on your actual facility program — not a generic square footage, but the program produced by the Clinical Space & Cost Program, so the two answers are comparable at the line-item level.

It reports the year the ownership path overtakes the lease path, if it does, and states plainly when the answer is genuinely conditional rather than manufacturing confidence that is not there.

What the model does

Both paths, same facility, ten years

Ownership path

Acquisition and construction, debt service, equity build, principal paydown, appreciation, and the asset's position on the balance sheet at year ten.

Lease path

Base rent with escalation, tenant improvement treatment, and the leasehold written to zero at lease end — because that is what actually happens to it.

The delta

Net worth difference year by year, the crossover year if one exists, and a recommendation of Own, Lease or Conditional with the reasoning stated.

What the model does not do, stated plainly. It measures wealth building only. It will favor ownership in most stable, growing-volume scenarios, because leasehold improvements are treated as a total loss at lease end while owned real estate builds equity. That is a real advantage of ownership and it is not the whole decision. Flexibility, capital availability for the operating business, physician group turnover and exit timing, and tolerance for real estate illiquidity are not modeled here and can reasonably point to Lease even when the wealth math favors Own.

Sequencing

This is a second question, not a first one

Own versus lease cannot be answered before the facility is defined, because the cost of the owned path is the construction cost and the cost of the leased path is rent on a known square footage. Both come out of the space program.

Most clients run Level 1 first and Level 2 against it. The Unified Suite bundles all three levels at $4,750 — $5,600 purchased separately, a saving of $850.

Unified Suite — $4,750 Start with Level 1

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