Refinance or sale-leaseback: run both before signing either.

When you are sitting on a valuable building and need capital, two offers show up most often: a refinance from a lender, or a sale-leaseback from an investor. On the surface, they can look similar. They are not.

One question, two very different answers

At the core, both options answer the same question: how do I turn building equity into usable cash without hurting the practice?

Because both can generate a similar check upfront, it is tempting to decide based on that one number. That is usually a mistake. If a sale-leaseback offer is already on your desk, read it alongside How to read a sale-leaseback offer without getting boxed out of ownership.

Step 1: put both options on the same page

Before you react to any single offer, ask your advisors to help you build a simple side-by-side. For each scenario, list:

• Cash you receive at closing, after fees and payoffs.
• Monthly obligation: loan payment vs. rent plus NNN charges.
• Term length and any step-ups: rate resets, rent increases.
• Who owns the building at the end of 10, 15, and 20 years.

You are not trying to engineer the perfect spreadsheet. You are trying to see, in plain language, how each path plays out over a realistic practice timeline.

Step 2: follow the money over time, not just day one

A refinance can feel conservative because nothing big changes: you keep the building and keep paying a loan. A sale-leaseback can feel modern and flexible because you unlock the equity and just pay rent.

To make a better comparison, look at:

• Total loan payments over the refinance term vs. total rent under the sale-leaseback, including likely renewals.
• How much of each payment builds your equity vs. how much is purely operating expense.
• Where you end up: a debt-free building you own, or a renewed lease with a landlord who has captured the appreciation.

Sometimes the sale-leaseback still wins, for example if you truly want to exit ownership and invest aggressively in growth. Other times, the math shows you are selling a long-term asset to buy shorter-term comfort.

Step 3: weigh control and flexibility, not just cost

Control and flexibility cut in different directions in these deals.

With a refinance:

• You control the building, subject to loan covenants.
• You can often refinance again, expand, or modify the space with fewer parties at the table.
• Future buyers of your practice inherit both the building and the debt structure you choose.

With a sale-leaseback:

• You gain flexibility on your balance sheet: less debt, more cash.
• You lose control over the building’s long-term use, future buyers, and ultimate sale.
• Expansion, contraction, or relocation now require landlord consent and lease negotiation.

Which flexibility matters more over the next 10–15 years: flexibility in your balance sheet, or flexibility in your real estate?

Step 4: stress-test both under a bad year

Every pro forma works when everything is going well. The real test is what happens when things do not. Run a simple stress test:

• Assume a 15–20% drop in collections for 12–18 months.
• In each scenario, can you still comfortably cover the loan or the rent?
• Which path gives you more levers to pull: refinancing again, selling the building, subleasing part of the space, renegotiating terms?

In some cases, being the owner with a reasonable loan makes a rough year survivable. In others, fixed sale-leaseback rent with aggressive escalations can turn a bad year into a crisis.

Step 5: consider your endgame

This is not just about today’s needs. It is about how you want your story to end. Ask:

• Do I ultimately want to retire with a building I can sell or collect rent from?
• Do I see myself exiting real estate in stages, focusing purely on the clinical business?
• How important is a clear path to ownership for the doctor who comes after me?

If owning the building has always been part of your long-term plan, or your successor’s, selling it now for convenience may be more expensive than it looks. Does your building help or hurt your practice sale? covers what buyers make of it.

Run both, then decide

Refinance and sale-leaseback can both be useful tools. The risk is choosing between them based on which offer landed on your desk first, or which check looks bigger at closing.

When you run both side by side, cash, total payments, control, flexibility, and end state, you are far more likely to choose the option that truly supports your practice and your balance sheet, not just this year’s to-do list.

This article is educational, not legal, tax, or financial advice. Review either path with your own attorney, accountant, and lender before signing.