Doctor Real Estate Investing: 4 Ways To FI

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Who would have thought that a global pandemic in 2020 sending thousands of people to hospitals throughout the U.S. would cause many doctors to lose their jobs and earning potential?

Doesn’t make sense, right?

You’d think the demand would now be higher but it seems that many hospitals have lost so much money that hiring new docs is next to impossible.

This is especially troubling for the 2,500 new ER doctors entering the workforce each year.

Regarding medical school loans, research shows that:

  • half of them owe more than $200,000 
  • one-fourth owe over $300,000

The sad part is that many of these ER docs have had their contracts with these hospitals either altered, if not rescinded.

A survey from the American College of Emergency Physicians found that:

  • 20% of emergency medicine group practices laid off doctors in 2020 (wow!)
  • one-third furloughed them
  • more than half cut hours or wages

Hopefully news like this will come as a wake up call to the fact that the 2020 pandemic has shown us that NO job is protected and earning potential can decline at any point in time.

Reread that last sentence until it sinks in.

We should be diligent and prepare for times like this by investing for financial independence.

It’s a shame that we obtain such in-depth training regarding the human body yet receive no financial education. It’s now up to you to do that for yourself or else…

My goal is to start you down the road to working smarter NOT harder and making money work for you INSTEAD of the other way around.

Let’s get started with our first class of the day, Doctor Real Estate Investing 101


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Doctor Real Estate Investing 101

I want you to do me a favor. Take a minute or two and think about what your “typical” day looks like. Start from the time you wake up until your head hits the pillow at night.

Go ahead, I’ll wait….

More than likely you’re a busy person so let me ask you this…”Would you have time to find, finance and manage several rental properties such as a handful of single-family homes or apartment buildings?”

I’d bet the answer to that question is a resounding NO.

Going through this exact exercise years ago showed us that we were too busy to become landlords which led us to passive real estate investing. 

Related article: Real Estate Syndication: A Doctor’s Guide to Investing

More than likely you’re familiar with how doctors hand their personal finances.

Typically it involves handing over your money each month to an advisor and hoping they know what they’re doing so you’ll have enough to retire on.

doctor real estate

Occasionally when I speak with new Passive Investors Circle members about investing in real estate assets, I’m told that they have to run it by their advisors first.

I can almost guarantee 100% of the time that your advisor is going to steer you AWAY from investing in anything that doesn’t have their name on it.

Why?

It’s because they can’t collect fees from something offered outside of their firm. They make money via assets under management (AUM) and real estate investments would NOT be under their management.

It’s sad but true even though it maybe the BETTER choice for you.

The way I do things on this site is to give people options and then let THEM choose what’s best for their particular situation.

I understand that everyone is different so it’s important that you do what’s best in your own eyes to give yourself peace of mind.

There are too many sales people trying to “pitch” us deals whether it’s stocks, a new investment opportunity in your local town or a rental property.

My job is to present you with the facts that I’ve learned after personally investing and writing over 200+ articles on this site pertaining to rental real estate. 

Related article: 7 Steps – How To Build A Real Estate Empire

In my opinion, real estate is the best way busy professionals can quickly replace their expenses with passive income and reach FI in 7-10 years. I’m not joking when I tell you this.

How?

I’m personally going through the same process and I practice what I preach. Instead of investing for the distant future focusing on trying to “accumulate” a stock pile of money, my focus is building cash flow to replace expenses NOW.

It’s a different mind shift in the way to think about money. One of the main issues that holds folks back is that we’ve been told the accumulation model is the ONLY way to obtain long-term financial security. 

I thought this way too until I started investing in passive real estate and have seen firsthand what it can do our financial future.

The Simple Path to Wealth

Now I realize that investing in physical assets is one of the best ways high income earners can build wealth hands down. 

simple path to wealth

But in the world of FI, this method could be construed as being controversial as there’s many bloggers that recommend only investing in index funds as noted in the book, The Simple Path To Wealth.

I’ve read the book, which is great by the way, and it’s mainly for those that want a “set it and forget it” plan.

If this sounds like you then investing in something such as Vanguard’s VTSAX fund could work out OK.

But you’re probably not here to learn about how mutual fund investing over your entire career can help you with a better retirement.

You’re here to find out how to build a real estate portfolio to give you options NOW instead of when you’re 70.

Why Real Estate?

If one of your goals is to play better tennis, lose weight or gain muscle, what do you do in order to succeed?

More than likely you educate yourself by those that have “already” accomplished what you’re trying to achieve, right?

And you do this by reading books, listening to podcasts or watching YouTube videos of how that did it.

When I started learning about investing in residential properties, I noticed the majority of multi-millionaires held real estate in their portfolio.

Why try to reinvent the wheel? If so many of them were doing it with success then why not do the same?

The problem was that I had no clue about real estate aside from the home that I originally purchased after dental school.

The more I learned, the more I realized that there was something appealing about owning a physical asset whether it was a single family home or apartment complexes.  The cool part was the feeling I had after receiving our first distribution check from a cash flowing property without having to see extra patients to get it. 

Trading time for money?

If you’re employed by a hospital or clinic then you’re used to receiving income via a paycheck at set intervals.

This is the typical “trade time for money” method.

While working in this manner, there’s a clear relationship between work and compensation.

If you don’t work, then no money is coming in

Most of us are familiar with how stock market investing works. Early on I was 99% invested in mutual funds before becoming a real estate investor. 

The majority of the money made in the market is via appreciation of stocks held. But unless you sell them, profits remaining are nothing more than theoretical. This is NOT the case with owning a physical asset.

If you own investment property, the tenants pay rent each month and you also receive the benefits of the property’s appreciation.

Building multiple income streams from investment properties allows you to replace personal expenses which halts the “time for money” situation. 

Be Like The Rich

Earlier we touched on how multimillionaires hold real estate in their portfolio.

This graft from The Visual Capitalist drives this point home.

Do you notice that the wealthier people become, the more their portfolio shifts towards business equity and real estate?

In the Middle Income group it’s 7.9%, Upper Income group 24.5% and the Upper Rich is almost half of their holdings. 

If this graft doesn’t open your eyes then I don’t know what will.

Real Estate = Financial Freedom

#1 Wealth creation

As we’ve seen from the graft above, the ultra rich obviously know what they’re doing so “if you can’t beat ’em, join ’em“.

Creating wealth is NOT as difficult as many advisors will lead you to believe. If you invest in a property, the tenants should provide cash flow that pays the mortgage and expenses.

Over the hold period, the property typically appreciates in value, debt is lowered then it’s sold for a profit.

This cycle can be repeated with syndications every 4-6 years.

#2 Cash flow

As a busy doctor, your time is both limited and valuable. So it’s important that you choose investments that don’t take you away from what you know best – treating patients.
 
Most people that reach out to me still enjoy practicing and helping people.
 
We’ll always continue to need good doctors!
 
Real estate provides cash flow in the form of passive income that comes in even if you’re sleeping. 
 
I first learned the term from Robert Kiyosaki’s books:
If financial freedom is your goal, then focus on the positive cash flow real estate can provide.
 

In my experience, there are very few available passive income opportunities that allow your income to increase over time like real estate.

#3 Tax benefits

If you’re been practicing for a while, then I don’t have to tell you that income tax is your BIGGEST expense. 

That’s the BAD news.

The good news is that the U.S. government loves when we start businesses and provide affordable housing for its citizens.  

And real estate is practically the only investment vehicle that offers tax benefits.

The BIGGEST benefit is depreciation which allows you to deduct the value of an asset over it’s useful life. The IRS allows this even though commercial real estate typically appreciates in value.

Whenever we’ve invested in passive syndications,  we’ve been able to further our tax benefits via cost segregation and accelerated depreciation.

#4 Inflation hedge

If you think that saving your money in a bank is a good investment, think again.

As your money sits idle in a savings account earning next to nothing, inflation continues to erode it at an average 3% annual rate.

Utilizing this investment strategy generates a negative return adjusted for inflation versus commercial real estate which has averaged 9% over the last 25 years. 

Summary

If you want to begin living life on your own terms and invest as the ultra rich do then real estate is a must for your portfolio.

There’s another way to live besides constantly trading time for money while residing in the highest tax bracket.

If you’re searching for a consistent return that allows you to build wealth and retire wealthy then consider taking the passive route to real estate investing,.

To get started, join the Passive Investors Circle today. 

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jeff@debtfreedr.com
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