🎙️ Medical Office Real Estate Investing with David Hrizak | A Passive Wealth Strategy for Doctors

Good afternoon guys and welcome to the podcast. I've got a fantastic guest for us today, David from Arizona and he's a real estate investor. Real estate investors are no stranger to the show. Doctor, lawyer, dentist, all invest in real estate. So I'm really happy to have him on and share his two cents, what's going on in the markets and and talk all things real estate. So, David, welcome sir.

Thank you very much for having me. It's a pleasure to be on your show today.

Yeah. Briefly introduce yourself and we'll dive into the questions.

Absolutely. My name is David Rezak. I am the CEO of the Streamline Companies and we are a vertically integrated organization where Streamline Capital Group helps investors like doctors, high net worth individuals diversify away from the volatility of the stock market and put some investment into real estate. Streamlined Development is our own general contracting business. We have the ability to perform all of our own maintenance, our own tenant improvements, capital improvements, and then Streamline Asset Management is our own property management firm. So from day one, when we find a property through the acquisition process, through the property management, through the construction or improvements, everything stays under our umbrella, thereby saving money and thereby creating better returns for our investors.

Interesting. Yeah, that's a great segue. And currently talk about, because you basically you now focus on medical office, real estate, commercial real estate, fund manager and talk to us about how you went from broker to investor to fund manager.

Absolutely. So I've been in the industry for 29 years now. I don't know how to do anything else than real estate. So I started out as a broker working for a lot of high net worth individuals, including doctors, attorneys, surgeons, dentists, just who wanted to diversify their portfolio. So I would go out there and find the properties, whether it would be an apartment building, retail shopping center, office building. And then ultimately we took back the property management because obviously they're professionals, they have their own day jobs, they don't want to deal with tenants and toilets. So we took on that work. And then ultimately one of my clients said, Dave, you need to start investing for your own portfolio. I was still young at the time, he taught me how to do it. And I bought my first property in 2001. And then ever since 2001 I've been investing in real estate and I have owned every asset class there is, except for storage facilities and mobile home parks. And not only have I bought them, I've also built them. So I've done out of the ground development, I've done value add rehabilitation to projects to take something that was old, make it new again, create more value. And in today's market we find that it's cheaper to buy than to build. There's a lot of properties on the market that we see in our portfolio, for our portfolio that, that have opportunities to become maybe a sleeping dog. It becomes a roaring lion. And that's an opportunity that we see both on leasing, if there's vacancy or if there it's an older building that we can utilize our construction experience and ultimately create value that way by buying the existing buildings. And what I like about buying multi tenant medical buildings is doctors look for off site offices off site from the hospital, I should say, so that they can see patients away from the hospital or dentists or chiropractors and all of those professionals need a space for their business. So when we're talking to doctors and surgeons to invest in medical buildings, they understand it because they see those buildings, they live in those buildings, they occupy those buildings. But they don't always understand the daily economics and the management of it. And that's where we come in. We make it truly passive for our clients where once they invest, they're in with us for the long term because we're a relationship driven firm. I have had multiple investors over my 24 year career since 2001 when I started investing. Follow me from every deal that we've done and they built great wealth but ultimately they've done it because they've trusted the process, they've trusted me and we built relationships. Sometimes they don't even ask me what the building is, they just say, Dave, if you're doing another deal, I want to be in with you because we've had great success over the long term. And as we talk to new investors and educate them about the process and it's a great way for them to understand how to save money on income taxes. Owning real estate is one of the best tax advantaged investments there are. When you buy a building, even as a part time passive investor, you get some great tax write offs that come back to you in the form of the K1, which is the tax reporting document. We're able to help people save on their taxes and ultimately get better returns because they're not paying as much in taxes.

Interesting. Yeah. So the next question I have for you is because we'll talk about medical office real estate. So explain. A lot of the audience are doctors and dentists, healthcare. How why medical office real estate is the most overlooked asset class in the.

US because it's not sexy, it's not that shiny building, it's not that new apartment complex, it's not that retail center, but they are buildings that are needed. Medical is an economic resistant asset class because no matter if times are good or times are bad, people still need a doctor sometimes. If times are bad, retail shopping centers will get emptied out, or if times are good, people are buying homes and apartment vacancy rises. We believe wholeheartedly in the medical office buildings, especially here in Arizona where we see our population increasing on a daily basis and that population is also aging as well. So we've got a lot of retirees here in Arizona, but we also have a lot of families moving here because of the amount of corporations just relocating to Arizona, bringing new jobs, bringing new residents. And medical is always going to be needed for those people as well.

Huh. Interesting. The. I think a lot of the audience there aware of the tax efficiency, passive income, the all of the benefits of owning real estate. Talk about just in this current environment where we have, I would say, elevated interest rates and the price of real estate is always appreciating, then you have like tornadoes and hurricanes, power outages. How do you, how is one to like, like if a doctor, dentist has some capital and they're looking to invest, why should they look into real estate? Because just with all of these headwinds.

Coming at them, one of the great things about our market, and we focus exclusively on Arizona right now and the Phoenix market. Phoenix does not experience the natural disasters that many other parts of the countries do, which is why we have major corporations moving here and spending billions of dollars to establish their infrastructure. And their corporations here in Arizon, they will not be shut down by natural disaster, so they will not have the business interruption. So that makes properties more valuable. And as those corporations build, as more people come, more services are needed, more medical offices are needed to take care of those new residents coming in. And Arizona is such that we've got the Mayo Clinic here who just announced a multibillion dollar expansion. We've got some great medical schools from around the country that have opened up here in the Arizona market as well. Everybody around is starting to hear about Arizona. And we've been a sleeping giant for a while, but we've been awakened and we're not stopping. We're the fifth largest city in the country. Phoenix is. And that's a testament to the strong growth that Arizona has based on their friendly business environment. They're low income taxes, they're low real estate taxes, they're low sales taxes.

Yeah, yeah. I recently read an article because I'm based in Austin and Austin was like for a long time the number one place where a lot of millionaires were flocking to. And now it's, now it's Phoenix. So one thing, that one thing that talk about is what are some of the biggest myths or misconceptions you hear about real estate investing that need to be debunked?

Some of the real estate myths, I would say that a lot of people think that they can't get involved in real estate. They don't know how to get involved in real estate. But when you look for a sponsor like myself, a fund manager like myself that has a 29 year track record of doing this, you have that opportunity to learn from someone. Now you can be as passive as you would like. I have out of state investors that have never seen some of the buildings they own part of here in Arizona. But what we do as the owners of the property, we have what's called kick the brick days where we invite all of our investors that own a particular property out to that property a couple times a year so that they're able to come out, feel, see and touch what they own. And through the constant communication that we bring to them on a minimum of a quarterly basis, when they receive their financial statements from us, they're also receiving a letter from me explaining what has happened with the property over the last 90 days since they've heard from me specifically on that property. But we also have a great newsletter system where we're always bringing information to them about the marketplace, what we see in the industry, different ways to protect our assets that we own. Having done this for so long, I've been through downtimes and I've learned how to pivot when we need to pivot. And I'm always on the lookout for any pitfalls that may be coming. You had mentioned earlier about higher interest rates because interest rates are higher today. We're actually seeing better deals right now. And if we can write deals where they're making money at higher interest rates, when interest rates come down, and we all believe they will, that will create additional cash flow and we're able to refinance buildings, recapitalize our investors and increase cash flow because then we're paying lower interest rates. So if I can underwrite a building today at higher interest rates and it makes sense, it only makes more sense in the future.

Interesting. A follow up question I have for you is a lot of the high income professionals, they're still stuck trading their time for money. What's the most important mindset shift they need to make to start building true passive wealth.

The best time to start investing is yesterday. The second best time is today. Don't wait to get involved. Contact a professional that you trust, whether it be myself or another sponsor. Start learning the process and start educating yourself. But please be advised, don't think you know everything. When you get involved in real estate, look for someone that's going to help you learn. And that's what I'm doing right now. I came out of retirement to reinvigorate my career. I retired when I was 49 years old after a near death experience and having built a successful company, having raised the three beautiful children with my wife and she retired from the education system, I felt it was time for us as husband and wife to enjoy our time together. So I did. I retired and I took 10 months off. And finally I realized, you know what? I miss something and I miss the passion that I have with helping people. So I'm on a mission right now to help educate people, to help people build long term wealth and to help them learn and educate themselves so that if they do get involved with us, they understand the process completely and we build that relationship, build that trust. And at some point they wanted to do a deal on their own, we'd be happy to support them with additional educational sources as well.

The next question I have for you is what? For example, you talk about how athletes, doctors and entrepreneurs are quietly investing their way to to financial freedom. How are they doing that?

When you're a high income earner, you have greater opportunity to build long term wealth than a person that's making minimum wage or middle management salary. When you have higher income, you have the opportunity to leverage that easier and help build your long term wealth. And when you're a high income earner, you pay a lot in income taxes. And if we can help educate you how owning real estate can alleviate some of those taxes, that only expounds on your returns and your benefits long term by owning the real estate.

The next question I have for you is what's the difference between. So for example, we talked about the headaches of like direct ownership, like landlord, like tenants, toilets and trash. But how about if a doctor versus investing commercial real estate versus owns his or her own practice versus invest in a fund, what are the differences between those three? The advantages and disadvantages?

So when a doctor owns their own practice, they're running their own business. And when you run your own business, you always need to look to diversify. Diversifying into real estate, diversifying into the stock market, we tell people that they should be diversified into many different investments. So when their practice is earning them money and there's profits at the end of the year, take those profits and invest it into something that's going to create money. Let your money make money for you. You're working 60, 70, 80 hours a week in your practice. Let all of that hard work keep working for you when you're not. And if you own real estate by yourself, you are going to have to either hire a property manager or find more time in your life over the 60, 70, 80 hours that you're already working to manage that. We take all that stress away. When you become a passive investor, you don't have to deal with a tenant, a toilet, a repair call, anything. And then we report back to you with how the property's doing and the financial future of that property as well.

How do you, how do you address cause? Cause with, especially with a property manager. I've had horror stories. A lot of doctors have horror stories and just the high fees, the high expenses. How do you address these criticism? Why don't doctors just invest in the S and P or the NASDAQ or equities?

So when you invest with a wealth manager, typically you're paying some type of fee for the assets under management. When you invest in real estate, and especially when you invest with Streamline, you're investing with a company that owns the property with you. So we're mutually aligned in our goals and in our ideas. So when we're managing a property, we're looking at it as, hey, we're the owners and we have partners that have trusted us with their money invested side by side with us. How can we make this both beneficial for our partners and ourselves as well as co owners? So when you go out and hire a third party property manager, sometimes they miss things. They don't think of it from an owner's point of view, having bought, built, owned every asset class. As I mentioned earlier, I understand the nuances of real estate. I understand what when to pivot. I understand what to be looking for in market trends ahead of time so that we can keep our buildings at a stabilized, occupied level.

If people were wanting to connect with you, how could they do that a couple different ways?

I am a huge proponent of LinkedIn. I communicate with a lot of medical professionals on LinkedIn. It's David J. Rezak, it's H R I Z A K or via email. I look at and answer every email personally. It's djh@the streamlined companies.com I love real estate. I love what I'm doing, and I don't consider it a job. So every time I have an opportunity to talk with somebody, with, to educate somebody, or to just understand what their needs are, it excites me. Because real estate is not going away and it's always going to be around. It's not going to be replaced by AI. Buildings are here to stay.

Yeah, yeah, yeah. Really interesting. And thanks so much for coming on and, and adding value to the audience.

I appreciate your time. I love the show and I love how you help others educate themselves. And any way I can help your audience, I'd be happy to do.