MtoM #135: Opening a Franchise and Finance 101: Tilting Your Portfolio

This is the White Coat Investor Podcast. Milestones to Millionaire. Celebrating stories of success along the journey to financial freedom.

This is Milestones to Millionaire podcast number 135, Podiatrist opens a Franchise.

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All right, welcome to the Milestones to Millionaire podcast. And there are a lot of milestones in life, a lot of financial milestones, and we celebrate them all the time here. You know, it might be just getting back to broke. It might be becoming a deca millionaire or anything in between, but we like to do unique ones as well. And today we've got a bit of a unique one. But if you'd like to celebrate your milestone with us, you can apply whitecoatinvestor.com milestones, and we would love to celebrate that with you and also use it to inspire others to do the same. Stay tuned. After this interview, we're going to talk about what it means to take tilt your portfolio after we finish this interview. All right, let's get our guest on Today. Our guest today on the Milestones to millionaire podcast is Dr. Rakhil Patel. Welcome to the Milestones to Millionaire podcast.

Thanks, Natalie Valley. I've been a big fan of the show, and I'm proud to be on here right now.

All right, well, let's let him get to know you a little bit. Tell us what you do for a living and how far you are out of your training.

Yep. I'm a podiatrist trained in foot and ankle surgery. I graduated med school, 2013, residency in 2016. I did a fellowship in 2017, first started my career in Florida and moved up to Maryland to be closer to family about three years ago, and I'm still here.

Awesome. Now, I often tell people on this podcast that we'll celebrate anything with you, and we like having unique milestones. You know, I mean, it's great when people pay off their student loans or become financially independent or a millionaire or whatever. Those. Those are great milestones. Those were also important milestones in my financial life. But it's also fun to do some of the maybe less common episodes that we do on here. And your milestones a Little bit unique. It's really kind of a career change. So tell us what happened with your career and what was going on in your mind and your life that caused you to embark on this career change.

So I mean, we've heard so much about burnout and all aspects of medicine. And my burnout didn't really come from the pandemic, it just came from my workload. And last year I was just, I felt like I just said yes to everything and working late hours and not paying attention to my own mental and physical well being. And I had every symptom of burnout from light stage to the serious stage. I've been seeing mental health experts for it. I can gladly say I'm on the recovery for that. But it kind of kicked me in the butt saying I can't do this for 10, 20 years this way. So I had to find another revenue stream that not all reliant on this job, which in itself is not really secure, which we'll talk about later. But my true passion ended up being golf. So I made a decision decision with a friend to start a golf indoor golf simulator franchise in our hometown.

So tell me about this business, what does it do exactly?

So it's an indoor golf simulator. There's bays, you could play a full 18, you can do driving range, there's a full bar, there's food. It's like almost indoor topgolf. And we were tired of in the wintertime not having a place to golf. And then we said, you know what, let's just make our own. So we tested the waters about doing from scratch, but we didn't want to leave our day jobs. The franchise opportunity was the best thing and we just took the plunge in March 2023 and we just signed the lease for the for the space last night actually.

Awesome. So how long does it take to play a round of indoor golf?

So comparatively to the outdoor golf, you take four hours. In indoor golf you could do an 18 holes in one hour and you're not tired. You could be home to your kids and you could still have a drink or two and have some food and bring your friends on and it could be maybe maximum of 3 hours. But typically an hour for 18 is much better time commitment.

So if I walk into your to your shop and I want to play around to golf, what do I pay for that? What's it cost?

So from depending on off peak and peak is from $40 to $60 an hour, you could choose up to six people per day. You just pay for the hour and then the food and beverage is separate. You choose to spend all day with us or just come in for an hour. You don't even need your own club. We have our rental clubs that we have for you.

Did you say it was three to six dollars an hour?

No, no, no. It's 40 to $60 an hour.

40 to 60. All right. I couldn't figure out how you stay in the business making $3. All right, so 40 to 60 bucks an hour. I mean, that's a round of golf. You can play it in an hour. That's, that's cheaper than a lot of places around here.

Exactly. And you don't have to brave the weather, the hot sun or the raining or the bugs, the controlled environment. So I think it's a way for us to maintain our golf skills all year round.

What part of the country are you in?

Mid Atlantic in Maryland.

Okay, so do these do better in New England than they do in Florida or do people just more in the summer in Florida?

Right. I mean, they are mostly in. They started in like Midwest, Chicago, Michigan and all that area. But now we're finding that the heat and the sporadic weather, a lot of warm weather places are now starting to pop up. Indoor simulators as well. Independent franchise, whatever. Probably every, every state has something. So in the, we thought in the future, golf accessibility is the key. So if we could bring golf to more people, more, more days of the year, I think it's just going to grow the sport and help us just be active.

So tell me about this franchise. I mean, we had a non food franchise guy on the white coat investor podcast a few months ago. Tell us about this franchise. I mean, you have a partner, it sounds like. How much money did you put down and what kind of income are you seeing out of this franchise?

So we have, we had an initial $30,000 franchise fee and then we are. Our cash injection will probably total up to 150,000 between both of us. We have an SBA loan for about a million dollars and we plan to gross rent revenue about a million for the first couple of years and it'll go up and up from then.

So pretty highly leveraged, but pretty darn good income from it, it sounds like, right?

Yeah. Eventually my goal was to become a part time doctor, a part time golf instructor enthusiast. Yeah.

So what, what has this allowed you to do with your practice? How much have you cut back at your practice?

Well, cutback was actually forced upon me since I lost my job actually because I was forced out my contract six months early. So I guess my. Well, Mike Tyson said he always planned until you got punched in the mouth. I got punched in the mouth pretty hard. So my plan, I guess became accelerated because right now I'm doing part time work at nursing home two days a week. But I've also made the decision to start my own practice. So I'm going through that while starting another business at the same time. So it's a lot of learning along the way, but everyone tells me it's going to be worth it in the end. So I wish I had that income I had in the first part of the year, but luckily we did all the groundwork beforehand, so it's not too bad. Yeah.

So what advice do you have for somebody that wants to do this sort of a thing? They want to mix it up, you know, they want to leave a job or cut back to part time or, you know, open a business thing on the side. What advice do you have for somebody that's maybe sitting there with a little bit of paralysis by analysis?

So in my journey, my wife has helped a lot with this about finding what really works for you. I mean, when my schedule was overrun with late nights waiting in the hospital or working seven days straight, we had to realize that if we look for a new job, it had to be more on our terms. Something that I don't have to spend so many hours with. I can still do things with my family and then I could still give time for myself. So the biggest takeaway is don't ignore yourself mentally and physically, because burnout will affect your patients negatively, even if you don't know it. Because it was definitely about to start affecting my practice and luckily I made changes to make a positive impact.

So tell us a little bit about your financial situation. It sounds like you'd been out six ish years. Five ish. Six ish years.

Yeah, about seven years, I would say. Yeah.

Where were you? Had you paid off student loans? Had you saved up any sort of a nest egg at that point? Had you bought your house? I mean, where were you at?

Yeah, so luckily we saved. I got into the financial literacy game a little late, probably 2017, when I was a fellow, when I was around more high income people in Florida. But luckily we bought our house here in Maryland with a physician loan. So that was very nice. Not have to put anything down. My wife's salary, she works in real estate, logistics. All her money goes right into savings. We try not to touch it. We're living off of my income, which ranged from $50,000 from residency to 250,000 as an attending. And now that has all changed because of the job loss. But luckily we've used the principles White co investor to save. We've knocked down our car debt. We'd have no more car loans. We don't have any credit card debts. Only debt we have is the house and student loans.

So now with you opening the practice, do you plan to just have that practice always be part time?

That would be nice. I don't know how sustainable it would be at first, but that would be a perfect goal of mine. We'll have to see how that works.

Awesome. Well, Dr. Patel, this has been great. I appreciate you coming on and sharing this milestone with us, maybe inspiring others to make some career changes, whether they are forced upon them or whether they are desired for whatever reason. But we thank you for sharing your story. Anything else you would like to any other advice you'd like to give people who are experiencing this sort of a career change?

Yeah, basically be careful of who you trust in any business venture. I mean, sometimes you have promises that you think are actually written down, but they're not. So make sure you review all your contracts and keep the people you trust close. And just make sure you look out for yourself first.

If it's not in writing, it didn't happen.

Exactly.

Awesome. Well, congratulations on your success and thank you so much for coming on the podcast.

Thank you. All right.

I hope you enjoyed that interview. I thought the most interesting part of it was just seeing a doc go out and with no fear whatsoever do something different. In this case it was opening a franchise and it's not an insignificant amount of debt. I think you said they put down 150,000 and had about a million dollars worth of business debt for this thing. So there's some risk there. There's some time and obviously some expertise. When it's your, you know, your passion, it's a little easier to come up with that expertise, but what a blessing, especially at a time when the main career is having some changes, you know, with the job loss, opening a practice, et cetera. It's great to have a little bit of income on the side to help support you through those transitions and I suspect eventually allow him to practice part time exactly as much as he wants. So lots of great lessons there that I think we can all take from this. This message is sponsored by wythco, the ownership company. As a physician and practice owner, you probably know that owning your practice's real estate is a smart idea. No more rent hikes, no risk of displacement and an asset that belongs to you. But medical school didn't teach you much about commercial real estate and you've got a more than full time job. That's where Withco comes in. With our lease to own partnership, we give you the expertise and the capital you need to become an owner with zero money down, leaving you to focus on what's important, caring for your patients. Visit with Co Whitecoat to learn more. That's with Co Whitecoat. All right, we've come to the end of another episode of the Milestones to Millionaire. I wanted to talk a little bit in this episode about a topic that we don't talk about all that often, and that is this idea of tilting your portfolio. What do I mean by tilting a portfolio? Well, if you start with the basic market portfolio, you know, if you just buy, let's say we're talking about stocks here, you just buy all the stocks. That's the market portfolio. A tilt is when you hold something in a different percentage than the market. Why would people do this? Well, they do this primarily because they want to have higher returns and they think their tilt is going to give them higher returns. Maybe it lowers risk as well. But for the most part, the goal is to boost your returns. So what do people tilt their portfolios toward? Well, a common one is to tilt your portfolio toward smaller stocks or value stocks. Well, a small stock is just a smaller company, right? It's more vulnerable. It has fewer products, it has fewer product lines, it has, you know, less cash. Usually it's not as well known, it doesn't have as well known of a brand. And historically these smaller stocks have shown slightly higher returns than larger stocks that are more well known, you know, your Disney's and your Exxons, et cetera. And so some people have more small stocks in their portfolio than the actual market portfolio does. Also value stocks. What's a value stock? Well, a value stock is one that is not growing as quickly. Well, that doesn't sound good at all, does it? But the truth is value stocks have had greater returns historically over the long run than growth stocks. These stocks that are growing quickly. And the reason why is because people overpay for growth stocks. And so you're getting a better deal on a value stock. You're buying more earnings for what you paid for the stock. And so what do people do? Well, they may have a total stock market index fund and they may also have a small value index fund. You know, Maybe they have 50% of their money in a US total stock market fund. And 10% of their money in a small value fund. And that would be a tilt of the portfolio. Now, should you do this or should you not do this? Well, nobody knows for sure how well these tilts are going to perform going forward. You're for sure going to have more complexity and usually at least a little bit more expense in dealing with your portfolio management. But whether that will pay off or not, well, the jury's still out on that. We can say it paid off in the past, but we can't say it paid off going forward. There are all kinds of other factors out there. Profitability, momentum, other things that people tilt their portfolios toward. You can even tilt it toward one part of the world. You may tilt your portfolio toward China or something like that, for instance, because you think China's going to have fantastic returns. Lots of ways to tilt a portfolio, but when we talk about tilting, that's what we're discussing.

If you're looking to boost returns, lower taxes and build wealth, join the WCI Monthly Real Estate Opportunities List for tips and strategies to maximize your real estate returns. And for introductions to exclusive investment opportunities, expect educational emails that introduce you to syndicators, fund companies, online courses and online real estate platforms. Go to whitecoatinvestor.com reopportunities to sign up today. You can do this and the White Coat Investor can help.

Alright, hope that's helpful to you. Hope you're enjoying these podcasts and let us know what you'd like to see more of, what you'd like to see less of. We're always responsive. You can email editorwhitecoatinvestor.com but we appreciate you listening. We know your time's valuable. We're grateful that you spend it with us. Keep your head up, shoulders back. We'll see you next time on the Milestones to Millionaire podcast.

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