WCI #412: Toxic Work Environments, Avoiding Burnout, and Real Estate Questions

This is the White Coat Investor Podcast where we help those who wear the white coat get a fair shake on Wall Street. We've been helping doctors and other high income professionals stop doing dumb things with their money since 2011.

This is White Coat Investor podcast number 412. Today's episode is brought to us by SoFi, the folks who help you get your money right. Paying off student debt quickly and getting your finances back on track isn't easy. That's where SoFi can help. They have exclusive low rates designed to help medical residents refinance student loans that could end up saving you thousands of.

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NMLS 696891 all right, for those of you out there in White Coat Investor land, I hope you're aware of our online communities. There are four of these communities. We have a subreddit. You can find this by going to Reddit and looking for the White Coat Investor subreddit r WhiteCodaInvestor. We have a forum. You can go to this by going to forum.whitecoatinvestor.com we have a Facebook group. If you go to the Facebook group called White Coat Investors, you have to apply and sign up and you'll be let in there. And we also have the financially empowered women. This is a much smaller group, but it's all women. If you prefer to learn an environment where there's all women, you can do that. Not only is that an online community, but they also have events not only at wcicon in person, but also during.

The year via, you know, webinars and online meetings.

So check those out. The benefit of being in a community is you don't feel so alone when you're doing all this stuff. A lot of times you just have questions. And the truth is just like going through medical school and residency, there's somebody a year ahead of you in this process and they can answer all of your questions. You don't have to know dramatically more than somebody else to be able to help them. Knowing just a little more than them oftentimes can help them with their questions and their support.

You do not have to do this alone.

Now I discovered early on that the way I learned is by reading books and by participating in online forums, communities. And if that's the way you learn as well, check those resources out. Each one of them is a little bit different. Facebook is.

Facebook people tend to have a little.

Bit shorter, sometimes a little more superficial interactions, but there's a ton of people there. If you want to just reach a whole bunch of people, that's a good place to be. The subreddit tends to skew a little bit younger. Lots of students, lots of residents, lots of young attendings. And so the subjects discussed there tend to be younger kinds of subjects. The forum tends to skew the other way. Mid career, late career, retirees, et cetera.

And so if you prefer interacting with.

More people like that, you might find the forum meets your needs.

And of course the Few is a self explanatory group.

So check all that out and realize.

That you are not alone.

You do not have to do this alone. Not only are there tens of thousands.

Of people listening to this podcast, but.

There are a whole bunch of other.

People out there that are high income.

Professionals just like you, navigating the same financial setbacks, looking for the same guidance.

And really just wanting to become more knowledgeable, more financially literate, maybe a little more financially disciplined. Ask your questions in those communities and pay them forward.

Okay, let's do some corrections, clarifications, additional information, whatever you want to call these. Oftentimes we get feedback on the podcast and it's not as easy to correct podcasts as it is a blog, right? Errors last very short time period on the blog because somebody posts a comment at 7 in the morning, I see it at 8 in the morning, I've fixed it already. And most people that read it, unless they read it in their email, never realize that it was wrong to start with. Well, that's not the same with podcasts, right? There's a delay in making a podcast. It's a lot harder to correct. So we don't generally go back and correct little things and add information to the old podcast. We do a correction in an upcoming one. So it might be, you know, four weeks before we really correct something. So this is one of those. Somebody writes in and says, I was listening to yesterday's podcast. It was recorded a month ago. A listener asked you about tax gain harvesting in UGMA accounts. The writer says, I agree with you, this is extreme optimization. Although I admit I've done it too. But there is an additional problem. You didn't mention unearned income above a Certain level gets taxed at the parents marginalized tax rate, the kiddie tax. So you have to make sure the combination of tax gains and dividends and interest stays below $2,700 in 2025. Otherwise it defeats the whole thing. It might help your listener to know.

This before she sells all of her.

Kids winning stock to raise their basis. This is a good point.

I should have mentioned this, right? I don't know that I said it.

Wrong, but this is a consideration. And you've got to realize that tech scan harvesting your kid's massive UGMA would not normally cause them to have to pay capital gains taxes unless the kiddie.

Tax applies to them.

So this is a good thing to do. Maybe when they're in their early 20s and they don't have much income, they're in college, whatever. You might be able to tax gain.

Harvest then, but maybe not the time to do it when they're six, or.

At least not in an amount that's.

Going to be more than gains of $2,700 a year.

Hope that's helpful. Okay, Another one is about escrow accounts. This one's just kind of some additional information, but you might find it useful. They write in saying on your most recent podcast, number 409, you mentioned that mortgages require an escrow account for insurance as well as property taxes. I suspect that there's some regional or risk profile analysis to determine who needs an escrow account. On both my residency and attending house purchase, they did not require an escrow account on my loans, both of which were physician loans, although 20% was put down. I found it interesting that let a resident not have an escrow account. Also, they never mentioned the options for or against an escrow account. This was simply decided without me being aware of it until I looked at the payments amortization tables. I suspect this may catch some people a little bit less financially savvy off guard, but it's my natural propensity to have this in my own account and.

Put away on a monthly basis. Anyway, I just wanted to mention it.

Okay, so that's interesting. I thought. I don't know that I've run into that. I think most of the time when you have a mortgage, that mortgage, that lender requires an escrow account. But apparently not all of the time. So make sure you know when you take out a mortgage when you buy a house, whether you have an escrow account or not, an escrow account is just the lender forcing you to put money away month by month to pay your property taxes and your insurance and.

Then they take care of the payment as well. That's all an escrow account is. It's a little bit maybe convenient for.

Some people, maybe a pain for other people. It's just a different way of doing it. I think most commonly it is required as long as you have a mortgage loan, but apparently that is not the case all the time.

So thought I'd mention that on the podcast as well.

We also have a speak pipe where somebody called in and mentioned something that I've said before. I've talked about 457Bs, right? And one of the downsides of a 457B is that it's technically not your money yet, it's your employer's money. So if your employer's financially on the rocks, you might not want to put money in there because it's accessible to your employer's creditors. Now, if the employer went under, you would be one of those creditors. And truthfully, over the years, I've never actually heard of cases of somebody actually losing money from their 457 because something happened to the employer. Now somebody wrote in to mention that this might be happening. Hasn't actually happened yet, but it might be happening. So let's listen to that speak right now.

Hi Jim, I'm a physician in Massachusetts. I've heard you warn people about the dangers of 457 plans, but I've also heard you say that you've never heard of anyone losing their money in one. I just want to let you and your listeners know about a case where people could end up losing their money. Stuart Healthcare was a large multi state health care system that employed thousands of physicians before they went bankrupt last year. I was not a student employee, but I was talking to one who was telling me how they were seeking legal advice about how to get their money out of the deferred compensation plan. I read online that there is some $60 million in the deferred compensation plan that is currently being litigated over by the creditors of Steward and physicians that contributed to them. Thanks for all you do.

Okay, so this one isn't done yet. Again, I suspect all the docs are going to get their money. But keep me updated. Those of you out there working for.

Steward or who were working for Steward.

Let me know if you end up losing 457money.

I would like to hear about it. There's not much I can do to.

Help you if that's the case. But realize those of you with 457 that this is a risk of them.

Right? It's deferred compensation. It's not yet your money.

The fact that it's Steward makes it.

More near and dear to my heart.

For those who aren't aware, Steward owned.

My hospital for a couple of years, two or three years, while they gradually went bankrupt.

And so we got to see firsthand the downsides of a terribly run hospital.

As all of a sudden, capital started drying up. And I remember one day the CT scanner broke.

And I said, well, we'll call the C repair guy. And the answer I got from the.

X ray techs was, they won't come. They haven't been paid in six months.

And imagine running an emergency department without a CT scanner.

It doesn't work very well.

So I'm not thrilled right now with.

Steward as a company, and it'd be.

Interesting to see how that all ends up.

But hopefully, at least everybody with money.

In the 457B ends up getting it okay. Speaking of, you know, maybe not so awesome employers, I got a question by email. It said this. My question pertains to mitigating employer risk and finding alternative streams of income. I work as a hospitalist. Same hospital I did my residency training in. When I interviewed and signed my contract, the job and terms were great. But before starting my job, there was a change in management. The administration tried to argue that our contract had implied coverage of the ICU and procedures and cross coverage that wasn't written in the contract. After some pushback in negotiations, they agreed to give us a small pay increase and limit the coverage to only a few shifts each month.

The contract wasn't amended, but over the.

Next year or two, they've mandated us to cover more shifts than initially agreed upon. They change our schedule and location a few hours before the start of the shift. Despite us voicing our concerns and working with the new management team, we only get empty promises. It seems they're trying to phase out our position entirely and expand daytime hospitalist hours with swing shifts and APC overnight coverage. We're working less hours and seeing fewer patients, making about half of our usual RVU based salary. The job and pay is now terrible. And I wonder how doctors can protect themselves against bad employers and the loss of their job. Now here's where it hits this doc. Personally, I work in a small rural area.

There's not a lot of hospitals nearby. The nearest ones, you know, an hour drive away.

And moving would probably mean selling our.

Home and being further away from family.

So I explored the possibilities of locum tenens. Outpatient clinic, urgent care, going to fellowship.

But none was particularly appealing.

We considered trying to learn real estate, self publishing, expert witness work, or corporate consulting, but we would need to invest a lot of time learning the field. The work also seems inconsistent, risky and less profitable. Better as a side gig than a full time job. Switching to a daytime position in the same hospital is possible, but I worry that the administration will continue to push more responsibilities and limit payments. We're looking into hiring a contract attorney to see if we can negotiate a better deal or be released from the contract without paying back our sign on bonus. I know there are many doctors who find themselves in a similar situation would like your opinion on how to best approach this. Should we fight to keep a good job at a place that doesn't seem to value their employees? Should we leave our life and home behind in search of a better job somewhere else? Should we try to find a new job, medical or non medical, in the same city? We have a good emergency fund, no debt, and are still living like residents, but are too young to retire.

What would you do in our situation?

Okay, I think this sort of thing happens to lots of docs and it's unfortunate, right? Sometimes jobs get bad. When you treat docs like labor, they start to act like labor. You know, you treat your employees crappy, where do they go? They go somewhere else and work for.

Somebody else and you won't have employers.

Or you'll have crummy employees that can't get a job at other places. If you're hoping on keeping them there just because they have family nearby or they want to live in that small town, that doesn't seem like a great long term strategy. So what should this doc do? Well, you got a toxic job, so the job either needs to change or you need to go to a new job or you're going to burn out, right? The biggest financial risk in your career is burnout. So you need to make all of your career decisions. With the number one priority being career longevity. It's pretty wild. I mean this is a doc that's still in the live like a resident years, right? And is considering leaving medicine, considering doing real estate, self publishing, expert witness work, corporate consulting, right? Because of a bad job. Well, this doc probably needs to keep.

Working in medicine, right?

I'd keep this job for now, maybe switch to days if that's a little bit less toxic. But start looking for a better job, right? Don't quit and then look for a better job. Look for the better job, get the better job, then quit. Does that mean you're gonna have to move your family?

Probably. It probably does.

And I'm sorry. And I hope this house you're in.

Isn'T a big fancy doctor one you just bought a year ago. I hope it's the one you were.

Living in as a resident or something.

But it is a problem, right?

You go to a job, you think the job likes you, you like the job, so you buy a house, then the job changes.

Well, what are you going to do, right?

You got to adapt.

You got to roll with the punches.

But at this point in your career, retiring is not an option. Switching to a side gig you haven't even started yet, that's not a good option right now. I mean, sure, work on side gigs, build up side gigs. Obviously, the side gig worked out really well for me. Now there's 18 people working at my side gig. You know, sometimes that happens, but most of the time a side gig stays a side gig. And the best way for most doctors to make money is doctoring. This doctor needs another doctor job. And if you can't force this job to get better, you probably need to go somewhere else. Now, that might be Locums mentioned. You looked into that. And then you can still live in the place you have. You can be near your family, and you're just gone for a week or two a month doing Locums somewhere else. You know, maybe it's commuting an hour away for a while until you line.

Up, you know, another job.

But most likely it's probably moving. And lots of people don't live in the same town as their family because.

Their job doesn't let them live in the same town as their family. And while that's unfortunate, it sure beats being in a job that's going to burn you out in two years or a job where you're making half of what you can make somewhere else.

I mean, you can buy a lot of plane tickets home, you can get a NetJet subscription and come home for half a doctor's salary. So it's just not okay to be.

In a place where you're making half of what you're really worth. So it sounds to me like a change is coming. I'm sorry to hear it, but there certainly are toxic changes, jobs out there. Doesn't mean you shouldn't be a doctor, though. Now, if you want to learn how to do real estate and you want to do some, you know, consulting work, or you want to do some medical.

Legal work, great, start getting into that stuff. But you can't Walk out of your doctor job today and support your family and pay off your student loans and.

Save for retirement with a medical legal job tomorrow. It just doesn't work that fast. It takes time to build that business up.

All right, let's take a question off the speak pipe.

Hi Jim, this is Edward from the Southeast. Thank you for all that you do. I have the opportunity to buy into a soon to be constructed surgery center. There will be two separate buy ins, one for real estate and one for operations. Each buy in is relatively low as it's the new center and both expect to pay out on K1 dividends. I'm considering buying into at least the real estate portion using my Roth ira. One of the servicers on your recommended page believes they'd be able to handle this kind of transaction. Assuming the real estate return is comparable to the total SART market return, does it make sense to put this kind of asset into a Roth IRA and avoid paying taxes on the dividends? Would the appreciation on my investment also be tax free when I sell in retirement? I can't see that there'd be any hiccups with stark laws or anti kickback laws. Is there anything else I'm missing here? Thanks for your help.

Okay, lots of questions there.

Let's see if we can answer them all.

First of all, should you do this? Is it a good idea to buy.

Into a surgical center?

Most of the time the answer is yes. Most of the doctors I talk to.

That buy medically related businesses, whether it's emergency docs buying an urgent care or.

Nephrologist buying a dialysis center, or pathologists.

Buying a lab or radiologist buying an.

Outpatient imaging center, or surgeons and anesthesiologists.

Getting some sort of an ambulatory surgical center or GI docs opening up their own suite or whatever, right?

This is often the best investment doctors ever make. These often work out very, very well. Now, every one of these is individual and needs to be evaluated on its own merits, right?

Owning your own practice and your own.

Real estate is generally a good thing. I'm a huge fan of ownership.

Not only does it often pay off.

Really well with a great return on investment, but it gives you control.

And that control matters when it comes to stopping burnout.

So if this were me, I'd be trying to buy into both the real estate and the operations. I suspect both of them will probably end up being good investment, especially if you're able to be involved in them for the long run and you're talking about it being a relatively Small amount of money to buy in. Great. Yeah, you'll have to deal with the K1s, but this thing's in your state already. You don't have to file any other state tax returns. Maybe you got to pay somebody to prepare your taxes, but you're probably doing that anyway. So that'll cost you a couple hundred dollars more because you got some more K1s, but that's not a big deal. So I would probably try to do this. Okay, the next question is, do you.

Have to worry about stark laws and stuff?

Well, you need to understand that there are rules and there are laws about self referral. But for the most part, there's a whole bunch of ambulatory surgical centers out there. So doctors are clearly not clearly allowed to own these facilities without being in violation of the stark laws. So you just got to follow the.

Rules like everybody else does.

I wouldn't let that keep you from making this investment. Now, should you put it in a Roth ira? Now this gives me a lot of.

Pause for a couple of reasons.

Number one, putting equity real estate in IRAs, not 401ks but IRAs, introduces unrelated business income tax. If they're leveraged, basically you have to pay tax on them despite them being.

In an ira, which is not awesome.

But that does get you out of capital gains taxes and having to pay taxes on the income as it comes in.

You just have to deal with the unrelated business income tax, which is a little bit complicated.

So because of that, in general, I.

Don'T love putting equity real estate in retirement accounts.

You also don't get the benefit of depreciation, shielding that income from taxation like.

You would in a regular old taxable account, non qualified account, or outside of your retirement account.

So when I think about putting real estate in retirement accounts, I'm usually thinking of publicly traded real estate. We're talking REITs, something like the Vanguard REIT Index Fund. VNQ is the ETF for that fund.

Or like a debt real estate fund, we've got a couple of debt real estate funds inside retirement accounts.

Debt real estate is terribly tax inefficient. It's a great thing to have inside.

A retirement account if you're allowed to. And obviously it has to be some sort of self directed retirement account, but that's been a great thing for us.

But the equity side, I usually try.

To keep the equity side in the taxable area.

Now if all your money is in retirement accounts, and you may have to.

Decide between not investing in the real estate or doing it inside A retirement account. But I don't know that that's your situation. You didn't mention that.

So hopefully that gives you my thoughts.

On your opportunities with the Surgical center.

We talk a lot here at the.

White Coat Investor about private investments. This question was about a private investment, one that you'll be involved in, presumably.

The next question is also about real.

Estate, which is typically a private investment, at least outside of something like vnq.

But there's a lot of merit to private investments.

There's a lot of cool things about them, a lot of opportunities out there.

In fact, the actual number of stocks.

In the US Stock market is going down because investments are not going public at the same rate they used to. They're being taken private at a much higher rate than they used to.

And so there's a big market out.

There for private investments.

But if you are investing in the US Stock market, there's a pretty darn clear way to do that. And I'm surprised that I keep running into people who are not aware of the best way to invest in publicly traded stocks. The best way to do this is to invest in index funds.

Okay.

And I know a lot of you have been listening to this podcast for a long time.

This shouldn't be news to you, but.

This is news to lots of people. The day I'm recording this, which is March 18th, I published a blog post.

That I actually wrote like a year before then.

But basically, the point is, when it comes to publicly traded stocks, the data is very clear. Managers don't beat markets. Let me explain what I mean. I quoted in that post a fellow.

By the name of Mark Hebner who wrote a book. His book was called index funds a.

12 step recovery program for Active Investors. And he pointed out the behaviors that define an active investor. And these include owning actively managed mutual funds, assuming prices are too high or too low, picking individual stocks, picking times to be in or out of the market, picking a fund manager based on recent performance, picking the next hot investment style or sector, disregarding high taxes, fees and commissions. Investing without considering risk. Investing without a clear understanding of the.

Value of long term historical data.

Right. We're talking about market timing. We're talking about actively managed mutual funds. We're talking about picking stocks. Okay? None of those are a great idea. The data is very clear. And if you haven't seen the data, I would spend some time looking at it. Okay? You can look at it using something like the S&P's SPIVA return. They publish this every six months. That shows how many US stock funds are underperforming their benchmark, the index, essentially. And if you look at any long term time period, the answer is 90 to 95% of them. So 1 out of 20 beats the market in the long run and typically not by very much and maybe not after taxes, and certainly not after taxes and the value of your time. It's just a terrible way to bet you you are much better off getting the market return, beating 95% of other investors and sleeping well at night. Now, there's lots of books out there.

If you've never read one that convinced.

You that index funds were the way to invest in US Stocks, I would recommend you do so. These books could be something like those by Jack Bogle, like Common Sense on mutual funds, those by Burton Malkiel. A Random Walk Down Wall street is his most famous one. Just About Anything by Rick Ferry, all.

About index Funds is maybe the best known one.

William Bernstein. If you want a doctor's writing, check out the Investor's Manifesto, Alan Roth's How a Second Grader Beats Wall Street. Bill Schultheis wrote the Coffeehouse Investor, Investing Made simple by Mike Piper, the Simple Path to Wealth by J.L. collins, unconventional success by David Swensen. You name it. Any of these books are going to show you the data and demonstrate and convince you that this is the way to invest in the US Stock market. That doesn't necessarily mean you shouldn't invest in real estate on the side or you shouldn't buy into your ambulatory surgical center. But for the money that you are investing in stocks, publicly traded stocks both in the US and internationally, the best way to do that is to buy and hold and rebalance the static asset allocation of low cost, broadly diversified index funds. Each of those terms I just said has a specific meaning. If you don't know what they are, you need to look them up and understand that statement.

But the bottom line is if you're.

Buying stocks, you ought to be buying.

Them via index funds. The data is very clear, don't be ignorant of it.

And if you think it doesn't apply.

To you, make sure you're not just being overconfident.

Because the truth is, if you can beat the market or pick managers that can beat the market, you shouldn't just be managing your own money, you should be managing billions. And you should become a gazillionaire and solve some serious problem in the world, like curing malaria a la Bill Gates. Okay? If you really do have that skill of beating the market, your skills are so rare that you should not be.

Using them just for your own portfolio.

Okay, let's take that real estate question.

Out the speed pipe now.

Hi, Jim, this is Warren from the Southeast. I'm a longtime listener and just want to thank you for everything you do for us. My question involves real estate. I have been a part time real estate direct investor, own a few small single family rental properties and I'd like to know if it's possible to do a 1031 exchange from a direct real estate sale into a syndication. I try to read up some about this online and it appears that it may be possible as long as the syndication will accept your ownership as a tenants in common. I'm not sure if that is true. I'm not sure if any of your preferred providers allow that sort of thing and if that's even possible. I really appreciate input on this. Thank you very much again. Bye.

Okay, great question, Warren. 1031 exchange. Okay, what's the point of a 1031 exchange? You're swapping from one real estate investment to another real estate investment, relatively similar. And that's a very broad definition of.

Relatively similar, by the way.

It'd be awesome if you could do this with stocks or mutual funds. You can't. When you sell one mutual fund or one stock to buy another one, you gotta pay capital gains taxes on it. But you can exchange real estate as one of the things in the tax code that really benefits real estate investors. You can buy a house and own it for a few years and exchange it for a duplex and own that for a few years and exchange that for a quadruplex, and I own that for a few years and exchange it for a small apartment building and then exchange that into a larger apartment building. You can do all this and not only do you never pay capital gains taxes, especially if you die still owning that large apartment building and your heirs.

Get a step up in basis of.

Death, but you don't pay the recapture of the depreciation either. So you're depreciating and exchanging and depreciating and exchanging and depreciating and you die. And nobody pays capital gains taxes, not your heirs, not you, nobody pays recapture of that depreciation. And yet your heirs get the basis, which is the value on the day when you die. And so it's a pretty awesome, very tax efficient way to invest in real estate. It's generally a good thing to do. It's a pain though, right? You have a time limit after which you gotta identify the new investment and you gotta complete the purchase of the new investment within like six months of the time you sell the old one. You know, it's gotta be an exchange. It can't be. You sell one now and you buy.

Another one in 10 years and you call it an exchange. That's not going to fly with the irs.

So the question is, you got some appreciated properties that you've depreciated a whole bunch. You don't want to pay the depreciation recapture, you don't want to pay capital gains taxes.

What are your options?

Well, you got a few of them. One, you can die, right? If you die, still own it.

Your heirs get a step up in basis of death. Nobody pays capital gains, nobody pays depreciation.

Another option is you can exchange it.

Into another property and then nobody pays capital gains, nobody pays depreciation recapture.

But can you exchange it into a syndication? Right. Well, what's a syndication? A syndication is like 100 investors going and buying a big 200 door apartment complex that's a syndication. Maybe your share of it's 50 grand.

Or 100 grand or something like that. But it allows you to have these.

Economies of scale, this big huge apartment.

Complex, even though you're only putting in 50 or $100,000.

So can you do that? Yes. But guess who has to work with you to do it? The syndicator has to work with you to do it. So you need to ask that question to the Syndicator. Now, most of the advertisers we have.

Here at White Coat Investor, you know.

Most of the people on our real estate list, they are fund managers. Because I think most people investing in.

Private real estate benefit from using funds. Most White Coat investors are probably not.

Going to be better off picking individual syndications. We do have a couple of companies on there that do individual syndications. It would not take much for you to pick up the phone, call them both and ask them, hey, can I 1031 exchange into this syndication that you're selling right now?

Right.

Because when they're doing a syndication, it's only available to invest in for like three months and then they're on to the next one, right?

That's the way it works.

So I just pick up the phone, I would give them a call. I have not called them and asked.

Each of them this particular question of whether you can take, you know, your.

Three duplexes you have in some small.

Town in Iowa and exchange them into the syndication. And they will work with you on that.

I think the answer most of the.

Time is No, I think most people don't want to hassle with that, but.

There are some that do. There is also what's called the 721 exchange. Basically you are exchanging your property that.

You own into REIT shares essentially.

And so that's kind of cool. That can be done with some REITs.

Will allow you to do that. So look into the possibility of that as well.

Another thing that's kind of beginning to.

Sunset a little bit is the concept.

Of an Opportunity Zone. And an Opportunity Zone fund is basically.

Where you're investing money, someplace where money supposedly needs to be invested. And so there's some additional tax breaks associated with and that can help you to put off some of your capital gains taxes for a while.

It's not nearly as good as a 1031 exchange, but it might help you with your problem, which is you don't want to pay taxes on the sale.

Of this property you no longer want to own.

And then of course, the last option is to just sell it and pay.

Your stupid capital gains taxes. Right?

No big deal. Now you have your money. Maximum flexibility.

You can do whatever you want with it. You can spend it, you can invest it in something else. You can invest it in stocks, you.

Can invest it in more real estate if you want. You can always just sell and pay your taxes.

That's not the end of the world either. Congratulations on making money. Now you get to pay taxes. Welcome to how the rest of the world works. Hope that's helpful, Warren.

I would ask them individually if that's.

Something you want to do, and maybe it would be worth the hassle for you and them to arrange that tenancy and common structure so that you can do this.

All right, our quote of the day today comes from Morgan Housel who said, use money to gain control over your time. Because not having control of your time is such a powerful and universal drag on happiness. The ability to do what you want, when you want, with who you want for as long as you want to pays the highest dividend that exists in finance.

Well said, Morgan. And you should check out Morgan's book, by the way, if you've never read it. It's called the.

I believe it's called the Psychology of Money.

Yeah, the Psychology of Money, one of the best books on personal finance I've ever read. It's one of those things. You read it and you're like, ah, I wish I'd written this right. He just did a really nice job on that. I like Morgan.

He was a WT icon speaker in.

2020 and unfortunately was one of the.

25% of our speakers that weren't able.

To make it to that conference.

So he gave his talk virtually for the conference.

But it was great to work with him. I don't know that we can afford having Morgan housel anymore at WCIcon, but he's a great person. I love the way he thinks.

Okay, let's take another one off to speak Bite.

Hi Jim, this is Andrew from the Midwest, longtime listener, first time caller. First off, thanks for all you do for this community. I've been listening to you for 11 years and it's made a very positive impact on my financial life. For my question curious if you could speak to construction loans for new construction home builds. We are considering whether to have our builder carry the construction loan or for my wife and I to do so. Some potential advantages that I've read for carrying this are that the transaction price of the house is unknown, so nosy neighbors and friends can't look. The county assessor also doesn't know this information. So property taxes may be lower in the first few years and then you can deduct interest paid on the construction loan if you itemize deductions. On the contrary, it seems builders may not fully deduct the cost of interest paid from the home price and it may reduce incentives for builders to complete projects in a timely fashion. Any general guidance here or specifics that I've misstated or I'm overlooking. Thanks in advance.

I don't know anybody's ever asked me this question before. I don't even think I realized it was possible to get the builder to.

Carry the loan on it.

I assure you that they're not going.

To do that for free.

It just doesn't make any business sense.

For them to do that for free. They are going to make sure that.

They come out ahead if they're doing that. Whereas if you take on that risk, you take on that hassle of having.

To build their loan yourself, the construction loan yourself. That's probably going to work out best for you financially. Most of the time I would guess. I didn't even know it was really much of an option though.

A lot of times what people do is they buy the land with cash.

They have and then they borrow against the land to build the house. And then when it's all done, they wrap it all up in a brand new mortgage on the entire thing. I think that's what's done most commonly.

But I would look at all your options. If the builder is willing to take.

The loan and it seems to work.

Out better for you financially. Fine. Sounds like they're taking on all the risk. Maybe they have a little more incentive.

To get it done fast and get.

The house into your hands so you.

Take over the payments on it. That sounds like might be a great.

Option, so I would explore that. I would also look around and see if you can get a particularly good rate or particularly good terms on your construction loan.

Then maybe you don't want to do that.

So I would look into both options. I don't know that there is a definitive way that you should or shouldn't.

Do this, but in general, most people.

Who are building a home should be in a pretty good financial position, right? This is generally not the house you're putting yourself in.

Six months out of residency, when you still owe $400,000 in student loans, you only have 20 grand to your name.

This is not the time to do.

A new home build.

This is usually a few years down the road.

You can't find anything that you want and you're like, I guess we're going to have to build. So you've got to have your current mortgage and now you got another house that's going to take nine months or 12 months or whatever to build.

You got to be able to afford.

To carry both of them for a year.

Hopefully you have a big huge down payment.

Maybe you can even buy the land with cash.

Those are the sorts of situations where.

It makes sense to to build your brand new customized home. But you're a ways down the road most of the time when you're doing this, and hopefully quite a bit wealthier than the typical first time home buyer.

Hope that's helpful.

Good luck with your new home.

Hope it's awesome. As I mentioned at the beginning of the podcast, SoFi could help medical residents like you save thousands of dollars with exclusive rates and flexible terms for refinancing your student loans. Visit sofi.comwhitecoatinvestor to see all the promotions and offers they've got waiting for you to one more time, that's sofi.com whitecoatinvestor Sofi student loans are originated by Sofi Bank NA member FDIC.

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NMLS 696891 don't forget about our social and online communities. We have a subreddit. We have the WCI Forum. We have the White Coat Investors Facebook group. We have Instagram which is a bit of a community as well. Lots of great comments and feedback there in this group.

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Thank you for all you have done for my family and I.

5 stars.

Awesome.

Thanks for that review. Reviews do help other people to find.

The podcast, so thank you for doing that.

We've come to the end. You can do this stuff. It's not that complicated. I promise. This is way easier than whatever you're doing day to day that you spent.

A decade learning how to do.

Keep your head up, your shoulders back. You've got this.

We're here to help. We'll see you next time on the White Coat Investor Podcast.

The hosts of the White Coat Investor are not licensed accountants, attorneys or financial advisors. This podcast is for your entertainment and information only. It should not be considered professional or personalized financial advice. You should consult the appropriate professional for specific advice relating to your situation.