#170 Top 10 Real Estate Investment Opportunities for Doctors in 2023

Hey, everyone. I know it seems like the world of real estate is changing daily. We're in the midst of a cycle or the end of a cycle, but that's normal and par for the course. We knew it was coming, especially being part of our community. We've been talking about it for a while. Whenever cycles change or shift, opportunities are created. So this week we're going to talk about different opportunities for doctors in real estate investing in 2023. So stay tuned. Welcome to the Passive Income MD podcast where we talk about creating your ideal life through multiple streams of income. If you enjoy hearing about this stuff, make sure to hit subscrib. Now let's get on with the show. I'm a huge believer that real estate investing, it's one of the best ways to generate passive income and build long term wealth. I don't think it's any secret that most of the wealthiest people in the world own a significant amount of real estate in their portfolio to not only preserve capital, but to create income and wealth for the long term. Now, as doctors, we face unique challenges, but we also actually are exposed to unique opportunities when it comes to real estate investing. We all know that as doctors, we're extremely busy, but many of us have some extra capital to be able to throw into real estate investing. So the way we invest in real estate can be a little different from some of the other people that you hear out there on some of those forums. So whether you're a seasoned real estate investor, maybe you just start to dip your toes into this whole industry and field. This episode is for you. We're going to cover a range of real estate opportunities. We'll talk a little bit about the pros and cons or why that might be good for you. And again, it's going to depend on your investment preference, your profile, your risk tolerance level, and ultimately what your goals and objectives are. So my goal in this short episode is to go over these things really quickly to introduce the ideas. And then in future episodes, we're going to go deeper into each of these. Okay. Number one, we're going to call it single door rentals. That means owning and renting out individual residential properties. Now, when we mean single door, there's one single door in the front, one unit that you own and you operate and you rent out. That's a really hands on approach to real estate investing. Many of you know this concept. You might have rented homes before, but there is a landlord to that now. When you invest in single door rentals, you obviously have greater control over Your property, you own it yourself. Whether you hire property management or not, that's up to you. But you get to decide who is the person, the tenant, the family, whoever might be renting your place. You can decide whether you want to refi that property, sell that property down the line, whatever it is. There's potential for long term appreciation, which means increase in value over time. And you can build wealth slowly through property appreciation. Mortgage pay down some of the cash flow it's probably one of the most simple ways to invest in real estate. Now in 2023, the thing I have to let you know is that prices still seem to be high in this area. We haven't seen the crash yet that many people had predicted. That's because supply is relatively low, interest rates are high. People are locked into some of these interest rates and don't want to sell. They don't know where to go. So what I will tell you about single door investing is make sure the cash flow works. And all a numbers game. Make sure that your rent more than covers the mortgage, interest, taxes, insurance and gives you some cash flow on top of that. Otherwise, single door investing can be more hassle than gain. Now if you want to step it up a bit, there's something called multi family rentals or apartment buildings. Now this might be your duplexes, triplexes, five and above. Whatever it might be, there are some unique advantages that come with renting more than one door or one unit under one roof. There's some economies of scale that are involved that allow things to be more efficient, allow you to have more control and ultimately more levers to pull to create more cash flow. Imagine if you have five units in each unit. You can increase rent just by a little bit because of the market, because you offer a better product then that can scale your income. And if one of those units happens to go unrented, it's not like you have total loss of income like you would with a single unit. It helps smooth out cash flows for you over the term, create more levers for you to increase again cash flow and increase the value of the property. Now that may obviously feel like a little bit more headache, more things to control. Maybe you absolutely do need property management. I would recommend it for sure in this type of case. But I will tell you, the more people you talk to, the amount of work that it takes to manage an apartment building is not significantly more than a single family rental. And that's because as you get more units, you can actually pay for more professional management. It makes more sense. Who can help you manage this property and asset. You know, manage this asset. Now this is direct ownership, meaning that you own it yourself. You have the control and you make you decide what to do with these investments. Now I will tell you, direct ownership comes with its pros and cons. Just like everything else, you get the most control, but of course it takes up more of your time. And the key that we talk about with real estate all the time in any of these passive investments or side hustles is make sure you understand what you're getting paid for, but also the amount of time and energy that you're putting into it. You want to maximize the income for the time that you put it. Over the last 35 years, MLG Capital, they focused on making smart investments in real estate and building relationships with their investors. They call it an investor centric fund structure. That's what they focus on where accredited investors, they can invest their money with confidence in funds that target diversification. They prioritize cash flow as well as low leverage with a what they call a unique, unique dual sourcing strategy. So if you're unsure about investing due to rising inflation or volatility in the stock markets, well, I want to let you know that investing real estate, it's been historically one of the best hedges against inflation. In fact, I've been investing with this company for years. So if you're a medical professional and you'd like to learn more about investing with MLG Capital, make sure you visit passiveincomemd.com MLG again that's passive income. MD.com MLG now back to the show. Okay, Opportunity three Short term rentals. These are otherwise known as Airbnb, VRBO or VRBO is actually a platform. Those are platforms that you can utilize to market some of your properties. They've obviously gained immense popularity over the last couple of years. In Covid times when hotels were shut, people needed to rent these Airbnbs. The reason they become popular is that you can also generate higher rental income compared to traditional long term rentals. Because it's like hotels, you're pricing them by the night and you can change it according to demand, especially in peak season around holidays, whatever it might be, you can leverage that and increase your prices to create again supercharged cash flow. I will tell you, it's just like a business though. There's marketing involved, there are, there's vacancy, there's expenses and, and just like any other property that you might have, you have to manage and really understand your cash flow. Now in 2023 though, you're hearing a lot of word about these short term rentals, A lot of them actually facing stiffer competition from hotels that have opened back up from a ton of supply that's now come as a result of this popularity. So it's not a slam dunk. So I think it's absolutely essential more than ever to understand the market that you're in, understand the demand and supply factors, understand the competition, and ultimately understand the numbers. Since you are directly owning this property, I know you have a property manager for it, and hopefully you do, but you still have to run the operations and understand whether it's a good investment for you and your family at the end of the day. Now the next opportunity is syndications. What's a syndication? When people pull their capital to buy something that maybe they couldn't do on their own, it's usually led by a general partner or operator. We've talked about it quite a bit. It allows doctors to pool their resources to to invest and own pieces of deals. By investing with an operator who basically curates the opportunity and puts and accumulates and aggregates all the capital to go buy larger, higher value properties that otherwise might be inaccessible for you as an individual, you get to leverage the general partner or operator's expertise or track record, their experience. They can handle property acquisition, meaning they go and get the property management and figure out when to perhaps sell this building or keep it for the long term for cash flow. The good thing is you can go in with lots smaller amounts than you would maybe having to buy your own property. You don't have to be on the loan yourself. And it allows you to create a diversified portfolio by either investing in a fund that has a large amount of properties within it, or investing in different syndicators or different operators all across the country in different asset classes for a smaller amount. Personally, I'm in close to 40 different deals currently as a limited partner. Mean that you are an investor in that deal and it's created a significant amount of diversification across different asset classes, different markets, different areas of the country. It's up to you though, to learn how to do the proper due diligence to make sure you partner with the right people in the right market, with the right opportunities. Understand that when you do this type of investing, you don't have control, you are leveraging and trusting someone else. So it really matters who you're trusting with and who you're willing to partner for the long term. But as a physician, sometimes it's best for you to do what you do best and allow other people do what they do best and invest with them and allow them to use your capital again, leverage your capital to create better returns. But again, my caution to you is don't invest without doing the proper due diligence yourself. Because once you're on for the ride, you're on for the ride for the long term. Okay, opportunity number five, it's private real estate funds. Now, why that's a little different from some of the syndications. I like to separate those a little bit, is because I think of syndications as usually single deals, meaning that single buildings or single opportunities. When it comes to the real estate funds though, they aggregate capital and go out and find multiple opportunities, multiple deals, multiple properties in one basket. Again, they provide instant diversification for you in the sense that you might get multiple properties at once. So if one property doesn't do as well, you've got the others to help it out. I like ones that are geographically diversified too, meaning that they're in different areas of the country, perhaps because real estate is very local, meaning that certain markets do great while other markets may not do as well. The difference with these type of investments is that you don't know exactly which property you're investing in. Well, at least before you invest in the fund, oftentimes meaning that the fund managers go take that capital and go out and buy multiple properties according to their business plan. So with the syndications, you might know exactly which property in which area funds. You may not know exactly which properties on the front end, but for that lack of knowledge or directed investment, you're gaining diversification. Okay, opportunity number six, REITs, real estate investment trusts. They allow investors to own shares and professionally manage real estate portfolios. These are usually publicly traded companies. There's some liquidity there at ease of investment, meaning that you go on the stock market, you take your money on there, you buy the reit, you buy it today, you can sell it later that day, you own shares in it, and you don't own the properties directly, but you own shares of the company that owns those real estates. It's very passive, meaning that you're able to invest in real estate and have diversified portfolio with without you actively owning and managing the properties. Now, they usually pay out in the form of dividends, which is nice. Again, a very popular choice for a lot of doctors who are looking for that liquidity, have some diversification into the real estate market and want that passive income stream. The issue with this is that you don't get a lot of the tax benefits that you get with these syndications and passive real estate funds. Oftentimes known that these REITs are, they correlate with stock market. So if the stock market goes down, these REITs tend to follow along. For many people that invest in real estate, you're investing because you want that diversification, you want that hedge against the stock market. So if one falls, the other still stays up. REITs don't quite give you that diversification. You might have heard of our next opportunity too, which is called Real Estate ETFs. ETF stands for Exchange Traded Funds. So Real Estate ETFs provide an accessible way to invest in real estate, again through the stock market. Provides you a lot of exposure across a lot of real estate classes and in different geographic areas. So slightly different from ETFs. It's like buying and selling shares or like mutual funds of real estate companies or opportunities. Again, it's a convenient way to gain exposure to the real estate market without direct ownership. And for some people that are looking for a little diversification within their portfolio, ETFs fit the bill. But again, it doesn't come with those tax benefits and it often correlates a lot heavier with with the overall stock market. All right, opportunity number eight, real estate notes. So what are notes? Notes are like loans, meaning that your mortgage on your house is a form of a note. It's an iou. It's a promissory note secured by your property that says you're going to pay back the bank at this interest rate for this period of time, or at least this amount. There are ways to actually invest in these notes to own these loans like you're the bank. So you might get that cash flow like like banks receive in terms of that interest payment as well as some of the principal payment. So you're investing in real estate by owning the loans or the debt on that real estate. And for you as a lender, you don't care about the daily active management of the property. You have to think about it. You just want your check at the beginning of each month. The issue you have to deal with as an owner of that note is when somebody stops paying or has an issue. We call those performing or non performing notes. So you have to decide who to lend to and what note you're going to hold. There are companies that can help you buy some of these notes. You can also be part of note funds where these funds go out and buy a whole bunch of these notes that are performing and non performing and try to create portfolio for you. There's a level of risk there depending on what these notes hold, what their collateral lies against and who the borrower is. But depending on the right type of opportunity, it can provide steady passive cash flow opportunity. 9 I like to call these different asset classes. Within real estate. There are mobile home parks as well as self storage, and I like to group those together. There are alternative investment opportunities that again can provide steady cash flow, potential tax benefits. There's a lack of affordable housing in this country, we absolutely know that. So these parks where there's mobile homes become very, very desirable for people. People don't leave. And there are ethical ways to own these type of parks where you can provide great benefit for people that live in this type of housing. They get home, homeownership, long term stability, get a community, a neighborhood, and you can provide a great service for that. Again, it's about providing affordable housing options to certain communities. There are people who do this well and people who don't do this well. And on that self storage side, it's just about having storage units. You might have some of those yourself where you have too much stuff. And most people in this country probably have too much stuff, can't fit into their apartments or they're moving, whatever it might be, short term, long term, they have these storage where they pay a monthly fee and have everything stored there. There are pros and cons to it, which you can talk about another time. But it's a form of real estate and rentals and again, you don't have to deal with a lot of the tenant headaches. Either somebody pays you for the unit or somebody doesn't. You can participate in these type of investments by owning them yourself or by investing through syndications or funds that do own these type of asset classes. Again, the reason to go into some of these is for diversification. Some of these are known to be a little bit more recession resistant. So for some of you that believe we're going to go to a heavier recession, some of these might do better during that period. And the last opportunity is something called mineral rights. I've talked about it before in some of my past podcasts. When you own land in this country, you usually are used to owning the land and the house on it, but somebody owns the mineral rights or everything that's below that land. Whether there's water, different minerals, oil and gas, whatever it is, somebody owns that in this country. It's unique in certain areas where people might own those separately. Somebody owns the land and whatever's below and of course, whatever's above it. So owning mineral rights can provide a unique opportunity for a lot of doctors, high net worth individuals to own real estate in a way that's completely passive. So the way you get paid on these is usually royalties for a company to go in and be able to extract these minerals and oil and you get paid as an owner. Now, just like any of these other investments, it's absolutely important to know who you're investing with and who's going to help you through these because some of these things are quite complicated. You want to make sure you invest with the right people to help guide you through this and provide you long, consistent returns. So there you have it. I just quickly explored a quick overview of the top 10 real estate opportunities for doctors in 2023. The market is completely different today than it was a year ago, two years ago, but that's not unexpected. Everything works in cycles and I believe there are opportunities at every part of the cycle. It's just important for you to keep educated on what's happening in every asset class and every opportunity for you to take advantage of it. Some things will do better, some things will do worse. The key, like anything, is diversification. Create a diversified portfolio so that your wins will more than offset your losses. And, and I promise you, if you've been investing long enough, there will be some losses. But that doesn't mean you shouldn't continue to invest. It's about picking the right opportunities, finding the right people with the right track records, the people who you can trust to help you with this. Especially in this time which might feel quite volatile, it's important to have a community around you of people who are doing this alongside of you. That way some people will see things that you don't see, will bring information to the table that maybe you don't have and you can provide that value for them as well. Real estate is about doing your research, learning how to do the proper due diligence and having a long term perspective. It's not about getting rich quick, but it can provide sustainable long term wealth income for you and your family. If you're not plugged into a community yet, obviously, I recommend that you come to our conference PIMDCON in the fall to meet hundreds of other doctors who are looking into this type of stuff, helping each other get smarter, make better investment decisions. Otherwise, think about joining our Passive Real Estate Academy wait list where this fall we're going to talk all about the due diligence for a lot of these investments to make sure that you mitigate risk. Number one and number two, you ask the right questions so you know who to partner with and what type of opportunities to jump into. Thanks for being part of this community. I hope it's been helpful. Let's talk again soon. Take care. Ready to level up your Real estate, Investing and Entrepreneurship game? Well join us at pimbcon, the Physician Real Estate and Entrepreneurship conference happening live in Los Angeles on September 21st through 23rd. By attending in person, you're going to get exclusive access to expert speakers, panel discussions and the opportunity to connect with like minded high achieving professionals like yourself. This engaging event, it's packed with amazing content, workshops and networking opportunities. Now this year you're going to have the opportunity to choose from two different tracks, focus on real estate, investing or entrepreneurship, or do both and learn from seasoned professionals through mastermind sessions and coaching opportunities. Now you'll gain valuable insights on how to achieve financial freedom and walk away with actionable plans to help you achieve your goals. So don't miss out on this incredible opportunity to level up your financial future. Register now at PIMDCON. That's PIMDCON.com for your in person ticket and let's take your real estate, investing and entrepreneurship game to the next level. Thanks so much. Bye. Sam.