#182 How I Scaled My Real Estate Portfolio to Support Adventures of a Lifetime

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 subscribe. Now, let's get on with the show, everyone. I'm now going to be talking to Dr. Larry Daugherty. He's an adventuring radiation oncologist and a father of five. Okay. He and his family live in Eagle River, Alaska. He is an adventurous guy. He climbs mountains, he races, you know, races dogs in the Arctic wilderness. We talk about these things. But his passion for adventure, it led him to explore Passive income, though, as a way to find more freedom in his Life. After attending PIMDCON, which is our conference in 2019, Larry began to invest in cash flowing multifamily real estate. Started with duplexes and fourplexes and quickly led to direct ownership of commercial multi family apartment buildings. In just three years, he's acquired a portfolio of $28 million in assets, which is nearly 200 doors. He now works part time in medicine and has been building his brand called the Freedom Physician where he coaches high income professionals how to scale their portfolios while living a deliberate life. Well, he talked all about his journey. He's an awesome guy. Would love to talk about his adventures. Look, Larry, how you doing?

Doing great, Peter. It's such an honor to be here. Leveraging Growth Summit was huge for me a few years ago when you started it actually walked away with some great skills that I put to use right away. So super excited to be here.

Awesome. I just want to hear about your story a little bit, but we're going to go into all of that. But tell people right now what you have in terms of your assets, your multifamily, and kind of how your life looks like today, balancing those things.

Yeah. So in three years, like you said, I built a portfolio of nearly 200 doors of real estate, primarily focusing on commercial multifamily real estate to really scale. So I have about $28 million of directly owned commercial multifamily real estate work part time as a radiation oncologist up here in Alaska. That's allowed me to carve out more time with my family, more time to travel, time to focus on this coaching business, and time to focus on really where my true passion is and where I think I'll end up in life, which is I started this Radiating Hope nonprofit about 11 years ago as a resident and it's kind of like the perfect blend of all of the things that I love. So we, we aim to improve access to cancer Care in developing countries. And the way we fundraise is through adventure, like climbing trips. I'm leading a trip to Mount Kilimanjaro later this year. Um, so it's been a real passion project. And being able to. To open up more freedom in my life through real estate, through business, has allowed me to. To really focus on that more.

Amazing. I mean, it sounds like you obviously started this and had a passion for this early on, but early on in your career, now you've been in your career a little bit. Was there always a plan to go along this path where you'd be able to create passive income, have these other ventures, you know, these kinds of. This kind of stuff? Was this always kind of part of the master plan?

No, it was not. In fact, out of residency, I took a job in academics. That was the plan. I was going to. I was going to teach residents. I was going to do research. And about a year into that journey, I found myself on an airplane traveling to Europe for work. And I was going to be presenting at this meeting. It was a great opportunity. Before I got on that plane, I stopped at one of those newsstands and I got a copy of a magazine and it happened to be Outside magazine. And I'm on the plane and I'm like reading all these stories of adventure. It's something I'd always like things that I had always dreamed of doing. And I was at this place in my life where I had really finally arrived at what I had always defined as success. Right? I'm working at the Mayo Clinic, my dream job. But honestly, if I was being honest with myself on the inside, I was like totally empty. And it didn't make a lot of sense to me. But. But I'm. I'm sitting there, I'm thumbing through this magazine, and there was this tiny little advertisement that just like jumped off the page. I don't know if you ever had an experience like that or something just like pops off the page at you. But it was actually this picture of this woman on a dog sled in the Arctic wilderness. Something that I had dreamed of since I was a little kid. And it actually advertised for this contest. And if you won the contest, you would get this all expense paid trip to. To go to Scandinavia. I was extremely fortunate. I came home and I entered the contest and I won. But honestly, yeah, I won. I got to go do was incredible. But really what I realized, Peter, is all of that was just about freedom. Like the freedom to live a life that I really wanted to. And I wasn't doing that, like this adventure side of myself that really was important to me. It was, it was something that I had pushed down so deeply inside of myself through medical school and residency and academic radiation oncologists. It was like there was just this tiny little ember left of that. And I was even afraid to blow on it. I was afraid of what would happen, like, what would that mean for my life in medicine, in my personal life. But like, that contest was this opportunity to blow on. To blow on it. And that's exactly what I did. And it just kind of like became this fire. It's what ultimately led me to Alaska, ultimately led me to meet you in 2019. At the time, I had just barely surpassed a net worth of zero. But I saw this opportunity to really create a life that I wanted.

And why did you choose real estate at that time as the vehicle to make all this happen?

Yeah, that was also by accident. When I reached that net worth of zero, I became focused on learning even what is a 401K? What is a Roth IRA? All of this was a foreign language to me. And I became a disciple of Jim Dali. I was devouring White Coat Investor and it was actually him that led me to you and your conference in la. He advertised for your first, I think it was your first PIMD con for real estate. And when I went to that meeting, I hadn't actually planned on investing in real estate. It was intriguing to me, but meeting physicians that had, in a very short period of time, three years, five years, become financially free. It was like I left that conference totally fired up, like, I have to learn how to do this. I saw the end in mind. I saw the life that they were living. And within a short period of time, I had acquired my first fourplex. And I remember very clearly, like a month later, this check comes to me for $2,500 for this 4 Plex. It was a terrifying step to do that. But when that check came to me, it wasn't life changing money. But at the same time, it was like heroin hitting my veins. I saw this opportunity, the vision all made sense.

How did you get over that first step? Because I think a lot of people that are interested in investing in real estate hear it all the time. Sounds amazing, but how do you actually get into that first property? How do you get over that fear? Especially for us as physicians, we're probably pretty risk averse. Yeah. How did you make that happen and overcome that?

That's a really good question. Especially because we had had a Terrible experience becoming accidental landlords from our, our houses that we bought when we were residents. It was this like terrible money pit. And so I, I had a mindset that, well, that doesn't work. You know, real estate, that's not something I want to have anything to do with. But I think what helped me overcome that hurdle is just knowledge, like meeting other physicians that learn how to do it, learning that it's a very different process to deliberately invest in cash flowing real estate. Understanding how to vet a deal, honestly, I think what gave me the most confidence is being able to run the numbers. Like learning from people that had, had taken those steps and knowing what a cash flowing asset is, that's, that's what allowed me to go forward. Hmm.

All right, so you get that first property that cash starts to come in. Like what do you, what steps do you take from there to actually grow and scale this?

Yeah, so my, my first asset was, was a fourplex. I quickly thereafter bought another fourplex and a duplex. And at that point, after I had my first 10 doors and I spent the capital that I kind of had on hand, I think I hit my first bottleneck. And that was I didn't have any more capital, but I was still seeing deals come through, deals that I would have loved to purchase. And finally I had. But I was saying no because I didn't have any more capital. But I had developed these relationships with agents. I had this deal flow set up that was working really well. Finally I got a deal that was just like way too good to pass up. It was this 15 unit. It was the first commercial asset that was seriously contemplating purchasing. And actually I had to take some pretty big, even maybe some risky moves in order to acquire that. Like we all get those BHG loan things in the mail. That's actually what I did, Peter, is I took out a $250,000 loan to acquire this 15 unit. But I was very, very confident in my math that asset that I purchased. Actually still to this day, cash flows $18,000 a month. And that's after all expenses. So I had to take some big moves along the way. And it was a lot of work, but it's been an enormous payoff at.

This point, especially when you're doing all this. Are you still working as a full time physician? And if so, how are you able to kind of balance finding these properties, doing these deals, figuring out all this stuff while still working in your current job?

Yeah, really good question. So finding you and finding real estate couldn't have been more perfectly Timed. I mean, I went to that conference in October of 2019 and. And then Covid hit, right? I had bought an asset, and then I bought a second asset. And then in March of 2020, the practice that I was working for actually declared bankruptcy. And so, yeah, so I had this like, big wake up call where it was looking like I may have to leave Alaska. There was a lot of uncertainty surrounding my. My next step in life. And it went from, you know, I want to invest in real estate to like, I need to invest in real estate. And I desperately, you know, want to take the handcuffs, Handcuffs off of relying on medicine only as my income stream.

I mean, you have five kids and you're married and you're doing all this and like I said, you were taking some bold moves. How did you feel in terms of trying to balance that with security for your family, taking care of them, doing all this stuff? Like, I'm sure that must have weighed on your mind quite a bit.

Yeah, for sure. I think it's been a family endeavor. Honestly. My wife and I did this together. She became a real estate professional in our first year of investing, and that really helped us accelerate our growth. My daughter happened to be attending interior design school, and when she got her interior design certificate, she actually moved back home and was able to help us start rehabbing properties. So involving my kids in the business, you know, my younger kids, they look for forward to the days when we go around and empty the quarters out of the laundry machines because they know they're going to get to roll those quarters and get 10 or 20 bucks out of that. And honestly, I saw this as the best way to secure a financial future, not only for myself, but for my family.

I mean, so when did all this change in terms of your job though? And they said you were from full time to part time. What was behind that decision? What allowed that to happen? And kind of, what does that look like today?

Yeah, so I was able to go part time in November of last year, so I carved out a position in my practice where I now I'm like a locum for my group. So my group has practices all over Alaska and I cover vacations for the docs in my practice part time. So honestly, I wish that I would have done that even sooner. I was in a position to do that probably a year earlier. And I had a lot of, I think, guilt and anxiety around making that decision and making that jump. But it has been the best thing ever. I realized a week after I made that decision and I was able to Take my son and drop him off at school. Whereas usually I would have needed to be at work at this 7:55am meeting. But I'm able to take my son to school, drop him off, gets out of the car and just turns around and says, I love you, dad. That's when I knew that I had become a freedom physician and what that meant to me. Yeah, there's big things. I'm able to carve out more time to travel and do some of these adventures that have been important to me as well. But it's just those small moments with my family that have been the most meaningful.

I mean, what have been some of the big hardest things to deal with though, throughout this journey, I think people sometimes hear the end result and they're like, ah, it seems so easy for them. I mean, obviously there's fear there, but obviously you've had to overcome some challenges, been through some struggles to get where you're at. Like, what are some of the big ones so that you can let people know.

Yeah, for sure. I think that just developing the right mindset around things not going according to plan. I think the more big things you try in your life, the more that's going to happen. Right. Dealing with imposter syndrome, for sure. But I've also been somebody that has always gravitated towards challenge and towards doing hard things. In 2017, I attempted to climb Mount Everest for the first time. And my team, you can imagine like everything that might go into that, right. All of the planning, all the preparation, the training, the expense, the time off. And we're there for seven weeks. And my team actually got to the south summit of Mount Everest, which is 98 meters from the top of Mount Everest. And there we are. I mean, we're like an hour away now. The conditions looked actually pretty good. And we're being told by our, by our Sherpa that we need to turn around. And the reason we needed to turn around was the jet stream on Mount Everest was about to descend and we were literally going to be in hurricane force winds. We ended up listening. Thankfully. If we hadn't, like, there's no doubt in my mind I'd still be on Mount Everest today. But there was some real mindset work around defining what that meant. I had to really resist seeing that as a failure, which sounds ironic. I mean, obviously we made the right decision. But making that switch from failure to gratitude, gratitude that I'm alive, gratitude, even just for the experience. We got to the south summit of Mount Everest. That's incredible. I think that there's a lot of parallels with that in real estate. Like, man, you could have one thing derail you. I recently had a tenant leave a chinchilla inside their apartment and abandoned the unit. And, like, I couldn't believe the amount of damage that a chinchilla could do to a unit. Ate through walls, eight through doors, destroyed like a washer dryer. Like, you can look at that one experience and get trapped in it and have your mindset just go, go crazy. But. Or you can use it as an opportunity to move forward. So I think being able to mentally kind of push through some of those moments has been, I think, one of the biggest challenges.

I mean, what do you think the potential is for other doctors to be able to do this? Because, again, many of them, maybe they're watching this, they feel pretty. I mean, obviously they're very busy, and they feel pretty locked in to where they're at in life in terms of their job, their career, their time. What do you think is like, you know, what do you think allows physicians to be able to do this and ultimately be successful doing something like you've done?

Oh, man, I think if I can do it, literally anybody can do it. I knew. I knew nothing about. About real estate. I think it's just all about finding a mentor, you know, learning and taking that first step. For me, it was like just buying that first fourplex had me see the light where I was able to scale extremely quickly. But really, if I can do it, anybody can do it.

And so what do you do today with the whole physician? Tell me a little bit about where it's moved from there in terms of doing your own properties. But I know that you're helping other people out. What does that look like?

Yeah, you bet. So I have a mentorship program where I help physicians who have some knowledge and experience in real estate already. Like, if you're brand new, I'm probably not the right mentor for you, but if you are someone that has a little bit of experience, maybe you have a duplex or a four plex, but you're seeing just kind of these meager returns come in, and you're questioning whether or not this is even worth your time. Like, man, all the time I'm spending in real estate, I could actually make more money if I just worked more as a physician. I think for me, that pivot point of investing in commercial real estate, that's where, you know, that one property that I got, that 115plex, replaced half of my physician salary with one acquisition and I think what I learned is that I could be, instead of stringing together a whole bunch of deals to try to try to hit this cash flow number where I would be able to be financially free, I could just be one deal away, like one large apartment complex away to truly changing my life. And so that's what I mentor people to do. Like, what are your roadblocks? Is it, is it finding deals? Is it your deal flow? Is it financing? Is it mindset work? Just around whether or not this whole thing is worth it. So that's really my passion, is helping physicians that have some experience, some interest in this move past those roadblocks and really scale to commercial multifamily.

I know some people might ask you, obviously you're extremely successful, you're probably obviously busy with your family, you're doing well on your own. Why even do this?

Yeah, it's a really good question. I've had to really drill down to that myself because I didn't want to, especially after going part time, just trade one form of busy for another and everything we do, this becomes another time thing. And it's not really worth it to me financially yet, to be honest. But I think that the reason that I have chosen to jump into this mentorship is just because it has meant so much for me to attain financial freedom and to carve out this deliberate life. And I don't know, I think it was Zig Ziglar that said, if you help enough people get what they want, then you'll get what you want. Surrounding yourself with like minded physicians who are all kind of working towards the same thing, it's so energizing and it helps me as well. So I enjoy it. But it also, I think helps me along my own journey.

Well, I mean, this has been an amazing story. Obviously it's a journey that continues knowing you. The adventures will still come. Some people listening are listening to this and I'm sure they resonate with you in some way. Want to find out more about you, what you're doing, where's a great place for people to do that?

Yes, you can visit thefreedomphysician.com you can email me at Larry the freedomphysician.com that's awesome.

Okay, before we let you go, you've already gave such great advice, a lot of knowledge there, but can you share a big tip with someone for someone who wants to follow in your footsteps? Yeah.

You know, one thing that's really been huge for me, Peter, is I have what I call my top 10. So every morning before I go to the gym, I write down the 10 most important short term goals that I have. They tend to be kind of the same things over and over until I get those short term goals done. But writing them down every single day and then focusing on it while I'm at the gym, I think if you prioritize your health and your fitness, then there's something just super energizing about that that's going to, going to, going to push you forward. So that's my number one tip. Hit the gym and do the top ten.

I love that. Larry, thanks for spending your time for teaching us again. Congrats on all your success. Your story is amazing. Again, I'm excited for what's to come for you and let's talk again soon.

All right, thanks so much, Peter.

Enjoy the show. Let me know by dropping a review in the podcast app you're listening to us at. And if you haven't already dropped, be sure to hit subscribe. Join thousands of physicians who are also on this journey to creating their ideal lives through multiple streams of income. Learn more at our website, passiveincomemd.com thanks again for allowing me to be a part of your journey. See you next time.