#4: Adding Real Estate To Your Portfolio with Jim Dahle, White Coat Investor

Welcome to the Passive Income MD Podcast, where we talk about creating your ideal life through multiple streams of income. I'm your host, Peter Kim. If you enjoy hearing about this stuff, make sure to hit subscribe so I can bring it to you every week. Now let's get on with the show. Hey, everyone. Welcome to the show today. Today we have Dr. Jim Dali. For those who might not know who he is or have been sleeping under a rock, this is the White Coat Investor. And you might find him on his blog, several books that he's written, his own podcast, Facebook groups. I think there's a place on the Internet you haven't reached yet, Jim, but if people are unfamiliar with you, I'd like to kind of get them to get to know you a little bit. So welcome to the show.

Thank you. It's always wonderful to be here and always wonderful to talk to you, Peter.

Awesome. For those who might not know who you are, do you mind spending a few minutes and just letting us know who you are and how you got started with this whole thing?

Sure. Well, if you like podcasts, which I assume you do listening to this podcast, you can check out my podcast. Just look up the White Coat Investor anywhere you download your podcast and you'll be able to find that. You can also find more information about me and everything else I do@whitecoatinvestor.com so I started the White Coat Investor back in 2011. My goal with it was to help doctors get a fair shake on Wall Street. That was truly the passion behind it. And especially since it didn't make any money for years afterward. That was really the only thing driving it for a long time. Since then, it's grown into a very successful business. It's been a lot of fun to tinker with entrepreneurship and to tinker with business a little bit and create some great jobs for people and really see how many people we could reach doing this. So it's been a lot of fun to help a lot of doctors and to, you know, and other people, to other high income professionals. But it's been a wonderful journey and it's been fun to team up with people like you, Peter.

Yeah, it's been fun for me too. I've watched for several years as you've grown this business and I don't know, for some reason I decided it might be fun for me to do it too. Yeah, I mean, it's been a great journey. And so here's a question for you. Are you still practicing today?

Yes, I still practice halftime. I've got a shift at 6 in the morning. So I'll be in there seeing patients just like everybody else. I get to talk to people who are having the worst day of their lives in the emergency department. I've always found that to be gratifying and I feel like I'm still good at it. If there's ever a time I don't feel like I'm good at, I'll stop doing it. It's interesting. Occasionally I run into somebody online that's like, you must be a terrible doctor with all this time you spend on financial stuff. And I don't think that's necessarily the case. I'm certainly getting more CME than I ever did. I am only practicing half time now, but I honestly think it's made me a better doctor. I'm at least far more compassionate than I ever was when I was working full time, rotating shifts.

I mean, I feel the same way. I mean for people who've been reading and following along on my blog or the newsletter, they know that I've pretty much cut down to about half time. So same kind of, I guess the number of hours that you're working at this time, six to eight hours or six to eight shifts a month. And honestly I find myself enjoying it a lot more and I'm a lot more present when I'm there at work. I don't know, I guess there's a choice there involved. Right. And you can choose to do it if you want. And so when you choose to be there, honestly I think I'd bring a different energy and hopefully my patients kind of see that.

Huge fan of halftime work. I think everybody should try it. The truth is most doctors don't actually want to quit. They just want to cut back to full time. So I encourage them to do that.

Yeah, I guess that's why we're talking today and we're trying to help. I mean that's a big thing that I've talked about on the blog is something called gradual retirement, meaning that as you create other streams of income, you're able to cut down on your work until you find that happy place. Now how long did it take you to find your happy place?

Well, I felt like I was forced to cut back on my clinical work. Actually I just couldn't do two full time jobs anymore. It was too much. And so I went to three quarter time a few years ago and about a year and a half ago went to halftime and it was mostly just so I could keep the white coat investor running was the reason I did it, it wasn't necessarily that I wanted to work less. What I did want to do is drop my night shifts. So I dropped those about the same time I cut back to three quarter time and that made all kinds of difference in my life. And I enjoy my work much, much more now that I'm not doing it at three or four in the morning. But actually cutting back, I don't know that I really necessarily wanted to. I just needed more time to do White Coat Investor stuff.

I mean, you probably keep yourself pretty busy with your family as well, is that right?

Yeah, the family certainly has been placed on the back burner way too many times. And so that's actually a big push of mine. This last month or two, maybe three months is we've gone on a hiring binge here and we're working on hiring more assistants at the White Coat Investor basically so I can do the same thing with the White Coat Investor that I did with my clinical work, cut back to half time. So I've only got one total full time job between the two of them. And I think once I'm able to do that, I'll have a much better balance both with my health as well as with my family and my recreational pursuits and, you know, charitable endeavors that I'm engaged in.

Got it. Now for those again, who aren't necessarily familiar with your site, what kind of material can they find on your website and podcasts and other places?

It's interesting because I used to think I was in a little tiny niche, personal finance and investing for doctors. And since then there's been, I don't know, 50 or 100 physician blogs, half dozen or a dozen physician financial podcasts that have kind of carved this niche into even smaller spaces. So I guess now when I look at it, I think, well, mine's the Generalist website, the Generalist podcast. I talk about all things financial. So if it's financial and it deals with somebody that is a high income professional, I'm going to talk about it on the website. So that might be student loan management, it might be budgeting, it might be mutual fund investing, it might be real estate investing, it might be asset protection or estate planning or practice management, lifestyle and burnout kind of topics. Get in there. Spending, charitable giving, loan management, debt management, that sort of stuff pretty much runs the gamut for personal finance. But geared toward the high income professional like doctors.

Gotcha. It's funny, when I started my blog, one of the reasons I felt like I wanted to start it was that I wasn't seeing Enough fun real estate on your blog. And I wanted to share that with people and talk about the benefits of investing both passively and actively in real estate. Now the funny thing is I've noticed a lot more of that on your website, which is great. I mean, for me, I love it. Is that just a reflection on kind of you and your investment strategy, how things have changed over time?

Well, I think there's several things that have caused that. One is where you come from. And I think investors tend to come from one of two schools of thought. And I think the sophisticated ones end up in the same place. And so they either come from kind of a mutual fund stock, publicly traded investment side, or they tend to come from a small business real estate side. And I think you become a well rounded investor, you learn about both sides. But I certainly my background probably a little bit more boglehead ish mutual fund, particularly index fund background, stocks and bonds, publicly traded real estate investment trusts, that sort of a thing. And then kind of gradually work my way into real estate to the point now where I invest significant amounts of my portfolio into both types of investments, which I think both have significant pros to them. You know, high returns and low correlation with each other. And I think people who really step back and look at it objectively, I think they'll end up in that sort of a location eventually, no matter where they come from. But it's really disheartening to me to see mutual fund investors and go, oh, real estate's terrible investment. And see real estate investors go, oh, mutual funds. Any sort of publicly traded security is just a paper asset. Whereas I think when you really understand both of them, you see the benefits of investing in both ways and you'll probably include both in your portfolio to some extent or another.

Gotcha. If you're willing to share, what percentage of your portfolio would you say is in real estate currently?

Sure, I share this sort of stuff all the time. So my portfolio is 60% stocks. That's about 2/3 in the US, 1/3 overseas with a bit of a small value tilt. Then it's 20% bonds, and that includes both nominal bonds as well as inflation protected or inflation linked bonds like TIPS. And then the last 20% is in real estate and so that includes both. Publicly traded REITs typically use the Vanguard REIT index fund as well as hard money loan funds which makes up about 5% of the portfolio. And then 10% is invested in equity real estate, and that's entirely in private investments, either syndications or private funds. So 20% total divided 5% REITs, 5% hard money loans, 10% equity. And it's been that way for several years. It'll probably stay that way indefinitely going forward.

For those who aren't familiar with the hard money loans, can you explain that really quickly and kind of what your goals are with some of that?

Sure. Back in 2012, I started looking at peer to peer loans and this was an interesting asset class because the yields on these things were 15 to 30%. You were essentially taking people that wanted to refinance their credit card debt at a lower rate. And, and so you could make these really high yields. The problem was these debts were totally unsecured and there was a significant default rate. And before I got into it, I ran the numbers and figured out, well, how high can the default rate be? And I still make what I consider an attractive return. And that turned out that I could afford about 20% defaults and still make what I thought was a reasonable return for my, for the amount of risk I was taking. And so that actually investment actually treated me pretty well. But after a few years I started looking at it and looking at the platform risk there with two of the big companies, Lending Club and Prosper. And I didn't like the platform risk more than anything. It was, everything was kind of concentrated there, especially when it turned out that the CEO of Lending Club was engaged in some shenanigans. And so I decided, you know what, if I can make the same sort of return with a loan that's backed by a real asset that I can foreclose on, why wouldn't I just do that? And at that point, the returns from peer to peer loans have been coming down. My returns had been coming down from 13% to 8% or so. And I looked around at hard money loans and said, well, shoot, I can make 8, 9, 10, 11, 12%. There's something I can foreclose on, you know, not just somebody's credit cards. And so I decided to gradually move out of the peer to peer loans and into hard money loans with 5% of my portfolio. And so that was the reason why I got into hard money loans. But what a hard money loan is essentially, and it's interesting because I think there's a little bit of a negative connotation to calling it a hard money loan. Some of these guys that run these funds don't actually like them called that. They prefer just calling it a debt real estate or a mortgage real estate fund. But basically the idea is you're loaning money to a Home Flipper. So because it's such a pain to go to the bank and qualify for a loan, they would rather pay more in interest to get the money quickly. And so they pay a significant number of points, they pay a significant amount of interest to a hard money lender, whether that's a fund or an individual or real estate crowdfunding platform, whatever it is. And basically they get this money from them and they go develop the house, they flip the house or the apartment building or whatever it is that they're working on, and then sell it and pay back the loan. And they might be paying 2 points and 12% interest or 10% interest to get this loan. And so even after the fund manager takes their cut of it, you're still getting 8 to 11% returns on an investment that's backed by a property that you're in first lien position can foreclose on and probably get your principal back in the event that this person doesn't do a good job flipping the property. And the best part about it when you're in a fund is that you're diversified. You know, there might be 60 or 80 or 100 of these loans in the fund. And the fund takes care of the foreclosing and finding a new developer and fixing it up and selling it off. You don't even have to do it personally. And so I find that to be a pretty attractive asset class for 5% of my portfolio. But that's essentially what a hard money loan is.

That's a great explanation. I mean, I mentioned it on my blog or site, but my very first investment ever was in a debt investment just like that. I think I put towards $5,000 in a crowdfunding site that went towards funding a fix and Flipper. And I got, I think about a 12% return for your loan. And after that I was off to the races. I was like, this is amazing. And obviously, I mean, those returns have come down quite a bit.

It is exciting, right? I mean, people talk about stocks and they're worried future stock returns are going to be low. We're only going to get 6% or 4%. If you talk to somebody who's really pessimistic and I'm like, why would you take 4% when you can get 10% from a hard money loan fund? It just doesn't make any sense, number one, that that's all stocks are going to return in the long run. But number two, why you would invest there if that was really all you expected from it.

Now, you also mentioned that you invest in, I guess we call private real estate. Can you explain a little bit about what that is and what that means to you?

Sure. I like to use an analogy that there's a spectrum in real estate. And on one side of the spectrum is what people think of when they think about investing in real estate, which is buying the house down the street and going and finding the tenant and putting a tenant in there and collecting a rent check from the tenant each month and paying for all the expenses and covering the mortgage and keeping whatever's left. You know, essentially a direct real estate investor, where you're doing the management yourself. And on the far side of that spectrum is buying something like the Vanguard Real Estate Investment Trust index fund, where it's a totally liquid investment. You can get in and out of it any day. The markets are open, it's hyper diversified. You own hundreds and hundreds of properties across the country and you collect the rents from them. Nobody's ever going to call you about a plugged up toilet. There's no work to it at all. It takes 30 seconds of your time to buy this investment and sell this investment. And that's on the other side. And everywhere in between there's a spectrum. And I think it's important for people to find where on the spectrum fits them best. Because when you're out there managing the property yourself, finding it, managing it, selling it, et cetera, you are, in a lot of ways, it's a second job. And obviously if you are just buying real estate investment trusts, that's essentially takes very little research. It takes no work at all. But you do lose some of the benefits. You lose a lot of control, you lose some of the tax benefits. You probably give something up on the return side in exchange for that liquidity and that diversification. But there's lots of options in the middle, most of which are called private real estate. For example, let's say instead of buying the single family home down the street, you wanted to buy an apartment building in Cincinnati, but you didn't have enough money to buy the apartment building. It was going to cost 5 or 10 or 15 million dollars. And so you get together with 100 other investors and you each chip in 50 grand or 100 grand, and you buy this apartment building and you hire a professional to manage it and to run the syndication. And from the time you buy it until it's sold in five or 10 years, it's essentially mailbox money. At that point, they send you a check every quarter or every six months. Then when they sell it you get your share of the returns, and every year, any depreciation is passed through to you on a K1 that you can use to basically shield that income from taxation. So that's a syndicated real estate investment. It gives you a chance not to have to get 3am toilet calls and to benefit from some economies of scale and professional management and kind of turn it into mailbox money instead of a second job. And then if you want to go one step further and be a little bit more diversified, instead of going and buying a part of an apartment building, a syndication, you can buy into a fund with $100,000, and that fund might buy 15 of these different properties. And so you're a little bit more diversified that way. The funds can be a little bit of a pain, especially if they're in states where you have to file a tax return. And so they can make your tax filing situation quite a bit more complicated. But in exchange for that, you get a lot of diversification without as large of a contribution to the investment. And so when people are talking about private real estate investments, most of the time they're talking about syndications and funds.

I think one of the biggest. I talk about this quite a bit, but I think that one of the biggest challenges that people have or find fear that they might have in investing in these type of investments is how do they do the due diligence for them? Right. So how did you go about learning how to do some of the due diligence for these investments?

Well, this is the hardest part about it, right? I mean, this is the only part that's work. Because once you invest, you're stuck. Not only is there no point to doing any work, you can't do any work at that point. It's not like you can go over and fix it up. If you're in a syndication or you're in a fund or whatever, you're stuck till the fund's done. These are illiquid investments, and I think people need to really be wary of that and limit how much their portfolio goes into it. Because if your life gets really bad and you got to start pulling money out of that portfolio, this is a portion that you're not going to be able to pull money out of for years, most likely. And so I think it's right to do due diligence up front. Now. You can get very, very hardcore about due diligence. You can do background checks on every one of the principles of the company. You can fly out there and look at every property. You can sit down and interview these people and look them in the eye and see if you trust them. And then I think some people take the opposite approach where they say, well, maybe there's a scoundrel in here, but let's spread my bets wide enough that even if there is, it's not going to hurt me. And so they look at the minimum investment for multiple investments, and they spread their bets around. And so I think there's kind of two schools of thought there. Most people find themselves probably somewhere in the middle. For example, some of the people I've met, I invest with, I've talked to on the phone multiple times. I've watched what they've done for years. I've watched their prior investments perform. Others I've met personally and I've skied with them, you know, and so there's a lot of different ways that you can do due diligence, but at the end of the day, you've got to sit down with the paperwork and go through it and say, do I believe these numbers? Do I actually believe this fund is going to give me a 15% or an 18% return? Is this a reasonable thing they're proposing? Are there assumptions in the spreadsheets they give you? Are these reasonable assumptions? And then you invest, and at that point you're essentially hoping for the best, which I think is hilarious because so many real estate investors are always telling you, well, you guys in the stock market, you're just investing and hoping and praying, well, you know, that's the way a lot of real estate is too, unless you're managing it directly yourself.

Yeah, I think the due diligence is the most challenging part. And I do see people all across the spectrum. But when I talk to a lot of physicians and friends and colleagues who invest in these type of things, it's crazy to me how little due diligence they even try to do. And that to me has been something that has been a little bit of mission of mine is to educate and teach people about how to do the proper due diligence, at least at the basic level. Because you're right, once you're in, you're in and you're. You're along for the whole ride. And so at the very least, I've been trying to equip them with the right tools to do the basic due diligence. And that was kind of the reason behind we our course to begin with, called PASS Real Estate Academy. And I know that you've seen that. And really, it's kind of really equipped people to do the proper due diligence, and then once after that, it's totally passive and it's mailbox money, like you said.

Yeah, there's a huge need for that course, because you're exactly right, particularly people coming from another profession. If you're a physician or a dentist or an attorney or whatever. You know, nobody taught you in medical school how to read a ppm, you know, for a private real estate fund. So if nobody ever teaches you, you're going to learn the school of hard knocks by reading through dozens and dozens of them until you understand what they're saying and asking questions and googling terms. And so I think that's a great shortcut to just take your course. And at least by the time you get to the end of it, you'll speak the language of these PPMs and you'll know how to look at some and tell a few of the good investments from the bad investments and at least know what risks you're taking. But it's not quite as easy as a lot of people think it will be because there's no definites on it. You know, for one investor, one thing that they find in a PPM might be a red flag, whereas it might not bother another investor. And so it's really a little bit about matching the investment to the investor in a lot of ways. And I think that's part of it, too, is just finding the right fit. But one thing people just ought to realize is that most of these projections that the real estate investments put out there, whether it's a fund or a syndication, most of the time these are a little bit rosy. And so you ought to expect a little bit less than what they're promising in there. And I think if you go in with that mindset, you won't be disappointed nearly as many times. It's interesting. Even if you take an experienced operator and you go back and look at their track record, you know, somebody that really shoots straight, and you compare that to their pro formas, and about half the time they underperform their pro forma. You know, the other half they maybe beat it a little bit. But those are the really honest, experienced ones that have been doing it for a long time. Half the time it still underperforms the pro forma. So if you're expecting pro forma performance out of every single investment you make in private real estate, I think you're bound to be disappointed.

Well, I think the thing that people have to understand as well is that things happen in terms of timing, so they can map it out how they want. It's going to go this way for the first five years, six, seven. And this is how the rehab costs are going to take and this or that. But things happen. You know, there's a wrench in the plans and maybe renovation takes a little bit longer, it's a little bit more expensive. And then the cash flow, the first or second year might be a little lower than people expect. But they should know that ultimately that they should give it the full course. In fact, they have to give it the full course of the investment anyway.

Yeah, they don't have a choice anyway.

They have a choice anyway to see how it goes before they kind of are ready to blow up the whole thing. Right. So let me ask, do you also have any of your own direct investments or direct real estate?

Not anymore. I had like many, many physicians, particularly those who bought a house in 2006 or so, I had an accidental rental property. Basically our plan was to save up a down payment for a big fancy doctor house in this townhome we lived in while I was in the military. And so we put all kinds of money in it. We nearly had it paid off by the time we moved out four years later. The idea was sell it and use that money as the down payment on a big fancy doctor house. Of course, that was 2010, and those of you who were in real estate in 2010 know exactly what the issue was. You know, there was literally no buyers. I mean, for I could give it away, but at any price I could give it away at it made for a fantastic investment. And so I wasn't about to give it away at that price. And instead I put a renter in it and manage that from out of state for the next four or five years. And so not a great experience for me. Our returns were not great. From the time we made it an investment until the time I sold, the returns were fine. But if you look at the whole period we owned it, the returns were not great. And I ended up in the end with a pretty big write off for my taxes. So at least Uncle Sam shared the pain of those losses with me. But what I learned from that experience is that I'm not really super interested, excited, good at landlording, I'm not a good landlord. I'm way too nice to people. I don't actually enjoy the work. I don't have a lot of fix it skills. And so what I learned is this is not the way for me to invest in real estate. I still like it as an asset class. I Like its high returns, I like its low correlation with my stocks, I like some of the unique tax benefits of it. But I really don't like landlording. So if I ever do it again, it'll be local and I will have a manager hired that you know, that I trust and have a long term relationship with. I'm certainly not going to do it out of state again unless it's some sort of a syndication or a fund. But like I said, I was like many doctors, it wasn't bought with the intent to be a rental property from the beginning and so it didn't act like a very good rental property as you might imagine.

Just a little secret, I don't like being a landlord either, but I own a lot of direct ownership. I mean I direct properties myself. And the reason is that I love the tax benefits from it. I love the control. I love the control.

Oh yeah, the control is great. You can't beat it. And getting all that income covered by depreciation, it's wonderful.

Yeah, it's a huge benefit. I mean the good thing is a lot of people can get that depreciation benefits through investing passively as well too.

Right.

So that's.

Yeah, but you lose some of the control, right, because five, six, seven years into it, the syndication sells, you get your money back, the depreciation is recaptured, it's inconvenient to 1031, exchange it into another property and so you end up paying the taxes on it. Whereas when you're fully in control, when you truly are a direct real estate investor, that it's much easier I think to exchange it into another property and keep those tax benefits going. Exchange, exchange, exchange, die and get the step up in basis at death is really the real benefit of being a direct real estate investor. And if you are not willing to do that, you're going to give up a little bit on the tax side. There's no doubt about it, that is a very tax efficient way to invest.

Yeah. And one of the best ways that I found to get around this whole landlording issue is yeah, you just gotta get great management. I mean that takes a little bit of trial and error. But once you get great management in place, it's become quite passive. People don't believe me, but you're absolutely right.

The key is great management. The difficulty is finding a good manager. Because here's the problem with the whole property managing industry, right? It's an asset gathering industry is the goal. The more properties they are managing, the better they do. But there's not a Lot of incentive to them to manage the properties well because there's so many people looking for management. There's always somebody else coming in the door. And if they manage a property well, they get a few dollars more. But in reality their time is better spent gathering more assets and bringing them in the door. And so the whole way the industry is set up is not great for landlords. That doesn't mean there aren't good property managers out there. And some people take a long term perspective on it and really do a good job running their business, I'm sure. But I was surprised how difficult it was to hire good management. I think that's a little bit harder task than a lot of people assume it will be.

Yeah, it definitely takes a lot of trial and error. And one thing I've learned is that you can't just hire someone based on reputation, let them go and not follow up on them and do your due diligence as well and expect them to do a great job. You have to be on them a little bit in the beginning, especially just like you would with any contractor, right?

Yeah. You still have to manage the manager, at least to a certain extent. So how many managers did you go through before you felt like you found a good one?

Well, it depends on where I'm very comfortable investing out of state. And I have properties probably at this point in four other states in four different areas. So I have obviously different property managers for each one of those. I'd say out of three out of the four, I'm on my second and the fourth still in my first, so. But again, that one I just bought, so that one, I just closed that.

About two weeks ago. But I think you're demonstrating my point that it's not necessarily easy to find a good manager and it's going to take some work and if you find one man, hold onto them.

Yeah, but it's definitely worth it. It just makes it that passive income that we like to talk about. Now, how would you say, I think there's a lot of physicians out there, high income professionals that say, oh, you know, I don't think real estate makes sense for me for this reason or that based on what you've seen, especially when they hear financial advice from other people out there, it seems like it's only applicable for a very, very, very small portion of the population that it makes a lot of sense for. And I think you touched on it earlier on the podcast. But what would you say? I mean, does it make sense for a lot of physicians and high income professionals at least to consider and look into real estate. And could it be the vehicle to get them where they want to be?

Oh, I think it's fine to consider it. There's no doubt whatsoever in my mind that you could invest 100% in real estate and be perfectly fine. You know, you do a good job at it and you put enough money into it, you could invest in nothing but real estate and be fine. So there's no doubt in my mind that that's a viable path. However, I do not think it's the easiest path for physicians and probably not the default path. I'm amazed that I go and give a talk. I spend an hour talking about how to set up a portfolio, how to choose a handful of index funds, how to rebalance the portfolio. And I get to the end of the presentation and the questions I get about it are, not now, what do you mean by rebalancing? Or is there an easier way for me to do this? You know, and this is a very, very simple way to invest that I've just spent an hour talking to them about. And people just aren't interested. They're not interested in getting into their investments. It's not only do they not see it as a second job, they don't even see it as a hobby. If it's a chore, and an unenjoyable one at that. I don't think for that person that real estate is the answer, because I think for real estate, it may not be a second job for you, but it's got to at least be a hobby. If you are not interested in this sort of stuff, it's probably not a great idea for you to try to dabble in. I think what happens there is you end up with pretty crummy returns. I think if you're going to do it, you got to do it at least at hobby status. And if you're not going to even spend a little bit of time on your investments, you're probably going to be better off getting some professional help with it. And what that usually means for most professional advisors, even those who give good advice at a fair price, that usually means you're going to end up in a handful of index funds that gets rebalanced periodically and that'll provide adequate returns. If you work a reasonably long career and you have a reasonably good savings rate, that's probably going to get you to a comfortable retirement. But if you're trying to fire at 40 or 45, or you're trying to build eight figures of wealth, or you really are willing to spend some extra time in on your investments. There's no doubt in my mind that some of that time is probably best spent doing things like real estate or small businesses because you can get so much more bang for your buck doing that than you can trying to pick stocks, which is pretty well shown in the academic literature to be a loser way to spend your time. If you're going to invest in stocks, you're far better off just buying index funds and going doing something else with your time, whether that's real estate investing or working on your primary business or starting a side gig or whatever.

You know, a lot of people that are interested in investing in real estate, oftentimes they're out there and all they hear is kind of the rah rah, the benefits of real estate and how great it is. And I've tried to be as balanced as I can with my writing. But I know that you are also great at pointing out or at least recognizing a lot of the mistakes that especially physicians or high income professionals or investors make when they try to invest in real estate. So could you mind just taking a few minutes and sharing with us a couple of those mistakes that, you know, people really need to avoid?

Sure. I think people just need to step back and realize that there are significant pros to investing in real estate. There are also significant cons. And if you don't recognize those pros, I think you're going to get yourself into trouble. Right. You got to realize the returns on real estate are generally high and that is a huge pro to real estate investing. Here's another asset class besides stocks that has huge returns benefit number two is the relatively low correlation with the stock market. Again, here's another market with high returns, low correlation. Adding those in a portfolio, you get better portfolio performance than you would get from just one or the other. And then the third thing is the tax benefits, particularly depreciation and exchanging, which are huge tax benefits. There is no equivalent in the stock market, mutual fund market to these two tax benefits. And so I think you need to recognize that there are big benefits there. But when you go to a real estate conference, when you read a real estate book, when you go to a real estate blog or a website, there is a lot of rah rah rah. You can do this motivational stuff. And the reason why that is there is because it's a lot of work, you have to be motivated to do it. I do this all the time. I sit down with a nurse at the hospital and I help them put together a portfolio in their 401k. And I can teach them a lot of stuff in an hour, you know, between patients, when there's some downtime in the er and we can put together a very sophisticated, low cost, broadly diversified portfolio in just a few minutes. There is no way to do that in real estate. There is no way to do it. It just takes more time, more effort, more work, even if you do it, you know, quite passively. And so I think that people just need to be realistic about that and realistic about the risks and the fact that in a lot of ways, you're much less diversified when you're investing in real estate. But that doesn't cancel out the pros. The pros are still there. You just need to be realistic about both the pros and the cons.

Well, Jim, thanks so much for your time today. I really appreciate you coming down here and talking to us about your portfolio, your experience. If people are going to look for you, where's the best place for them to find out more about who you are, what you do?

I think the hub of everything is found at www.whitecoatinvestor.com. great.

You can check out his podcast there. You can check out his Facebook group, White Coat Investors. He's got a conference coming up, which I'll be speaking at, as well as several books that you can also get to learn more about finances and how to keep more of your money. So anyways, thanks so much, Jim. Thank you everybody out there and see you guys on the next show.

Thank you, Peter. And it's wonderful to be with you and your audience.

Enjoy the show. Let me know by dropping a review in the podcast app you're listening to us in. And if you haven't already, make sure to hit subscribe. Are you part of our community yet? Join thousands of physicians who are also on this journey to creating their ideal lives through multiple streams of income. You can join us on our Facebook group, Passive Income Docs and you can always learn more at our website, passiveincomemd.com thanks again for allowing me to be a part of your journey. See you next time. Sa.