The Time-Starved Doctor’s Guide to Building Wealth Passively Through Real Estate

A physician reached out to me recently. He is doing great in his practice, bringing in a bunch of money, but like me, he worries about the time when he won’t be able to have the same income. He might get sick or injured, or burnt out, which is such a big problem in our line of work. Like me, he realized that he needed to be ready.

I had to tell my colleague all the first steps: start by saving money, making a budget, and decreasing expenses. He argued that he simply didn’t have enough time. I countered that he needs to make time. Everyone has the same 168 hours in a week. We just prioritize them differently. He would need to make a sacrifice somewhere else to get his life in order. Then, he would find investing to be simple, allowing him the comfort of knowing he had planned for his future while allowing him to continue his important day job.

At that point, I could tell him about the options for hands-off investing. These options are more passive ones in real estate investing. You won’t find a recommendation to purchase your own apartment building here. That takes too much time. They range from very low work to higher work. They also range from lowest return to highest return in general.

Passive Real Estate Investments

  1. Stocks. My colleague was already in stocks. He had a 401(k) through his employer. I advised him to max this out. He needed to look closely at where the money was going. He would have to put more into real estate funds like REITs and ETFs. The custodian of these funds will have limits on what you can do.
  2. Self-directed IRA. These are ways to get the tax benefits of the 401(k) but having actual control over where the funds go. You’ll still need a custodian, but now you are the one making the decisions.
  3. Crowdfunding. You can invest money in a business that brings investors together with operators and pays out dividends based on how well the operators are doing. These investors act a little like a bank. There often is some control over what types of operators or deals are invested in, but it’s a set it and forget it kind of thing usually.
  4. Real estate funds. These are pools of money run by one company with the express purpose of investing in real estate. Put your money here and usually there is a guaranteed (read the fine print) level of return. You don’t get to determine what deals they invest in, so there isn’t much work after initially vetting the company.
  5. Syndications. You can invest passively in syndications. Here, a company finds a deal and puts it forth to investors, who can invest in the deal. This will take more work as each syndication needs to be evaluated to see if it is right for the investor. Once the investment is made, it is hand’s-off. I run these kind of deals.
  6. Debt investments. You can become the bank and lend money. These are called hard money loans. It takes a while to get connected with people needing the money. Each deal is a one-off loan, so takes more work to get up and running and then underwrite each deal. This is the one exception as the return is fixed and so might not be as high as the others.

If you want more detailed information about real estate investing, check out my course, Getting Started in Real Estate Investing for High Performers

Dr. Equity