Dr. Cherry Chen, the Real Estate Physician discusses this potential source of stable, predictable, passive-income as an alternative to investing in the stock market. We discuss how she made her foray into this field, the tax advantages of real estate investment, why she chooses multi-family commercial real estate via syndication over crowdfunding or individual units, and how picking a syndication is like picking a doctor.
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Unknown Speaker 0:03
Welcome to the physicians guide to doctoring A Practical Guide for practicing physicians. We’re Dr. Bradley Block interviews experts in and out of medicine to find out everything we should have learned while we were memorizing Krebs cycle. The ideas expressed on this podcast are those of the interviewer and interviewee and do not represent those of their respective employers.
Unknown Speaker 0:27
On the previous episode, we spoke to the frugal physician about how to save more money. On today’s episode, we talked to the real estate physician about how to invest that money. Dr. Cherry Chen is a real estate investor who has the real estate physician com website and she tries to educate physicians as to why real estate is a reasonable investment and a good alternative to the stock market. We talked about the different types of investments and why she chose commercial multifamily is her motive investment, and why she finds this to be the least risky of all the different types, as well as the different ways to invest between owning everything yourself syndication, crowdfunding, and why she chooses syndication, and then how to identify a syndication that you can trust and why it’s like finding a doctor. Welcome back to the physicians guide to doctoring. On today’s episode, we have Dr. Cherry Chen. She is a practicing physician in Texas, who now spends a lot of her time investing in real estate and connecting other fellow physicians with that method of investing. So Dr. Chen, thank you so much for for joining us today to educate our listeners.
Unknown Speaker 1:41
Yes, I read. Thank you for having me on your podcast. I’m really excited to be here and looking forward to our conversation.
Unknown Speaker 1:49
So just to get to know you, where did you do your training?
Unknown Speaker 1:54
I trained I went to medical school at Texas a&m. I’m from the Dallas area here in Texas. And then I did my internal medicine training at OHSU in Portland, Oregon. And now I’m back in Dallas, where I’m from in a practicing internal medicine hospitalist.
Unknown Speaker 2:11
So are you practicing full time?
Unknown Speaker 2:13
Yes, I’m practicing full time as a hospice. That’s correct.
Unknown Speaker 2:17
So the real estate thing has, I guess, become or at least started out as your your side gig. So you’re doing this on top of practicing full time. That’s, that’s, that’s pretty impressive.
Unknown Speaker 2:28
Yeah, that’s, I mean, that’s correct. I’m kind of lucky in that way that a hospitalist, you know, schedule kind of affords you, you know, 15 or 17 shifts a month. So there’s definitely time outside of that. And you’re right is kind of started out, as you know, definitely my own personal investment for myself and kind of just grew organically as I talked to other physicians. So that’s where I’m now.
Unknown Speaker 2:52
So how did you get there first, tell us how you got started in real estate and then where you’ve taken it from your own personal investing to expand it to offering to others?
Unknown Speaker 3:04
Sure, yeah. So I would say, you know, my story started about, you know, three to four years ago, as far as, you know, investing in real estate, that’s kind of when I, you know, finished my training and started making more money as an attending, in kind of, I think, as we’re all aware, we didn’t get any, you know, investment or financial education, through our schooling. And so, as I made more money, you know, it really was I put a concerted effort into, you know, wanting to see how my money could work for me. And in the financial world, the fancy word is you know, cash flow means just means how much money you keep in your bank account at the end of the month. Because I think when we graduate you know, we think all we make more money, we have high income as physicians, but it’s not how much you make, it’s how much you keep and that was a new concept for me. As I kind of started exploring, well, what makes a good investment? And it was through that process in that context of, you know, being more proactive about my finances now that I’m out of training. And in that context, I started exploring what other options there were for investing. And that’s how I kind of stumbled upon real estate. What do you mean, stumbled upon it? Sure. So I think, you know, for most of us, and for me, we had investments in my 401k, or stocks and bonds or your IRA account, that was kind of basically what was really kind of thought the only option, because it’s all we ever heard or heard about other people investing in and nobody talked about, oh, I invested in real estate, you know, so, for me when I looked, you know, I had certain criteria that I thought would be important, and it wasn’t like I had, you know, like my A to Z criteria, the sign from the very beginning. I kind of as I was exploring other options, you know, I realized, you know, what would make a good investment. And you think about investing in the stock market? Most people, you know, I don’t know, it’s kind of the de facto or default. So we don’t really consider it as a risky investment. But, you know, when we talk about alternative investments, which is what real estate would be considered, you know, a lot of people will say, Oh, isn’t that risky? So really depends what what you mean by risk, I would say, the differences being in Wall Street, you know, you could wake up tomorrow, and it’s, you know, the whims of the market. So it’s definitely volatile and unpredictable. And it doesn’t really, you know, put money in your pocket at the end of the month, you know, so those two two factors being the stability and predictability of what an investment I think should be and it bringing cash flow, meaning your money’s actually working hard for you, independent of your Time real estate was able to do that when I kind of explored and fit my criteria in that way. So I would say stumbled upon in terms of, I didn’t really go out seeking a knowing real estate was a good option in that way.
Unknown Speaker 6:16
So I guess more discovered the then then stumbled upon because it looks it sounds like you did a lot of research in order to arrive at this conclusion.
Unknown Speaker 6:25
Correct? Correct. I am an internist. So it’s like I have to know everything. So I, you know, Google till the ends of the earth, did all the try to educate myself as much as possible. And that’s kind of how I came to define my criteria. On what it right.
Unknown Speaker 6:42
I think the risky kind of like, when we have our patients, they’re nervous about something. And a lot of times they’re nervous about it, because they don’t understand it, or you know, they don’t know what the outcome is going to be. And so it’s the not knowing that makes you nervous. And so what you did is you mitigated that by educating yourself. When those people are saying, well, isn’t it risky? It’s a lot. Well, you know, the it’s the it’s the lack of knowledge that breeds anxiety. So, but historically is are you aware of any comparison of the market to the real estate market like the the stock market to the real estate market?
Unknown Speaker 7:19
Right, I would say I mean, real estate is really broad. And we’ll probably go into like, you know, the different categories of it later. So when I talk about my investments, and the the niche I focus on is called commercial real estate. The most basic example being like an apartment complex commercial grade, meaning it’s greater than five units. And so it’s a big apartment complex, and they’re that so that’s kind of the investment vehicle I came across that I thought met all the criteria. And so that’s kind of where I focus on
Unknown Speaker 7:55
just a historically commercial multifamily real estate tends to be fairly stable and just for the listeners, because I found this confusing commercial sounds like nobody’s going to live there. Right commercial property sounds like something where there might be real retail stores or industry, but commercial multifamily specifically refers to homes that contain greater than five units
Unknown Speaker 8:23
correct and for that’s, you know, apartments it doesn’t necessarily be homes there are things like you’ll see you know, your self storage facilities that are in your neighborhood. Some places have mobile home parks, those are all considered commercial because it’s generally greater than five units. But for most of my for most of you know, the talk will be talking about apartment complexes because I think for many people, when you think about real estate, you think, Oh, well, there’s a single family rental I wanted to go you know, buy a condo and rented out on Airbnb or something. So there’s some distinct differences when you go from A single family to a commercial grade multifamily apartment property.
Unknown Speaker 9:05
And the number there is the magic number is greater than five. So if it’s anything less than five, you know, you’re you’re dealing with maybe a duplex or an individual apartment or an individual house. And then just for completeness, because we’ve spoken about this before, you can also invest in industrials. So like a an office building, or you can invest in a retail establishment and not knowing again, I don’t have any full disclosure, I have zero Real Estate Investments right now. I would think that retail might not be the safest place to be considering how much people purchase online and the direction that that’s, that’s heading.
Unknown Speaker 9:51
Any thoughts on it?
Unknown Speaker 9:52
Yeah, you’re correct. Those are all you know, you know, real estate, commercial real estate, investment options and You know, primarily why many of the commercial real estate is focused on apartments and like you said, Because will retail so many people are buying online? Well, there’s always going to be the demand for housing. And now there’s a demographic trends where, you know, Millennials will and they want the mobility and it’s not back in the day where Oh, well, you had an employer for 30 years. And so people like the idea of being mobile and not, you know, saving up 30 years to buy their one home that they’re going to live in forever. So multifamily as far as an investment vehicle has been really popular because it’s kind of intuitive. You understand it, people need a place to live, and they pay rent and what expenses you have at the end, that’s your income for the property.
Unknown Speaker 10:49
So why do you find commercial multifamily to be the one that you’ve chosen as the the safest or most advantageous investment? Yeah, I think not to be redundant. You just mentioned why you think it’s safe because people are, are, are mobile, and they, they want to be mobile and they want to be able to move around. And also people are getting married later and having families later. And so they’re going to be what? Spend more time being mobile I’m involved had between all of our schooling tons of me. Yeah, but but financially, what has been your experience and what has driven you towards that investment?
Unknown Speaker 11:34
Right. So I think you know, so for me, my criteria is one being, I think a good investment should at least be somewhat stable, predictable, and have you know, cash flow as an investor, I want my money to work for me and give me returns. So you know, just comparing it simply to for example, if you got a single family rental, versus an apartment complex, you know, like a one door versus in 100 unit, apartment calm. Plex, the, you know, if you’re a tenant moved out tomorrow from your single family home, you would go from, you know, 100% occupancy to zero, you know, in an apartment complex if I have 100 units and two people move out, I’m still at 98% occupancy, right? So losing those two tenants, I might have a slight decline, but I would still expect a pretty stable return of my investment. As an investor who has, you know, invest into the property. If you have your single family, your tenant moves out then your cash flow is basically zero, right? And every month that you’re spending to find a tenant is is is zero income, or is the 100 unit property use it?
Unknown Speaker 12:47
Yeah, because you’re still spending money on mortgage repairs, upkeep. Yeah, all the all everything that goes into it,
Unknown Speaker 12:54
right. And so in your apartment, you still have 98 tenants paying you rent, you know? And so the basically that the main advantage of having multiple units is you have the economies of scale. And you can leverage that into into a business operation. And for I think for physicians and investors, the the the nicest thing about that is I don’t have to be the landlord, and I can pull my money together with other investors into a business. And that gives me you know, return on my investment.
Unknown Speaker 13:28
Yeah, we talked about the desire to have passive income, right? And if you own an apartment, and you are the landlord, that is not passive. That is the opposite of passive because then all the upkeep and management and finding new tenants and, and even if you outsource that labor, which actually you can do, I think it bears mentioning there. I think it’s called turnkey investments where you just get a management company and they try to flip a house and they can, they’ll manage the property and they’ll flip it and they’ll You use your money to do that. You still have that higher risk of what you’re talking about. If that goes unoccupied, then you are. It’s a losing proposition. So. So there are a bunch of different ways that you can invest in these commercial multifamily buildings. You can own it yourself, which seems unlikely on a physician income, even if you’re super successful plastic surgeon or neurosurgeon
Unknown Speaker 14:29
Yeah, I mean, even for anybody it’s Yeah,
Unknown Speaker 14:32
you’re not buying an apartment building, right?
Unknown Speaker 14:37
Then you can, there’s there’s syndications, there’s crowdfunding and you can still invest in real estate in the market. They’re called reads Rei T, but so owning yourself seems pretty straightforward. If you’re not doing just buying yourself or finding one of those turn keys, which might be a different episode altogether. There are syndications and there’s crowdfunding You talk about what both of those are.
Unknown Speaker 15:01
Yeah. So syndications is is is the way I invest in these real estate opportunities and for people who have never heard the word because I had never heard of that word, you know, but it’s just a you know, the fancy word in this real estate world where they’re pulling multiple investors or multiple investors money into a company that would purchase the apartment complex because like we said, most people do not have $10 million to go buy an apartment complex all on their own. So in a syndication, the way it works is you have these deal sponsors who who will talk to the brokers who will go look at the apartment complex, who will verify the rent roll look at all the financials and and find an apartment complex they think would be a good investment. And then they they the deal sponsors then they need to find the money in order to purchase the complex. Now in the syndication commercial world, it is still 75% leverage meaning the bank finances and is the biggest partner in the transaction. But the the deal sponsors still need to find 25% or so of the money. And that’s when they would go to, you know, for example, me of an investor who’s interested in real estate, but I don’t want to manage and I want to be able to be part of a bigger apartment complex. So then they would go to investors and to pull the money together to syndicate to complete the transaction. So that’s a syndication where one you as a passive investor are or limited partner in this in this transaction, get to reap the benefits of the investment and share in the profits and you are not at risk of you know, you’re not signing the loan, you’re not doing all the all the work of managing the property, and so you’re passing Some investor, you kind of basically collect what they call mailbox money when the apartment makes money and they distributed to the investors. So in a syndication model, you actually have direct access to the deal sponsors, you can communicate with them, you can ask them questions, you can verify things that the crowdfunding model is similar in that, you know, you still have these deals, sponsors who go out to look for deals, but they’re not coming directly to the passive investors, you’ll see, you know, crowdfunding websites, where it’s just, you know, a website with the platform of like a multitude of investment opportunities. So you’re not directly talking to the sponsorship team. You’re just kind of browsing, you know, a whole bunch of opportunities and seeing Oh, well, hey, this says there’s a 10% return. Well, that looks good to me. So it’s a more indirect way to invest, where you don’t have that direct relationship with a sponsor, so there’s no right or wrong way. Everyone’s investor, you know, trust or risk profile is different. The The only other major differences, the crowdfunding has a lot less minimum investment where you’ll see on these sites where it’s 1000 or $10,000, to invest or syndications, where at the minimum investment is usually about 50,000. So that’s also another major difference.
Unknown Speaker 18:26
So when you’re choosing syndication, because that’s typically your method of investment, how do you vet them?
Unknown Speaker 18:35
Yeah. So it’s, you have to do a syndication. You have to know the sponsors, right? That’s feeling where you would hear about the opportunity to invest. It’s not, it’s not advertised. It’s not on the crowd format site. It’s not you know, Wall Street where you just pick something. So there’s multiple ways investors can go to their local meetup local apartment. meetup where these deal sponsors will be at, and you can meet them personally personally like that, or you meet somebody else on the team and invest that way. And or that’s, that’s really the only way is to meet them, either directly or indirectly, to find out about the investment.
Unknown Speaker 19:19
So, when we first met, I asked you a question, and you had a very interesting way of answering it. And, you know, the question was, how do you know that you can trust the syndication? And you said, the same way that you can, that you know, that you trust your doctor, right, like if you’re, if you’re trusting the syndication with upwards of $50,000, right, your your, your analogy was, well, you’re trusting your physician with your life. So, you know, this is a lot of people find me by going to their town Facebook group, you know, they’ll go to the Facebook group and say, Hey, does anybody know good ENT? And sometimes my name pops up. And so they come and see me And so I guess you’d find your syndication in a similar way. Except that you could have your I guess, could you could you have your accountant look at their books and make sure that that, you know, everything that they’ve done with previous deals was all on the up and up and you know, is that type of stuff, the type of thing that they make public to you,
Unknown Speaker 20:22
right? Yeah, the physician patient analogy is something, you know, I was trying to find like a good, like a good, pertinent way to explain it. It’s like if you were the investor talking to the deal sponsor, as opposed to physician patient, right. And, and we’re managing people’s health, you know, and versus they’re managing investment, but you’re putting in significant amount of capital into the investment. How do you trust that’s like one of the biggest, I think, barriers or issues we come across when you come, you know, come across an investment opportunity. And so, the you know, it’s it’s just like how We help patients Yes, they, you know, like you said indirectly they see you on Facebook. Well, they see that you want to, you know, XYZ school you went to this residency training you are accredited at this hospital. So indirectly you have you have this, you know, track record or reputation. In the same way these deal sponsors, they have prior deals they’ve done, they have, you know, other complexes they’ve owned, and you can review all of that and you don’t even have to go through your CPA The beautiful thing about the syndication is, you ask them directly, because you are going to be a potential investor, you have the right to ask all these questions and they that you you, you ask them directly you can say Well, hey, you know and sponsor you, you projected that it’s, this will return 10% next year. Show me how you got there, you know, or show me why you think this apartment can rent for thousands dollars a month rather than maybe 800. You can ask them all those questions.
Unknown Speaker 22:07
But if they had, if they let’s say they put together a building, and it was doing poorly, right, right, they wouldn’t want to tell you about that. Is there a way to access that type of information
Unknown Speaker 22:18
and a way to access that? There is no you know, database where you can put in Oh, sponsor XYZ name, and, you know, all their deals would pop up. Now, most of them will have websites where they put in all their properties that they’ve, you know, acquired. So, that’s the way to go to their website to say, hey, well tell me about this property and what’s been going on, you know, and, you know, another way is, you know, invest just like patients, you know, they say, Oh, well, you know, Dr. XYZ referred to me all my friend came to you and they really, you know, loved us their physician. So that’s how I found out about you. You can talk to other other investors that have invested in them, they can say, Well, hey, even they treated me really well, or they did not treat me well. And so there’s other other investor testimonials you can do too. So, I think trust, you know, in this way, it was a question for me as well. But, you know, one that I could verify their records, the fact that the apartment is a business, they can’t make up these numbers, they look at the financial statements, they look at the income and expenses, and those are things you can ask for and verify yourself. And so that for me, and looking at things, a very objective way, you know, so that kind of helped me overcome that. The trust issue,
Unknown Speaker 23:45
can you do that with crowdfunding
Unknown Speaker 23:47
with the ground funding, I do not believe you can do that. I don’t, I’ve never invested via crowdfunding. So I don’t know this step by step process of the way that works, you know, so I don’t want to to misguide That the listeners because I’ve never done it step by step myself.
Unknown Speaker 24:05
Okay. And I think that’s that’s fair and thank you for for for admitting that that’s that’s much appreciated by by everyone for crowdfunding though I just and correct me if I’m wrong and you know you’ve never done it but I think they can advertise, we’re syndications can’t and so syndications thrive off of their reputation and these introductions right you, you find syndications that have done well you introduce them to other potential investors with crowdfunding, they have these websites and they can just advertise and you because you can find them this way. They’re not they don’t need that word of mouth reputation. It’s kind of like, I guess. Actually, I’m having trouble thinking of analogy, I guess as physicians advertising versus just just you know, before the days of advertising, there was just word of mouth. And if you had some bad outcomes, then that would get around and then you know, you’re, you’re kind of sunk it, you know if that’s true of crowdfunding.
Unknown Speaker 25:09
Yeah. So the only one exception to what you said is, you know, through syndications, you know, the sponsors there through a syndication, there’s two ways they can raise money. You know, like we said, The first way is to where they, you, you they directly know, the investors, you know, through their circle, or the other way that they can legally advertise is they they made what we call a 506. See offering in that just so is an SEC term. And that in that way, when they are only advertising to a specific investor, what they define as an accredited investor, then they don’t have to have that relationship or know you. Exactly. So there’s that one exception,
Unknown Speaker 25:59
okay. You’re making a pretty convincing argument for investing in commercial multifamily real estate through syndications. But I think there’s more of an argument to be made, right in terms of the tax advantages of these investments because, you know, high income individuals pay a lot in taxes, although our we’re not going to get political. But our current president and his son in law involved in real estate, turns out, don’t pay much in taxes. And that’s not you know, I, again, political, that’s not through tomfoolery, or trickery. Some of it may be, but it seems that it’s on the up and up because of how real estate operates. That somehow you can protect your investments from where you protect your yourself from taxes. So, so can you talk about some of the tax advantages of investing in real estate.
Unknown Speaker 27:03
Yeah, I be you know, obviously not an accountant and so I don’t know the exact ins and outs but on a very you know a basic level that I understand it as an investor myself is that because if you’re investing in real estate and real estate you know in the government’s i is something that they want to promote investors to invest in because one, you know, we talked about it provides housing and provides jobs, it provides for growth in a city in a community and they want they want investors people out there to provide housing for these people. So, government provides incentives to promote activities that they want to promote whether we believe it or you know, feel for or against it. So the the advantage of investing in real estate which people calling say, you know, you can have a Tax Free income. And that’s coming from as a real estate you get depreciation of the property of the building of the equipment. And so when the government IRS allows the accountants or you know the business to take that depreciation of these properties and buildings over time, that often will offset the income you get from your investment in. That’s how, you know, they come up with the term tax free income.
Unknown Speaker 28:34
This is how I’m understanding depreciation. And correct me if I’m wrong, you buy a building, kind of like buying a car, as soon as you drive it off the lot, right? It starts to lose value, because the building is aging. So it the building is losing value, it’s depreciating. And so it’s almost like if you lose capital losses in this in the market, you can deduct your losses. You now have capital losses because your building has depreciated. So even though you built the building a year ago, it’s a year older, and it’s depreciated and and so that capital loss can be deducted from your your taxes. Correct that would be creationist.
Unknown Speaker 29:19
Yeah like the building and and so over in commercial real estate the IRS allows you to kind of deduct that over like a, you know, the cost over 27 years or something like that. So, you know, you know, just think about how much money that is or an apartment like 100 unit apartment complex, you know, and so that depreciation is often much larger than your income that you get as an investor. So, whatever passive income you get, if that’s less than the depreciation of the building, then you don’t pay taxes even though you Have earn some income correct on your investment.
Unknown Speaker 30:03
So wait, let me see if I understand this because I, I used to live in Long Island City, which is right across the East River from Manhattan, there are some gigantic, fancy buildings there that might have 800 units. And I’m just making up a number here. Let’s say one of those buildings is worth 100 million dollars. You’re saying, in the eyes of the government, after 27 years, that building is worth zero, so it could so it has depreciated to nothing? Oh, so
Unknown Speaker 30:30
I didn’t mean it in 27. It’s like, so let’s say for instance, and these are just totally made up numbers, right. Like, for instance, this 100 unit complex building, the building itself, you know, is a million dollars. You can’t really say I’m going to take a million dollars on your, on your text form this year, you take that million you divided over a 27 year term. And that’s the amount of You know, you can legally maximally deduct on your on your tax form. That’s what I meant by the 27 years not not saying the what you were talking about. Does that make poker? Yeah,
Unknown Speaker 31:11
yeah, that definitely makes more sense.
Unknown Speaker 31:12
And so of course, I’m these are just totally made up numbers. But on a general basic level, that’s kind of what people mean when they say, Oh, well, there’s, there’s the tax advantage of investing in real estate. Because if you through through your wall street through stocks and bonds, any gain is, you know, taxes, your ordinary income, which is a lot for many of us. And so and that’s also the same if you mess and we’ll say through rates because it’s part of Wall Street. So that’s the tax advantage of investing in real estate in this way.
Unknown Speaker 31:47
But have you had any experience with your buildings being financed by the banks and in terms of non recourse loans? Have you been in that situation?
Unknown Speaker 31:57
Yes, and actually, you know, the, I would say probably I want I want to say 100%. But most of these majority of these properties are non recourse loans through the bank who finance about 75% of these transactions because that, you know, and that’s kind of another layer of, you know, if you want to say how do you vet an investment because, you know, banks are conservative and they, they’re out to make money. And for them, they see apartments or these properties as, quote unquote, safe investments. And so, they actually finance about 75% of the purchase price when you when you purchase a building like this, so, you know, they do their own underwriting, they do their own analysis, and they come up with what the what the purchase price or the value of the building is worth themselves. So they these properties are majority non recourse financed.
Unknown Speaker 32:56
So if the whole thing goes under, you don’t want this Just to clarify, this is what non recourse means. If the whole thing for whatever reason, like, let’s say, right, some of us believe that the market is a bit frothy right now and we’re at the precipice of potentially something bad. If that happens, and and the building doesn’t get built, then what happens to that 75% that the bank has lent us,
Unknown Speaker 33:25
right. So I would say so, the, you know, the, so we talked about non recourse, the other side is recourse loan, you know, so, what non recourse means, like you said, as well then we don’t have to hit you’re not liable to the bank for this loan. The only one exception in is that if for whatever reason you’re committing outright fraud, you know, or it’s called what they call the bad boy carve out if you’re not acting, you know, in quote unquote, normal behavior or committing fraud then that kind of cancels out the Non recourse, the not then you would be held liable as in that you being the deal sponsor not you as a limited partner. Because
Unknown Speaker 34:10
the loan I think if you do something to the property as well like if you something toxic or something happens on the property, something environmentally unsound happens on the property. I think that’s another reason.
Unknown Speaker 34:20
Yeah. So there’s there’s certain reasons but those are, you know, far few in between the environmental toxins is if if the bank’s found out about that, and that will be definitely before it was even an investment available to investors at the bank’s saw that and they would not lend to purchase the property to begin with. And so that’s probably what you’re talking about, okay.
Unknown Speaker 34:44
Well, if I had a friend who was investing in their 401k, and maybe they were trying to dabble in the market, try and beat the market which we know may be done. What would you say to to send and maybe just had some finances that were being managed by a financial advisor that they found? Because they they bought them lunch at when they were a resident and gave a talk that sounded good. had nice suit. Yeah. What would you say to that friend who feels that their money is as safe as it can be in the market with this educated and informed financial advisor to get this person to start investing in real estate? What’s your what’s your elevator pitch to that person?
Unknown Speaker 35:35
Um, I don’t know. So, I don’t I don’t have an elevator pitch. And I say that because one, I’m not, you know, I don’t ever want to convince somebody to invest in commercial real estate and, you know, we can talk about all the benefits and, and why I thought it was a good investment vehicle, but, you know, it’s, it’s like, you know, if your friend went to advisor it’s like, nobody really understands your financial situation, and in what your your financial needs are more than yourself, you know, nobody cares more about your money more than yourself. And so I really would say, you know, what I’ve always said to you know, other friends or families, colleagues, what, to me, the most really important is that, you know, what is your investment philosophy? Or what is your criteria, because one, you know, your friend might be right, and you know, him going to his advisor is probably the safest because maybe his or her goal is to say, I just want enough for retirement. And if I put a certain percentage of my income every year into, you know, quote, unquote, stable, safe mutual fund, I will have enough for retirement correct and he wouldn’t need to look outside of that vehicle. But, um, you know, for me, and I think for most of us, is that you, we don’t want to work forever, right? At least I don’t know forever. I Love medicine and I’ll be in it for a very long time but I want the option of you know, if I needed to for some unusual life circumstance, you know, with family or friends, my loved ones that well maybe I can work fewer clinical hours or we just want the option to have more non clinical time to spend with our family so that’s why I real estate was really attracted to me because one you know, quote unquote, predictable income in the cash flow. And you don’t get that no matter how much money you earn. If you don’t keep that in one if you’re really good at saving but to you’d have to work forever and, and that’s why I’d say you know, if real estate has the advantages and the criteria if you’re looking for passive income so that you can have the option to choose to work last should you choose to,
Unknown Speaker 37:56
so you get your investment, hopefully appreciates because, you know, the value of real estate appreciates, but then you’re also getting income through rent. So, you know, you’re, you’re in the same way that that your investment hopefully in the market appreciates your investment in the real estate appreciates, but you’re also getting that that rent. So that’s, I think important to delineate that specific.
Unknown Speaker 38:22
Yeah. And so certainly the appreciation if you look at all these for you know, is the syndication investments, it’s the good deal sponsors will not, you know, hope for that, like, you know, you they don’t anticipate that it’s like an extra bonus. So what are
Unknown Speaker 38:38
some of the resources that you consume or that you would recommend that our listeners consume? If they want to start get it like you said, you Google to the ends of the earth so that you could be more comfortable with this. Save us the time of googling to the ends of the earth. What are either the resources that you consume or the resources that either a podcast that you listen to aside from mine Of course, or, or a book or a blog or something that we can read to better educate us efficiently. Aside from I think every real estate podcast with a physician I’ve heard mentions Robert Kiyosaki was rich dad poor dad. Yeah. So we can’t end this without mentioning that. Rich Dad, Poor Dad. I’m curious how changed your philosophy on money. So aside from that, what would you recommend?
Unknown Speaker 39:37
I would say? If it depends, so one, if you think if you know your criteria, and you know what you’re looking for, even if you didn’t, so one of the nicest resources out there is probably bigger pockets. I don’t know if you’ve heard of it or familiar with that. It is a very active real estate community where people contribute all the time. Whether it be you want to do single family, multifamily, self storage, mobile, home parks, the whole gamut of real estate, there’s somebody involved in it one way or another on that site, and they contribute regularly. So I think that’s a very great starting point. And, you know, you can browse the forums and find something that fits your specific question. And to a, you know, you know, the point of going to these meetups or going to our conferences is you you build relationships with people who are who have done this or, or are doing what you want to do. So the other way is, you know, talk to other physicians who have invested before and or whatnot. And that’s kind of why I wanted to start you know, my website and company because I talked to so many physicians and one, you know, I don’t know if you identify with this because I did to in the very beginning, I didn’t want to start a company. I just Wanted to invest. But physicians, one will say, Oh, I don’t have the time to go to all those conferences. And even if I did have the time, I’m not going to, you know, you want to spend time with your family, you know, and friends and and you don’t have the time to, like you said go to the ends of the earth. And so that’s kind of one of the main reasons why I built the website to help answer these questions in one to share this kind of investment opportunity with physicians that we don’t really hear about so often.
Unknown Speaker 41:30
And where can people find you?
Unknown Speaker 41:33
The so my website is www dot the real estate physician.com. And really, it’s just a platform, like I said, that kind of grew organically out of all the conversations I had, and was a way for me to kind of systemized that and have a platform to share. So if people are interested in commercial real estate, they can just go to that site to learn a little bit more. That’s about it. And I’m always happy to answer any questions or I talked to people all the time about this, if they just want to call me or email me any questions, they don’t have to sign up on my website. And they can just email me cherry at the real estate physician calm to do that.
Unknown Speaker 42:14
Is there anything else that you’d like to mention today? We didn’t get to?
Unknown Speaker 42:17
I don’t think so. I you know, I really the one thing I would say is that I like you said, We sometimes as physicians, just leave, you know, our investments to advisors, but I really would, you know, not not to say they don’t do a good job, but really, just at least in your framework or mindset, be more proactive about your financials, whether it be well, you know, understand a little bit more about the structure in or one, you know, think about, do you need cash flow, do you not need cash flow, so just be more proactive, then you can set the criteria for what you’re looking for. And I think that’s been really helpful for me, so
Unknown Speaker 42:57
I think you’re totally right. I think it’s it’s so easy. For us to just we got on this path we got on this train, right? good scores, good grades, med school, residency, seeing patients, you know, just going through life doing what we were supposed to do. It’s, you know, we’re, we’re now being financially rewarded for it, some more than others, and to just assume that someone else to just trust someone else with that income without educating yourself, there’s so much information out there, it’s so accessible, and there are plenty of places it’s not opaque. This stuff is not that complicated. It’s really fairly easy to understand and a lot of these industries exist to try and make themselves opaque so that they seem necessary, right? A lot of these. There’s a lot of there are a lot of sales people out there and, and it’s not that hard to educate ourselves. So we really need to do it so that you know what your money He is doing you know where it’s going. And you can then not be afraid to get a little more involved in it and, and and then it also a lot more interesting than then many people think it is. So. Dr. Jerry Chen, the real estate physician, thank you so much for taking the time today. It has been a pleasure.
Unknown Speaker 44:21
No problem. Thank you so much.
Unknown Speaker 44:25
That was Dr. Bradley Block at the physicians guide to doctoring. Find all previous episodes on iTunes, Stitcher, Google podcasts. Were wherever you get your podcasts and write us a review. You can also visit us on firstname.lastname@example.org slash physicians guide to doctoring. If you are interested in being a guest or have a question for a prior guest send a message or post a comment.
Transcribed by https://otter.ai