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Real Estate Investing

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Real estate investing is one of the most popular 'side gigs' or areas of interest amongst our members, for good reason. It is an income stream that allows you to leverage the money you've earned to make more money, comes with tax benefits, and creates cashflow that can be relatively passive and quickly add up to significant amounts of money. Many of our physicians have achieved financial independence through real estate investing.

Investing in real estate comes in many forms.  Many physicians enjoy investing in "passive" real estate investments where you invest alongside others into a project, but are not part of day to day operations.  Others prefer "active" real estate investing, where they actually own and manage properties themselves, develop projects ground up, or flip properties.  There are advantages and disadvantages to each, with different tax implications, level of effort, and level of risk. 

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Between discussions on our communities, our website, and our events, we have compiled a large number of resources to hopefully get you started on your real estate investing journey in a way that is right for you! 

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Disclosure: This page contains information about our sponsors, as well as affiliate links, which support the group at no cost to you. For example, we are not clients of Fundrise but we do receive a commission from anyone that signs up with our affiliate link. These should be viewed as introductions rather than formal recommendations - please do your own due diligence before making decisions based on this page. We are not formal financial, legal, or otherwise licensed professionals, and you should consult these as appropriate. To learn more, visit our disclaimers and disclosures.

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Passive vs active real estate options

Quick Links

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Resources

Resources to Get Started With Real Estate Investing

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  • Free Real Estate Educational Series Events:

    • ​Covers some of the most popular questions in passive and active real estate investing, including how to get started, terminology, and how to vet sponsors and opportunities. 

    • Sign up here to be notified of upcoming events, which typically offer a Q&A sessions for members to learn more about particular areas of interest. 

    • Recordings of our previous webinars on our event page. Please note, you have to be a member of our free, physician-only Physician Side Gigs community to access the recordings, while anyone is welcome to attend the live events.

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Passive Real Estate Investing

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Introduction

 

The allure that so many physicians feel to passive real estate investing is not surprising, as it carries many of the benefits of real estate investing such as cashflow and passive income, tax benefits, and the potential for significant upside if a project does well, but without the hassles often expressed or expertise needed when owning property directly yourself. In these situations, you are usually one of many investors in a real estate company or a particular real estate property, but someone else is taking care of the business aspects and the day to day management of the asset. 

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In these cases, the projects or portfolios are often so large that a company or person cannot individually buy the assets, so they finance their acquisition of the assets by bringing in additional funds. This could be by using debt and/or equity, which means they may look to banks and/or investors to help them come up with the money they need to finance a project.  In a REIT, you invest in the company that owns multiple assets, but don't own the assets themselves directly. You do well if the overall company does well. In a real estate syndication, you are pooling money, skills, and resources with others to buy an investment larger than you could typically buy on your own, and are an actual owner in the assets.  You will share the profits or if applicable, the losses, of the individual asset. 

 

Passive real estate investing can be across many different asset classes. We often think about large multifamily apartment buildings or complexes, but passive real estate investment options exist across a wide variety of asset classes, including but not limited to office buildings, commercial shopping centers, hotels, self-storage buildings, student housing, medical office buildings, RV parks, warehouses and data storage facilities, and more. 

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As the passive investor, your job is to do proper due diligence about the opportunity. You want to make sure you understand what you're investing in, the business plan to make money, the ownership structure in the investment and what it means for potential upside for your share, and what your risks are as an investor. We get into a lot more detail about how to vet opportunities using syndications as an example in this primer on syndications.  We also cover this in depth on many of our real estate education series events.

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Each type of passive real estate option carries different tax considerations and levels of risk, as well as different requirements for investing, liquidity in taking your money out, and how much money you need to get started. You can read more about the different venues for passive real estate options, as well as the pros and cons of each, here.

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Once you've decided where you want to invest in a passive real estate offering, you will send your money in. From this point onwards, you will be truly passive, in that someone else will be managing the asset and (hopefully) sending you money in pre-agreed upon intervals from the cashflow from the asset. In the case of individual real estate profits, at some point they will make the decision to sell the property (hopefully for a significant profit), and you'll also get your share of the proceeds from the sale.

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Some things to consider when choosing how you proceed:

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1.  How much capital do you want to invest?

If you want to start with < $50,000, you may want to start with the crowdfunding platforms, as they allow you to invest with as little as $500.  Most private syndication companies these days require minimums of $50,000, though there are some exceptions.

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2. Are you an accredited investor?

For some investments, you must be an accredited investor. Many private syndication companies require this unless designated as 506b, where there can be a limited # of non-accredited investors. This is not a certification, but a set of income qualifications or net worth criteria you have to meet - see image. 

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3. How diversified do you want to be?

Some people prefer picking the exact property they'll invest in, while others prefer picking a REIT or a real estate fund, which will distribute their investment across multiple holdings.

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Some Terminology To Know

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Crowdfunding and syndications 101
Passive real estate investing terminology
Who counts as an accredited investor

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Get Started! Passive Real Estate Investment Opportunities

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Please note that the companies listed here are sponsors and/or affiliates of our Real Estate Educational Series, which means that they help sponsor our Real Estate Educational Series events and/or may compensate us if you elect to sign up for their platforms. However, we are not involved in the future relationship you may elect to engage in with these companies. We do not run these deals or get paid real estate management fees. You should view these mentions as introductions rather than recommendations, and do your own due diligence before investing in the opportunities these companies offer and consult appropriate tax or financial professionals who can provide you with advice for your personalized situation as appropriate. We specifically disclaim any losses that may occur from your decision to invest, and remind you that all investments carry the possibility of loss of capital.  

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Crowdfunding Platforms for Syndications

  • Crowdstreet: must be an accredited investor, commercial real estate investments around the country in many asset classes, including multifamily apartment buildings, commercial office buildings, medical office buildings, hotels, student housing, data storage, and more

  • RealtyMogul: open to both accredited and non-accredited investors

  • EquityMultiple: must be an accredited investor

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Private REITs

  • DLP Capital offers private real estate funds with different structures and assets depending on your preferences. See more on our partnership landing page here. You qualify for lower minimum investment amounts through their sponsorship of our real estate education series.

  • Realty Mogul: You do not need to be an accredited investor for their REITs​

  • Fundrise: You do not need to be an accredited investor for their REITs​

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Private Syndication Companies

Note: You must be an accredited investor for these.  You should let them know that you are coming from PSG, in case they are offering perks to the group as part of their sponsorship of our real estate education series! View their previous webinars on our events page.​​​

  • Sovereign Capital offers development deals in multifamily apartment buildings.

  • Vive Funds offers value add deals in multifamily apartment buildings.

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Passive Real Estate Courses

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Along with events and book recommendations, we have partnered with some real estate courses (many of them member side gigs) to help you learn more about some of the most popular topics and questions in passive real estate. Learn more about each below.

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Many physicians are excited about the idea of passive real estate investing, but either don't know where to start, get stuck in analysis paralysis with all the options available to them, or freeze when they're told to "do their own due diligence, before investing in a deal.  This course, Multifamily Syndication Masterclass, is taught by a group of experienced real estate professionals, including several physicians, and relevant tax and legal professionals.  It goes over terminology, how to vet deals and sponsors, the life cycle of deals, and other relevant topics to get you up and running!  It is one of the best deals for learning about how to invest in syndications that I know. It is offered year round with occasional live Q/As and a 24/7 course community to ask questions on.  Use our promo code PSGFAMILY for an additional $100 off (current price $497, normally $1800) when you use our affiliate link to enroll.

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Active Real Estate Investing

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Unlike passive real estate investing, in active real estate investing you typically are more hands on as the owner of an asset, and ultimately, the responsibility of the property falls upon you. There are still varying levels of involvement within active real estate investing, ranging from being the person who receives phone calls from tenants in the middle of the night to just being the person who owns the property, but having a property management company handle the day to day operations.

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As with passive real estate investing, active real estate can come in many forms, and you have to choose what's right for you and your lifestyle. Some of the most popular ones among our members include:

  • Long-term rentals

  • Short-term rentals (like AirBNB properties)

  • Mid-term rentals (such as properties rented out to locums doctors)

  • Flipping Houses

  • House Hacking or adding an additional dwelling to your primary residence

  • Medical buildings for private practices

  • Residential assisted living properties

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As you can imagine, the business model, day to day involvement, and degree to which you need to utilize other vendors is different in each of these situations. If you own a long term rental property, you may be pretty hands off aside from the occasional tenant call or having to manage turnover and finding new tenants when a tenant leaves. On the other hand, owning a short term rental or a residential assisted living property is going to require a lot more involvement on the business side of things, but also offers much more potential for profit and cashflow, as you are making money on the real estate ownership itself but also managing the business side of advertising your property for vacationers or of making it an attractive environment for people's long term care needs. In each of those situations you or your team will likely be interacting with people on a frequent basis.

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There are many more tax benefits involved with direct ownership of real estate, including the potential for things like 1099 exchanges and writing off your paper "losses" against your W2 income to reduce your taxable income even though your property is actually rising in value. As many of our community members only have W2 income and are taxed significantly as high income professionals, many of our members have gravitated towards investing in real estate actively despite the added responsibilities over passive real estate investing.

 

Another advantage of active real estate investing is the control you have over the destiny of the project. Depending on how hands on you want to be, you can really turn up the dial on potential profits in active real estate investing. This could be improving the building through renovations to force appreciation on the valuation of the property, renting the property to transient populations that can pay higher than average rents in situations like midterm rentals to traveling nurses or corporate relocations, or in the ways discussed just above with residential assisted living or short term vacation rental properties. You also control when the property is sold and can even pass it down to future generations, activating the step up in basis on the property and amplifying the tax benefits. In passive real estate investing, the property is sold when the parent company decides to sell it, and you don't have much of a say in the matter.

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Financing of these projects can get fairly creative. Most real estate investment mortgages only require 25% of a down payment, so you can leverage debt to invest in multiple properties for the same price you may have only been able to make one or two investments in a syndication. You can also learn how to force appreciation and cash out refinance once one property, opening up the possibility of "infinite returns" on your investment that we sometimes hear about in our properties.

We know that's a lot, and can get overwhelming. The first step is really just learning what you want to learn more about, and then taking a deeper dive. Be sure to check out our partner courses below and our educational resources above to learn about your specific area of interest in more detail!  There are tons of great real estate books, free events on our Real Estate Educational Series, podcasts, and websites that focus on each aspect of these things. 

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House Hacking

What is House Hacking

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Short-Term Rentals

 

Visit our page on investing in short-term rentals here.

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What makes a good short term rental?

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Active Real Estate Investing Courses

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Along with events and book recommendations, we have partnered with some real estate courses (most of them member side gigs) to help you learn more about some of the most popular topics and questions in active real estate. Learn more about each below. Please note that this section contains affiliate links, so if you purchase a course, we may receive a commission at no cost to you - whenever possible, we've tried to secure you discounts so that this is a win-win for everyone!

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A lot of physicians stay away from rental properties because of the perceived time commitment.  This course, The Doctor's Course to Automating Your Real Estate Investments, is taught by a general surgeon who actively managed 64 units while he was working full time and had a family, and who was able to achieve financial freedom through real estate.  He walks you through his methods in four weeks titled Emergencies and Maintenance, Turnover, New Tenants and Money, and Evictions, Taxes, and Accounting.  The information is practical; it's not meant to guide you in how to choose a real estate property, but rather how to deal with the day to day management - and regularly save or earn you money - through helpful tips and rules of thumb.  He also gives you access to all of his spreadsheets and forms for your personal modification and use.  The course is significantly cheaper than most real estate courses and there is a satisfaction guarantee.  Incorporating a few of these tips will save you far more than the course of the course.  More about the course here.

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Creating Generational Freedom Through Investing in Real Estate is an immersive course and small group coaching program that helps physicians get started with long and short term rentals. It is geared towards those looking to start or scale their real estate portfolios with a focus on helping create your personalized strategy that’s aligned with your goals, resources and risk appetite (because one size doesn’t fit all).  The course covers how to find and vet investment opportunities, financing properties, and running rental properties, as well as the business aspects of these, including accounting, asset protection, and tax strategies.   It also provides you with mentorship and a community to discuss these topics and address your questions, as well as lifetime access to vetted investor agents and property managers throughout the country that can help you find and manage properties.  There are also limited limited 1:1 coaching spots for looking to accelerate their journey further.

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  • As a special Bonus for all Physician Side Gig members for enrolling through our affiliate link – you get to join both Spring & Fall Cohorts on all Live Coaching calls – for nearly a whole year of mentorship & community to help you strategize and diversify into new markets with confidence and clarity, supporting you in your second (or tenth acquisition)

  • LIFETIME access to all updated Educational Content, Worksheets, Guides & Vetted investor agents for Long Term and Short Term rentals in strong markets around the county

  • Educational sessions with Guest speakers (Real estate focused CPAs, Attorneys, Cost Segregation experts etc).  

  • 30 day Money back guarantee. If you feel the program isn't right for you, you get your money back - no questions asked. 

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MD Senior Living Academy (Use PSG affiliate link and code PSG150 for $150 off) was founded to teach and motivate physicians to open their own Residential Assisted Living (RAL) care homes. RALs are a unique investment niche designed to serve seniors in their Golden Years, with high quality assistive care to their activities of daily living. With physician ownership and oversight, residents in these RAL homes tend to thrive better, live longer and healthier, and score higher satisfaction scores from family members. Dr. Sendhil Krishnan co-founded MD Senior Living, which owns and operates over a dozen RAL homes in the Scottsdale area. The focus is on providing high quality care with nursing administration and physician oversight to ensure residents are served in a safe, dignified and compassionate manner. The Academy was created to teach physicians on how to obtain financial freedom with their own RAL communities, while also sharing best practices, policies, and strategies freely across all homes.

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BiggerPockets offers several bootcamps which though not specifically tailored to physicians, have excellent content and resources associated with them. Some of these are offered year round whereas others have special enrollment periods.

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FAQs:

 

Is it the Right Time To Invest In Real Estate?

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Most real estate investors will tell you it's always the right time to invest in real estate if you find the right deal. Real estate, just like any investment market, has cycles and different things are right at different periods. When interest rates are high, it may be harder to find the diamond in the rough deals that make sense from a cashflow perspective compared to when interest rates are low. But this may also mean there are more distressed properties and opportunity buys. Even in tough markets there are foreclosures, sellers that need to sell secondary to relocations or divorce, or areas of development and city growth that may mean something is a good opportunity. 

 

Like anything, we believe education is key. Don't wait until everybody's doing something to do it, because you may miss the boat. Learn, learn, learn and be able to identify opportunities and underwrite deals yourself so you're not counting on what somebody else tries to sell you to determine whether something is a good deal. Some of the best money in real estate is made during downturns. That said, again, don't let somebody sell you on that - educate yourself so that you're not buying out of FOMO but from a place of education.

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What's the best way to get started in real estate investing?

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Maybe it's the nerd doctor in us, but we really believe again, that it's education. There are always going to be people that are going to try and sell you on investment opportunities. It's important that you have a basic foundation so you can decide what's best for you. Here's our recommended algorithm.

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Decide if you want to be an active real estate investor or a passive real estate investor.

Review the pros and cons of each above, as well as the options out there for each. Decide what you have the bandwidth and the interest for. Do you want to be hands on or hands off? Also determine how much money you'd like to start with, as that will to some extent determine your options. For example, if you have a few thousand dollars to invest, you may want to consider investing in REITs until you've saved up the larger amounts to invest in a syndication or for a down payment on a rental property. If you're not an accredited investor, you will have a harder time finding syndications you can invest in, but you can invest in active real estate whenever you want.
 

Within the category you decide on, decide which options interest you and start learning about it.

If you want to flip houses, get your hands on books, blogs, podcasts, and/or courses that teach you about those things. Network with other people doing those particular things and ask your questions on related forums like our communities or the BiggerPockets forums (PSG affiliate link, 20% off a pro membership with code SIDEGIGS). Go to related events. If you're interested in syndications, start looking at relevant deals.  There's no obligation to invest in any of them, but by seeing the offerings you'll start to develop a spidey sense for what constitutes a good deal, what's a red flag, and what questions to be asking about.

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When you're confident you know what you're doing, start off with a small investment and see how it goes.

At this point, take small calculated risks. Hopefully you knock it out of the park, but if not, you'll learn. Don't start by buying a huge building yourself - one big loss will turn you off of real estate forever.

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