Real Estate Investing for Doctors: How to Build Wealth as a Real Estate Physician

Are you a doctor looking to make your money work harder, save money on taxes, or build wealth for retirement? Real estate could be the perfect investing strategy for you. Keep reading to learn about the massive benefits of physician real estate investing, the differences between active and passive investments, and the best real estate investing strategies for doctors!

Summary:

• Physicians can use real estate to build wealth faster, earn passive income, save on taxes, and fast-track retirement.

• Many doctors gravitate toward passive real estate investments, as they are easier to manage alongside a full-time job.

• Turnkey rentals, REITs, single-family homes, and private money lending are some of the best real estate investing strategies for doctors.

Why Should Physicians Invest in Real Estate?

What makes real estate such a powerful wealth-building tool for physicians? Here are a few of the benefits for doctors investing in real estate:

Make Your Money Work Harder

Real estate investing often outperforms savings accounts, stocks, and other investments, especially when you account for the cash flow you can earn from rental properties and the tax benefits that are unique to real estate.

Earn Passive Income

Many doctors don’t have the time to actively manage their investments. Fortunately, there are several investments—such as turnkey rental properties, REITs, and syndications—that allow you to invest in real estate passively.

Rent to Retirement has turnkey properties that allow you to earn passive income!

Save on Taxes

There are all kinds of tax benefits—including depreciation, write-offs, and the ability to defer capital gains taxes—that are unique to real estate. These benefits could offset your high W2 income and help you save a fortune on taxes!

Diversify Your Investment Portfolio

Diversification is the best hedge against risk. Adding real estate to your portfolio of stocks, bonds, and other investments can protect you from large losses and make it easier to ride out volatile markets.

Reach Retirement Faster

If you need another source of income to fast-track retirement, you can use real estate cash flow—the monthly net profit you earn from rental properties after your mortgage and expenses are paid. What’s more, cash flow grows as you raise rent and pay off your mortgage!

Passive vs. Active Real Estate Investing

Before you buy real estate, determine how involved you want to (or can) be in your investments. If you work a taxing, full-time job, you may want to look at passive real estate investing. If you work part-time, are retired (or semi-retired), or have the bandwidth to be more hands-on with your investments, active investing might be a viable option!

Passive Investing

Passive real estate investments include turnkey rentals, REITs, syndications, crowdfunding, and private money lending. Aside from some due diligence upfront, these investments require very little work on the investor’s end. You just need enough capital to get started!

Pros

Passive real estate investing appeals to physicians for several reasons:

• Low time commitment
• No labor necessary
• No skills required
• Often lower risk
• Easy accounting

Cons

Passive investing is the “easier” way to earn money through real estate, but it’s not without its drawbacks:

• Less control
• Low liquidity
• Often lower returns
• May need to be an accredited investor
• Often more capital to start

Active Investing

Active real estate investments include long-term rentals, vacation rentals, house flipping, and wholesaling. Unlike passive investing, active investing requires a significant time commitment to oversee or manage your assets (unless you hire help!).

Pros

If you have the time to be a hands-on real estate physician, active investing provides the following benefits:

• Control of your assets
• Often higher returns
• Greater ability to use leverage (debt)
• Wide range of financing options
• More tax benefits

Cons

Active investments are a great option for investors who want to be involved, but this strategy has a few disadvantages:

• Higher time commitment
• Labor often necessary
• Skills often necessary
• Higher investment property down payments
• Higher fees
• Often greater risk

Best Strategies for Physician Real Estate Investing 

Which real estate investing strategy is the best fit for your long-term goals? Here are some of the most popular options for physicians:

Turnkey Rentals

Turnkey rentals are recently built or renovated properties that are rent-ready, low-maintenance, and professionally managed. If you want to own rental properties without the burden of collecting rent, fielding maintenance requests, or dealing with evictions, this is the best option for you!

Check out our turnkey rental properties for sale! 

Single Family and Small Multifamily Homes

If you’re a full-time physician, you probably don’t have the time to manage a large real estate portfolio, but you might be able to handle single-family or small multifamily homes with one to four units. Buying turnkey versions of these homes makes your job even easier, as you won’t have to find tenants or manage your properties!

Vacation Rentals

Vacation rentals are furnished properties you rent out to guests for short-term stays, allowing you to not only earn income but also have somewhere to vacation! If you buy a turnkey vacation rental, you don’t even need to design, decorate, or buy furniture. These rentals are already fully furnished and ready to book!

Medical Office Buildings

If you don’t know which asset class to invest in, start with your area of expertise—healthcare! There will always be demand for medical office buildings, and tenants often want to sign extended leases—giving you steady, predictable cash flow and little turnover!

Real Estate Investment Trusts (REITs)

Real estate investment trusts are companies that own and operate commercial properties. Investors receive dividends, and REITs are required by law to pay out at least 90% of their taxable income. Keep in mind that these investments are entirely passive, meaning you don’t have any control over how properties are bought, managed, or sold.

Real Estate Crowdfunding

Crowdfunding is a strategy where a large group of investors put their money together to purchase properties or fund new development, typically through an online platform. Minimum investment requirements are often very low, and you don’t have to be an accredited investor to get involved!

Real Estate Syndications

A syndication is a group of investors who pool their money to buy one or more properties. The syndicator, or operator, is typically in charge of raising capital, managing the investments, and paying investors as the property performs. Due to the high-risk nature of syndications, vetting your operator upfront is crucial!

Private Money Lending

Private money lending is when you loan your own money to other real estate investors. As you are repaid with interest, you can often make passive returns of 10%-15%! The biggest downside of this strategy is that you need a decent amount of money to get started, but physicians and other high-income earners often have more capital to lend.

Ready to Become a Real Estate Physician?

Real estate is the perfect investment for any physician’s portfolio, as there are several strategies and asset classes to choose from and benefits you won’t find with stocks, bonds, and other investments.

Buying turnkey real estate is one of the best ways to get started! Unlike some passive investments, you’ll still have control of your properties and enjoy the cash flow, appreciation, and tax benefits that come with owning real estate. But because these properties are professionally managed for you, you won’t have to deal with tenants or be completely hands-on!

Physician Real Estate Investing FAQs

Do Doctors Invest in Real Estate?

Yes, real estate is a popular investment vehicle for physicians. Doctors investing in real estate can make passive income with turnkey rentals, REITs, or private money lending, or earn active income with normal rental properties!

How Can Physicians Make Passive Income? 

Physicians can make passive income through real estate with investments like turnkey rentals, REITs, syndications, and private money lending. They can also earn passive income outside of real estate with index funds, stocks, bonds, and businesses!

What Is a Physician Investor? 

A physician investor is a doctor who invests their money in real estate, stocks, bonds, businesses, or other ventures. Ideally, this allows them to generate a return and build wealth for retirement!