Based on our past Facebook group Survey results of thousands of doctors when we published the question, “Do you prefer to invest in active or passive real estate?”, We found that around 25% of doctors prefer to own rental real estate directly, while the remaining 75% invest rather in other people’s businesses (passive).
While a Facebook poll isn’t the most scientific study, it confirmed the trend I saw talking to doctors – doctors would rather work than doctors and let others make money for them.
The thing is, many think you have to choose one side and stick with it. The truth is, you can do both. I’ve kept a hybrid approach of investing in transactions depending on how much capital I have and what opportunities arise.
However, when someone has forced me to choose either side, I am more inclined to passive deals, much like the majority of doctors who took our survey.
Do you want to know why? Here are some reasons why doctors prefer passive investing …
This is the main reason right up front. While there are many ways to generate additional income from a variety of investment vehicles, our time as doctors is our most limited resource. We are busy with our daily jobs and when we go home we want to spend time with our families.
Do we want to use our “free” time to research, review, manage teams and tenants, develop strategies, etc.? Or do we want to enjoy our time and let someone else do the work?
Passive investing allows you to do what you are best at (being a doctor) while building sources of income to give you the freedom to do what you love (whatever you want).
2. Use other people’s knowledge and expertise
It probably took you at least a decade to become an expert in your field. It also took a lot of effort, experience, and trial and error. The same goes for real estate investments.
The good thing is that you don’t have to spend another decade learning the ins and outs of real estate to become a successful investor. You can use others who do this for a living and are knowledgeable about the industry.
Leveraging the knowledge and expertise of other people can be your greatest asset in building wealth that will lead you to achieving your financial goals faster. You draw on the goldmine’s industry experience without having to go through the entire process yourself.
3. It really is hands off
It’s true; nothing in this world is free. You have to pay to have someone work for you in order to generate income. However, after you’ve invested a little time and effort upfront to do proper due diligence, the rest of your passive investment experience will be reading updates, checking for deposits, and providing tax forms to your accountant.
With passive investing, you are able to own a piece of any physical asset without having to go through the hassle of buying, building, managing, and selling it yourself.
I like to say that with 1% of the effort you can get 80% of the benefits of investing in real estate.
4. Ability to start small
If you want to buy a decent rental home yourself, you will likely have to invest hundreds of thousands of dollars and get a large loan. The capital commitment for a property can be significant.
However, it is possible to invest in passive real estate for much smaller amounts. My first investment was a $ 5,000 investment and to date I’ll be making $ 25,000 and $ 50,000 on projects I believe in.
These smaller check sizes allow me to diversify my holdings and participate in deals across the country with various sponsors. I can work with industry experts for a fraction of what I had to invest to buy an apartment out of state on my own.
Many of us want to invest constant amounts in real estate early on, even when we may not have 6-digit sums to invest. It can be done if you are looking for passive deals.
5. You don’t have to deal with the backend aspect
Not only do you have to deal with the two most dreaded aspects of real estate investment – “toilets and tenants” – you don’t have to worry about securing a mortgage, getting insurance, dealing with local authorities, and so on.
I enjoy the benefits of investing in real estate very much, but I don’t enjoy these other roles and responsibilities. I’d rather not think about these things.
Remember, active real estate investments are like running a business and everything that goes with it. When done right, returns can definitely reflect the time and effort put into making the investment successful.
I suspect most doctors don’t want to get involved in all of the paperwork. Name a doctor who enjoys dealing with insurance and charts. The less paperwork I have to do when investing in real estate, the better my life is.
As I mentioned earlier, there is no one way to successfully invest in real estate. I take a hybrid approach and know people who have built themselves financial freedom with both active and passive real estate.
While I’ve spent the majority of this post talking about why passive homes are best, there is no doubt that owning your own property has more control and the potential for higher returns.
Doctors just need to figure out what suits their goals, time, and interests. Remember, the key to all of these types of investments is understanding the due diligence that is required in order to find good people to invest with.
As you may have heard in medicine, who’s holding the knife matters.
If you are interested in learning more about due diligence and want to confidently invest in passive real estate, then be sure to take a look at our Passive Real Estate Academy course starts this month!
This is a wonderful opportunity for you to grow as an investor by leveraging the experience of others in passive real estate investing …
Our free annual summit, Financial Freedom Through Real Estate, will take place from September 10th to 12th, 2021. You can secure your free seat by clicking here!