Earn as You Sleep
I moderate a Facebook group called ‘Alternative Careers for Doctors’ which, over the last 24 months, has organically reached to 12,200 members. 95% of these work in the NHS. It saddens me to see so many doctors looking for other opportunities, on the whole, because they are dissatisfied for a multitude of reasons with work in the NHS.
I sought the group’s input on why they were looking for alternative careers and had over 250 responses. The major factors cited were lack of work life balance, burn out, job satisfaction low.
Whilst on this poll, which is not quite anonymous, only 15% cited poor pay/salary as a factor there is anonymised evidence out there to suggest those percentages might be significantly higher, especially from consultants.
DoH have given the impression they do not value their biggest assets with a pay freeze on nursing pay (1) and in their handling of junior doctor contract ‘negotiations’ (2).
However, we are losing people and individuals who entered the profession as they are deeply passionate and value the top 3 segments of the Maslow’s hierarchy more than most. In fact it is this that has kept the NHS going winter after winter. However, if leveraging the goodwill of people, there is always going to be a breaking point when they need to look out for their basic needs. I sadly feel we are very much there as evidenced by the Facebook group and poll results.
Doctors, through this forum, reach out to me daily about changing their careers for various reasons. This got me thinking around how I can help them and other healthcare professionals.
Passive Income
I thought that giving healthcare professionals a better understanding of ‘passive incomes’ would help enable them to make more of their hard earned money and help them feel more fulfilled in their current roles.
95% of doctors wanted to understand more about passive income streams.
Passive income streams require an upfront investment and a lot of nurturing in the beginning. After some time and hard work these income streams start to build and are able to maintain themselves, bringing you consistent revenue without much effort on your part.
All passive income streams will require at least one of the following two elements:
1) An upfront monetary investment, or
2) An upfront time investment
These types of passive income require you to invest money up front to generate the passive income later. Don’t be alarmed though — you can start with as little as £10 with some of these ideas, so it’s achievable for everyone.
Investing in passive income can be an effective way to potentially boost your income whilst also allowing you to grow your equity, providing you with greater financial security and support in your retirement years.
Residential Property Investment (written by Udai)
The idea of using your spare time and money to buy property for investment purposes can seem like the most tangible yet most distant idea. I say tangible, because I think most people can identify with the idea of purchasing a house or at least the asset itself. I say distant because to most people, including myself, the idea of buying a ‘second’ property for investment purposes was outside my comfort zone and seemed initially like something ‘other people did’ or something I would only be able to do later in life when I had enough money. In 2016, I purchased my first investment property, and have gone on to purchase a further 5 in the years following, whilst working full time. This is not to boast, but merely to explain that it is possible to do.
There are also multiple ways to get into property — you could invest yourself privately, through private pension (Self Invested Personal Pension), regulated investment fund or through a crowdfunding platform.
There are also several approaches to generating passive income through property.
Generally the most common approach and what the majority of investors do — purchase one or two properties over the course of their working life to support their income both during their working environment and in retirement. This is when you buy a property and you simply rent it out to one or more individuals forming part of a single household. Generally speaking, in the United Kingdom the return you get (i.e how much income your property generates versus the purchase price) is relatively lower in the south of England than the north of England for 2 reasons.
1) Property prices are relatively higher in the South of England, due to it being historically where the highest population concentration has been and economic activity has been.
2) The relative demand for rental property is stronger in the North of England than the South.
As such, this creates an environment where property prices in the North are lower and rental prices are higher, relative to the South.
I can illustrate with a simple example;
A property I purchased in the South in 2016 for £220,000 currently rents out for £1025 per month — so this has a gross yield (see definitions below) of 5.5%.
A property I purchased in the North of England for £60,000 rents out for £575 per month — so this provides a yield of 11.5%.
As you can see from this example, the return against the relative value on the property in the South is less than half of the property in the North, however, may not have the same increase in value over time due to structural demand.
Personally for me, my general priority is increasing ‘cash flow’ to allow me to create more passive income faster to purchase further properties.
Commercial Property Investment (written by Udai and Sandeep)
Commercial property (E.g Office blocks, real estate based businesses (Hotels, Care homes etc), as opposed to residential property, are generally the most complex types of real estate assets to invest in and are generally the most costly to get into. Commercial properties such as nursing homes and hotels can offer yields in excess of 20% — however the costs associated with managing commercial properties are generally again higher.
Fig 1: Typical Yields by Property Type
As can be seen from the above, generally speaking, the yield (i.e the annual cash flow as a percentage of the asset value) increases as you go from a single household standard buy to let, through to commercial property — obviously the relative risk and general asset value could also be considered to be higher as you go from left to right.
Given the low interest rate environment and most ‘high interest’ current accounts not paying more than 2%, it’s not difficult to understand why putting some of your savings into property can potentially be financially beneficial.
Having experience of owning and operating nursing homes and hotels of over £45 million in value, turnover of over £20 million and total EBITDA (profit before borrowing/finance costs) of over £4 million, there is significant experience in understanding how to manage these sorts of commercial investments.
There are a wide variety and approaches for investing in property and for those who think that it requires a huge initial outlay for the ‘deposit’, I have purchased property in the North of England with deposits as low as £11,000. Ultimately whichever strategy you choose is up to your own circumstances, risk appetite and investment objectives but for me personally I have found it to be beneficial to allocate some of my disposable income to real estate!
We will talk further about some of the other strategies in investing and how you can get involved with companies that do crowdfunding etc rather than manage the properties yourself.
Investing in Startups (written by Sandeep)
Investing in property is tangible and one of the most common forms of passive income. However, because of its nature it has a specific boundary of returns. In 3 years, if the property is sold the typical yield returned would be 15% to 60%. If very fortunate and right strategy, rarely could return up to 100%.
E.g. Invest £100 = £160 return in 3 years.
Investing in startups, because they are creating new markets, industries and sectors, can achieve much higher returns, but of course carries higher risk. Returns typically depend on the stage of the startup.
The earlier the startup, the higher the expected return, because of course it also carries higher risk, but higher opportunity for growth too (3).
For example, I run a startup which is trying to help transform the NHS and we have removed non-emergency pagers in an NHS Trust, our peer review evidence showing that we save each nurse and each junior doctor 21 minutes and 48 minutes every single shift. We will be raising investment on a crowdfunding platform in the next 30 days or so. At this early stage an investor can expect 300% to 1000% in 3 years.
E.g Invest £100 = £300 to £1000 return in 3 years.
Typically, investing in a startup is investing in its future value rather than receiving returns on an annual basis.
Summary
- 95% of doctors wanted to know how to earn a passive income stream
- Most doctors do not believe that they are paid enough
- A passive income stream will enable you to build up an income stream outside of your profession
- Investing in residential and commercial properties can produce typical returns of 15 to 60% over three years.
- Investing in startups, especially at early stage, can result in returns of 300% to 1000% in 3 years, but carry higher risk.
About the Authors
Dr Sandeep Bansal
A GP trainee by background with a masters in Paediatrics.
I am passionate about remodelling health and social care; not just in the NHS, but globally. I believe that health/med tech will help enable and underpin this.
Our work has been mentioned in Parliamentary Bill to #PurgeThePager put forward by Matt Hancock and our study to show each nurse and each junior doctor save 21 minutes and 48 minutes with Medic Bleep of which I am the Founder.
I am also an Innovation Mentor for GP trainees and GPs at the Royal College for GPs alongside Faculty at Harvard Medical School for Postgraduate Teaching for Surgical Leadership and Innovation.
I am also a Member of the Faculty of Clinical Informatics and Faculty of Medical Leadership and Management.
I am also experienced in running of nursing and care homes, especially looking at mergers and acquisitions along with transformation projects.
Find me on LinkedIn: https://www.linkedin.com/in/drsandeepbansal/
Udai Deo
Director of a property company which buys and sells high yield property in the United Kingdom. Udai also works full time for a tier 1 Asset and Wealth Management firm. For questions Udai can be contacted on udaideo@hotmail.com
Disclaimer: All financial investments carry risks and professional investment advice should be sought before investing.
References
2. https://www.bbc.co.uk/news/health-36722326
3. https://startonpurpose.com/Article/what-rate-of-return-do-investors-expect
