4 Reasons Doctors Are Making Real Estate Investments a Priority in 2023
The medical field is booming. Doctors are in high demand, and their salaries reflect this. Generational change is also causing doctors to rethink their investment strategies, as many millennials are becoming more interested in passive income streams than active ones.
As a doctor, have you considered ways to invest in securing not only yourself but your family long after you retire?
One of the best investments for doctors has become real estate. Making money from real estate is one of the easiest ways to build long-term or even generational wealth.
There are many reasons why doctors should consider real estate investments as part of their overall financial strategy. Real estate is a good investment because it has low risk and can provide passive income and leverage. Here are four reasons why investing in real estate is an excellent idea for physicians:
Real Estate Can Be Used as a Tax Write Off
One of the best investments for doctors is undoubtedly to buy a mixed-use or commercial building. This real estate can be used by a doctor, therapist, psychologist, or another physician for medical purposes. Suppose you own the entire building and use it to treat patients or provide other services. In that case, you could exclude the entire value of your real estate holdings from your taxable income making this the perfect doctor investment.
The same tax-free status wouldn’t apply to other property types, including multi-families homes or land. That’s why doctors are looking to purchase medical-use buildings to offset their overall tax bill at the end of the year, which can be pretty steep.
Doctors Investing in Real Estate Assume a Low Risk
Generally speaking, investing in real estate is relatively low risk for doctor or physician investors; why? Doctors investing in real estate usually have enough money to spare for a down payment without hurting their overall savings. When someone purchases an investment property such as an apartment building or duplexes/triplexes with tenants already living there, those tenants pay rent each month, providing passive income from day one.
One of the most significant advantages of buying a property with cash is that there’s no risk associated with losing money, unlike if someone bought stocks on margin (borrowing money against those stocks). This makes sense because the value of houses rarely disappears into thin air as stocks can (the crypto and stock exchange crashes of 2022 provide frightening examples of this).
With the rental market continuing to heat up across the entire country, owning a rental property is one of the best investments for doctors. Capitalizing on otherwise stale money with a tangible asset is very appealing to many Physicians. Purchasing a multi-family home or other rentable space will provide consistent cash flow for years to come.
High Rewards for Doctors Investing in a REIT
A real estate investment trust, known as a REIT, is a perfect investment opportunity for many doctors — why? And a real estate investment trust or publicly traded company that owns and manages forms of real estate, including commercial real estate apartment buildings, hospitals, warehouses, and hotels, allows a physician with little or no knowledge of the real estate industry to get their feet wet with investing.
Generally speaking, a real estate investment trust is a long-term investment option that pays you as the investor non-qualified dividends, operating like a mutual fund or the stock market where you don’t have to buy physical stock or involve yourself in the day-to-day running of the business.
Investing in a Real Estate Investment Trust is one of the best investment choices for a doctor, but you still need to consider the following:
• You are required to pay taxes on your dividend earnings
• Some investment fees are steep
A REIT is great for doctors looking to start investing without too much involvement.
Doctors Can Make Money From Existing Real Estate
The value of your home will always go up over time, even if you don’t do anything to maintain or improve its condition. This means that when times get tough financially (and they inevitably will), your home will still be worth something, even if other investments have lost value.
If your home has enough space, consider renting a portion out for a passive income. You can find tenants through sites like Craigslist or Zillow and then negotiate a lease agreement with them. Make sure that the terms of this agreement are clear before signing anything so that both parties know what they’re getting into and possibly make enough money to cover your existing living expenses. If you’re looking to rent your place for only a few months, there may be better options than purchasing a dedicated investment property.
The medical profession is ever-changing, and doctors must be prepared for what’s coming next. To protect themselves from any risk of burnout or financial downturns, they should consider making real estate investments a priority in 2023. Investing in the real estate market is not a get-rich-quick scheme — it takes time. If you can invest without exposing your existing portfolio or diminishing the quality of your life, then you should do it.
By diversifying their income streams and investing in assets that will continue growing over time (even when the economy isn’t doing so well), doctors can protect themselves from future financial shocks while also ensuring their retirement years won’t be spent worrying about money issues.
Does investing in real estate sound like a good fit for you and your long-term goals?
You should sit down with a financial advisor or another experienced industry professional to provide investment advice for doctors and see why real estate investing for doctors is a good option for you.
David Price MD is the Founder and CEO of getFREED, a business providing real estate education and vetting of individual deals to help physicians and other healthcare professionals build a passive stream of income, allowing them to work less and practice on their terms.
David lives with his wife and two daughters in Atlanta, GA, USA.
To find out more about David and getFREED, head to http://www.get-freed.com.
