Graduate School? Or Real Estate?

Question

I'm 23 years old. I've always wanted to be a dentist since high school. I am in my 2nd year of college getting ready for my 3rd out of 5 years of undergraduate. I'm planning on majoring in Marketing and completing classes to apply to dental school. By the time I become a dentist, it will be 7 years. By that time, I will have around $300,000-$400,000 in student debt. Dentists make around $120,000 a year on average and can make more than that.

My brother is planning on investing in dental practices which he tells me are VERY PROFITABLE because there is a barrier of entrance only for dentists. He is planning on retiring at age 35-40. I am 23 years old. I am planning on finishing undergraduate at least, but I need some help deciding whether I could reach financial independence before that if I don't take on a lot of debt even if I will be making a lot more money from W2 job.

Does anyone else have this dilemma? I've seen how hard my brother has had to study to get into dental school and to graduate and it just looks tough, though I am willing to do it while investing in real estate on the side and house hacking to get rid of my living expenses. How could I reach financial independence before he does?

Andrew S. · Answer

This is a bit like going to NBA.com and asking “do you prefer basketball or football?”

Zachery Buffin · Answer

Well my immediate opinion is that real estate is the better choice for a wide variety of reasons but one cannot understate the importance of living your dreams. If you have always wanted to be a Dentist then you should do it. If you are even a little unsure however I think real estate provides a more sure future that will support going to school later if you want to.

Student loan debt is huge and will likely be a huge problem in the future, taking on that large amount of unsecured debt so young is like a weight that you will carry all through life. It will make it harder to get loans in the future and hamper your DTI ratio until it is paid.

If you look at the value one-to-one, for every dollar invested in real estate you are (unless you invest in crazy bad areas/markets) almost guaranteed 2 cents in appreciation, 10 cents in cashflow, 1-5+ cents (variable) in tax benefits, and likely greater gains too on home run deals. Even if this was 0 cents of gain/loss it would be better than incurring the debt that "investing" that money in education will buy you.

Moreover if you look at money the way Warren Buffett and other investors like him do, it isn't just the loss of the dollar spent on something other than investments it is the opportunity cost of that dollar over the years.

I really don't want to sound negative, I really support you living your dream and doing what makes you happy but if you are looking at it from a purely monetary perspective (you are on a RE investment forum after all) this is a hands down no brainer. Invest your money, you are so young that taking the risk of investing now is easier. If you wait to invest until you have a family, a career, a life to protect you will only become more and more risk adverse.

You can always do both, you are 23 my man, you have a lot of time to live yet and I know it seems like you have to do it all now or it won't ever get done but it will. You can do it and whatever you choose be happy that you re the one who decided for yourself.

TL;DR

Investing good, unsecured student debt bad. You should look up Brandon Turner talking about "the stack" and invest in small Multifamily properties (duplexes, triplexes and quads)

How to Build Your Real Estate Portfolio Faster Using “The Stack”

George Lods · Answer

So many things to say here. First let me say that I am a Registered Nurse so a portion of my opinion is from my own personal experience in the healthcare field. Like some have already mentioned, the Dilemma of becoming a Dentist should be based on it is/has been your dream and passion. Personally if you are not eat, sleeping and shi**ing the idea of becoming a Dentist I wouldn't do it. I went into Nursing because I enjoyed helping people. But in todays society the healthcare field is highly governed by patient satisfaction almost, if not, more than delivering great healthcare. So what I mean is if I start an IV on a patient and I get it the first try but I don't make small talk and create that "Disney" experience this can be viewed as a bad patient experience opposed to if it takes me 3 tries to start that same IV but I make small talk and present myself as more personable (and that goes for anything in life but healthcare is getting hit hard). In essence a lot of facilities want you to deliver that "Disney Experience" even if care is a little subpar. Now for a Dentist, you would prob have your own practice but you still have the same level of expectation bc everyone will be searching yelp for your reviews.

Another thing that comes to mind is a study I read awhile back. It compared a high school grad going straight to work for UPS and putting in the same hours as a grad going into med school and then residency. It was found that the Physician would not catch up to the net worth of the UPS working until his 50's mostly related to getting started so late going to work after med school and also the large student loan debt that has compounded interest for all of those years.

In conclusion I am glad I became a Nurse and thankfully Im working in a region that pays me well enough that I have a great earning potential to fund my REI adventure. And one day I plan on transitioning out of healthcare and to full time investor. But we are talking a 4 yr degree vs your potential 10+ years. If Dentistry is your lifelong passion and REI is secondary/side hustle then go for it. But if your crazy about REI and meh about Dentistry I would go all in head first REI.

Good luck in which ever you chose, both paths can create a great life!

Matthew McNeil · Answer

Real Estate.  I'd prefer $300,000-$400,000 in RE debt with cashflow vs student debt with zero flow.  Notice I removed the word "cash" from student debt because a tenant isn't bringing any cash to the table to pay down that debt.

Account Closed · Answer

@Jonathan Escobar $300,000 - $400,000 in debt with a $120,000 salary. That may hurt your debt to income ratios to a point that would hinder your ability to purchase properties.

Jason L. · Answer

I finished my MBA 2 years ago. It undoubtedly opened many new doors in my career that would never have been opened with just a Bachelors. It was a bit of a gamble up front because I paid for it myself entirely while pretty much all of my classmates had tuition reimbursement through their employers (for instance, a few of my classmates worked for Disney,  who pay their full-time employees 75% of their education costs. That's just one company though. Amazon pays 95%, even for their lowest level employees).

While I paid a pretty big cost up front on tuition, it did bring my wages up considerably (and I expect that gap to continue to widen even more over the next few years than if I had stuck with the path of just my Bachelors). In many ways, this payback period is not all that unlike buying a rental property. Think of it like investing in yourself rather than investing in a house, but the upside is far more uncapped (you can only raise the rent so much, but career growth at any given time can theoretically go parabolic).

My suggestion to you would be to look for the route my classmates took. Finish your undergrad, apply to employers that have a tuition reimbursement program (hint: big corporations generally have these systems in place), work for a year or whatever the qualification period is for those programs, and then apply to dental school. You might need to be a little strategic about who you work for because ideally you'll need a somewhat flexible schedule to make both work. It'll take a little longer to finish, but at least your employer will foot most of the bill for you.

Theresa Harris · Answer

Rather than making it a competition between you and your brother, why not learn together?  If you are living in the same area, can you pool your resources and buy a house while going to school and rent out rooms to other students?

Based on you planning to take 5 years rather than 4 years for school, I'm guessing you are working part time and that's the reason you aren't taking a full course load.  Adding that extra year to your undergrad, adds a lot of expenses, mainly from living expenses for the 5th year.   Look for ways that you can save money or make money to reduce your student debt before it gets to $300-400K.  That debt will affect your ability to borrow money and take a long time to pay off.  Make a budget to see where your money is going.  Once you finish dental school and start making money, keep living like a student financially.

Caleb Heimsoth · Answer

@Jonathan Escobar there are so many wrong things with this post.  You don’t want to borrow more money to buy real estate while making school.  I doubt you could even do that.

Don’t become a dentist just because you think it’s an okay idea.  You have to love it, otherwise you’ll hate it.

Bradley King · Answer

@Jonathan Escobar

Hello Jonathan,

Being a college student myself I understand what you’re talking about when you explain your majors etc. but I would like to move past that.

You say that it’s your dream to become a dentist along side your brother and to open up a practice with him yet at the same time you’re saying you want to be a real estate investor. These are obviously not the same things and need to be viewed differently, if you’re purchasing real estate/flipping/BRRRing etc. with the goals of financing your current lifestyle you are not investing you’re simply creating a job for yourself and YOU are going to be the ‘Business’ if you stop showing up the money stops too.

If you are investing in real estate you are using capitol, leveraging that capitol to create returns on your investment and generate wealth.

You can generate wealth and finance a lifestyle with real estate at the same time but then you are faced with the question of wether you want both your eggs in one basket because if the economy goes down and now your rentals start to not cash flow as strong and they aren’t providing you with a good income or you can’t fix and flip like you used to you have nothing to fall back on and support your existing assets. But dentistry will never completely crash because people need dentists in good economy’s and bad economy’s. In other words personally I would become a dentist and invest the money you’re making as a dentist into real estate rather than trying to make money from real estate and invest it at the same tim. Also just a word of advice before you make a rescuing either way try to proof the concept through testing.

Sheldon Vic · Answer

I'm finishing up my last year of grad school while learning REI on the side. Since i'm off for the Summer I've been just trying to get as much education I can. 120k/year isnt bad and the income would help you qualify for financing. I would think if you hired PM's and have a good team to manage your RE portoflio you could have the best of both worlds while still retiring within a relative timeframe that is closed to what you desired...

Graduate School? Or Real Estate?

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