Orthopedic Surgeon Investor Update

[Franky Davis]

Hello everyone…I hope you all are doing well and staying safe from the COVID. It's been a crazy time. I decided to post another update since it's been a while since I've been active. Around 2 years, my wife and I decided to purchase a duplex using no money down financing I was able to acquire by using my future orthopedic surgery salary as collateral for the note with a community bank. This was done in an attempt to start to initiate a retirement portfolio as we haven't really saved at all during the medical training process and my earnings wouldn't really put us in a position to save until I was 32 (This year). Over that time, we used several strategies (mainly handwritten direct mail) to find and acquire another duplex, 5 single family homes and a 48 unit self storage facility. All properties were already full and under market rent. About half were found off market using direct to owner contact and the 5 SFH portfolio was purchased using a commercial broker. Since that time, we have made appropriate repairs to the units, maximized the efficiency of the management and raised the rents to market. We've managed everything remotely, also using a property manager (I recommend). Over the last 8 months or so, due to the exploding market, we elected to sell 1 duplex at a 5.8 cap and purchase 2 more at around a 9 cap. We 1031 exchanged those funds into this purchase (including Reno) to allow us to reposition those two duplexes and add about $150k of value. We then sold a second duplex and 1 of the houses and were able to purchase a mixed use downtown 2 commercial space/5 loft apartment deal that really is an appealing long term asset with consistent rental income and rental increase potential. We also purchased it at a discount with 1031 funds to avoid the tax. Lastly, we sold the last 4 houses that remained at about a 6 cap and 1031 exchanged those funds into a 10 unit commercial with the plans to bring rents to market and refinance. We have elected to keep the self storage. It has been a wild ride but I'm posting this to encourage people to act even in the setting of their busy schedules to take steps towards financial independence. We aren't special. We don't have any special secrets. My knowledge acquisition was through using Bluetooth headphones and audible (20 books or so) and bigger pockets podcast (200+ episodes). Do your best to bypass the analysis paralysis phase, formulate a criteria that fits your mold, and act. Take steps to make it happen…and it will. I'd love to start some conversation about how you can get started. I think my strategy has some risks associated with it (high leverage initially). However, I also think it has allowed me to get involved earlier than I initially would have if I'd been required to save 30% down after taxes. Additionally, I've sort of figured out some tax benefits for high income earners while using real estate. Definitely not secrets by any means. But, some high income professionals may be interested in the strategies. Thanks everyone! I'm looking forward to getting back involved with the community!

[Jeff Copeland]

Impressive success in so little time. 

Another avenue you may want to explore is having your spouse pursue Real Estate Professional Status at some point in the future. The tax benefits can be enormous for couples filing jointly where one is a high wage earner and the other has time to focus on real estate. Groups such as Semi-Retired MD teach this method.