Best way to begin investing for a frugal dentist?

Question

Hey all, I was hoping to seek some wisdom from the fine people here and would appreciate some input. I wanted to live frugally and aggressively invest in apartment complexes using income from my practice to finance the down payments. I could save about 100k per year and was wanting to buy a few smaller duplexes and quadplexes to better understand the inner workings of investing in real estate before buying an apartment complex for 1.5 to 2 million with a 300 to 400k downpayment. My game plan is to aggressively keep buying complexes by reinvesting the passive income to rapidly build my portfolio while living frugally.

Questions:

-I suspect their may be a bottleneck in that I will be unable to keep getting mortgages for these complexes, and I was wondering if that might be a way around that. What other bottlenecks might pop up and when might I encounter them?

-Say you were a professional who wanted to live frugally and humbly and grow their wealth as fast as possible. You also wanted to minimize the interaction you had with the investment and not do the management yourself. What strategy would you use?

Thanks for the feedback!

Jaspreet Baveja · Answer

@Samuel J Meyer - as @Michael Ohara & @Taylor L. Have mentioned, investing passively, TRULY passively, may require an upfront effort of getting to know the borrower (if lending) or the syndication operator (if going that route), but then that's it. You just choose your investment amount, a return rate you're comfortable with, and hit GO when you find that investment! With a LOT of loans originated under my belt and a 0% default rate, I can personally vouch for the passiveness of this Private Money Lending strategy! I also invest in syndications and want to be a GP on larger multifamily deals for generational cashflow, but this is the best path I've come across to learn the process, grow in experience, and of course my cash to invest with! I'm also helping others get started in this space now. Best of luck!

Yonah Weiss · Answer

@Samuel J Meyer you may have success partnering with others that have similar goals, or investing passively in syndications. There are plenty of them active here on BP.By partnering with others you may have the ability to accomplish more at a faster pace, and can share the burden of responsibility.

Dave Wolcott · Answer

@Samuel J Meyer, one other key item to consider with this strategy would be to make an assessment of the time you are willing to commit to managing this portfolio of properties. Many of the Dentists and Doctors we work with have extremely limited time outside of their practice and therefore take the passive route with syndications. You can still achieve your goals with this route.

Yannik Cudjoe-Virgil · Answer

@Samuel J Meyer You can do two things:1) Buy smaller properties and work up from there. You may start running into issues at property #10 -- as banks will start to take a deeper look at your balance sheet. You can hire a PM to manager these properties as well or you can manage them yourself2) Invest in syndications and larger deals, where the sponsor is managing the investment. That way you can take the passive approach and just receive distributions. Biggest thing is working with a team you can trust, and who is going to be steward of your capital.I would recommend going bigger, quicker, if you can -- with larger units. I get the impression that you are very hungry and you are going to find out that scale can get you to where you want to go. If your goal is to be completely passive, then syndications may be good option.Hope this helps

Taylor L. · Answer

-Say you were a professional who wanted to live frugally and humbly and grow their wealth as fast as possible. You also wanted to minimize the interaction you had with the investment and not do the management yourself. What strategy would you use?This is my goal to a T. I never wanted to interact with a tenant, and I never have! There are multiple ways you can invest in real estate and stay far away from dealing with tenants. My choice was syndication investing. It's working out so far

Michael Ohara · Answer

@Samuel J Meyer minimal interaction with the investment can be done through private lending or syndication deals. I've done both and they are very passive. All the best.

Cody Murray · Answer

Go check out Roshan Kalra on Facebook. He is a dentist here in OK and he is growing fast. He calls himself a 'princess' in that he never touches a hammer and doesn't interact with his tenants. I have a feeling you will have to work harder upfront to build out your team so that in the future you can back away and create truly passive income. Passive income typically requires more work than most people think. Its not like buying a dividend paying stock or interest paying bond and literally doing nothing for income.

Andrew Hogan · Answer

Hey Samuel, sounds like a solid plan. Most people these days spend first, then invest. Typically what others do in your situation is partner with an experienced operator to handle the day to day things. That way they don't take on a second or third job but are still able to build the wealth bucket with a hands-off approach.

Mike B. · Answer

If you have at least 25-50K available, you could be a silent investor with a reputable REI firm in your area. Unsure where you're located though, but I'm sure there's plenty out there to choose from