Real Estate As An Investment
I once knew a guy who was reportedly worth over a half a billion (yes, that’s with a “B”) due solely to some savvy real estate deals he’d made in a relatively short amount of time. I had a hard time wrapping my head around the fact that he hadn’t created anything, nor had he developed anything. He simply took a risk on a piece of land that happened to be in the right place at at the right time.
Obviously, there’s a lot more to real estate investing than simple luck and in the ensuing years, I’ve seen countless numbers of friends invest in real estate, generally with amazing results
But we’re orthodontists, not real estate developers. Is this something we should be doing? Where in one’s financial life should they allocate money for real estate and how does that play a role in the overall investment/debt repayment strategy?
Is investing in real estate a strong move for orthodontists? I remember sitting in MKS about 3 years ago when a pair of Canadian orthodontists made the point that as orthodontists, we’re going to make a decent disposable income and if we use it correctly, we can grow the same real estate “empire” they had. It was truly impressive what they had done and I think that everyone in the room wanted to run out and buy some Canadian forest land next to a freeway.
While having dinner the other night with a general dentist friend of mine, he told me that he likes to invest in commercial real estate. He said it’s been really good for him and that companies are far more stable as tenants than any individual. “Stay away from non-commercial renters. You’re asking for trouble” he warned me. Really?
Another friend of mine’s sole profession is to buy, refurbish and then rent multi family homes and is totally non-commercial. He’s done it for years and is very successful. Why multi family as a target? Because, as he told me: “When the economy turns south, companies go out of business and people look for less expensive housing, namely, multi family.” He’s done great and it’s tough to argue with his logic…or results.
Of course, there’s always single family homes as an investment and I’ve known more than one friend who has told me that every year, he invests in at least one single family home. Some accumulate them and manage the properties themselves and others hire management agencies.
I’ve also had friends who buy huge “vacation homes” in places they want to visit from time to time and rent them out when they’re not using them, allowing passive income with the secondary benefit of watching the value grow year over year.
If you listen to real estate “experts” they’ll tell you that ether’s no greater or faster path to wealth than buying properties, leveraging them and then buying more. If you ask investors from Nevada, Florida or Arizona around 2009, you might hear a different take on the subject.
So, do you have experience in real estate investing? What advice would you give aspiring real estate moguls?
Wishing you all the best!!!
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GLENN KRIEGER IS AN ORTHODONTIST WITH 20 YEARS OF RESTORATIVE AND COSMETIC DENTISTRY EXPERIENCE BEFORE HE RETURNED TO ORTHODONTIC RESIDENCY. DR. KRIEGER LEARNED ABOUT THE IMPORTANCE OF WELL-DESIGNED PRACTICE POLICIES AND SYSTEMS DURING A YEAR AT THE SCHUSTER CENTER FOR PROFESSIONAL DEVELOPMENT IN SCOTTSDALE ARIZONA, AND AN UNDERSTANDING OF GENERAL ACCOUNTING PRACTICES AND INDUSTRIAL PSYCHOLOGY AT THE UNIVERSITY OF WASHINGTON GRADUATE BUSINESS SCHOOL’S “DENTIST AS CEO” PROGRAM. HE IS THE HOST OF “THE ORTHOPRENEURS PODCAST”, MANAGES THE ORTHOPRENEURS FACEBOOK GROUP AND RUNS THE ANNUAL ORTHOPRENEURS SUMMIT.