MtoM #196: Surgeon Gets Back to Broke During Residency and Finance 101: The Basics of Real Estate Investing
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This is the White coat investor podcast milestones to millionaire, celebrating stories of success along the journey to financial freedom.

This milestone e's millionaire dcs number one ninety six surgeon gets back to broke during residency. One of the most underrated financial moves in medicine is working low contents that pays significantly more on average, and you can work locomotive ll time or on the side of your full time.

And when you work with compels the number one staff in agency, they cover your housing and travel costs, which on top of fire pay really is up welcomes also gives you more control of your career, allowing you to go where you want, when you want with the schedule that works for you. It's the perfect way to get ahead financially while getting focused on what you love, whether is low contents or a regular permanent position. Build your career your way with the power compels learn more and compels that come.

All right, welcome back to the podcast. We have got a great podcast for you today. You are going to love IT. We are going to talk about the uh somebody has done some great things are is a relatively early milestone were talking about today um but I found a really fun to uh to consider this and compare IT to what we talked about last week with that million aire who is now part time work as a radiologist.

One other thing I want you to know about is that we are doing a real estate weber and I say we is, can be mostly me doing that. And this is my opinions about real state. I'm going to teach some things.

I have had to mind success as a real state investor. We're to do this on the twelve november, six P. M.

mountain. Five specific at the clock key turn at the time that seems to work best for these weapon ers. I know IT doesn't work for everybody.

We will record IT will make IT available to you afterward, but you can sign up for this thing and White conveyor dot com slash real state weber. I'm going talk about how to boost returns, lower taxes and build wealth using real estate. We're going talk about how current interest strates are impact in the real estate market working.

Talk about how real stake and fast track your financial freedom working. Talk about the pros and cons of the various real estate investment strategies. There are a lot of ways to invest, and you need to choose the right real state investments for your portfolio and your method of investing real state.

Never even talk about how to maximize zed, a massive real estate tax deductions that are available. Then we're going to do some Q N A. You can get your questions answered in the Q N A session afterward.

So join me live this. This can be a live and r tuesday, november twill. Six P M.

mountain. See them. You are all again is right on investor dot com flash real estate weber, okay. We're going to do, uh, a great interview here. You're really going to love IT, but I also want you to stick around afterwards, really talk for a few minutes about the basics of real state and so sick around our guest today on the mile stone's podcast is neil. Neil, welcome to the podcast.

Thank you. Jam preciate you have .

me tells what you do for a living, how part you are at a training, what part of the country you live in.

Alright, so i'm a fifty year general surgery resident in michigan. Get ready to do a fellowship next year and mainly visited surgery barria rics and in foregoes surgery. And you excited to be here.

awesome. We'll tell us what milestone .

were celebrating today. I I recently am back to broke network of zero.

That's awesome to do that while you're still in training. You know most dogs are not able to do that. Uh, granted as surgical residencies a little longer than some others, but that still pretty impressive. So tell us about your tells about your debts, tells about your .

assets now okay. Well, I came out of medical school with uh hundred and seventy thousand dollars in medical school death. And over the past or a half years or so, i've been able to through my investment through a four three b and ros I R A uh as well in H S C. I'm been able to accumulate assets of positive one hundred and seventy thousand.

awesome. So you still have the medical school that IT hasn't gone .

on anywhere to say the exact same.

no. And what's your plan for managing net?

I would like to get rid that as soon post and pretty dead diverse was raised on more of the the davers z plan. So you saw the opportunity during residency to, you know, get started on investing. And I would like to as as soon as I start making A A bigger paycheck and as an attending would like to pay off that dead as soon as possible.

Do you anticipate taking a job that would qualify for public service loan forgiveness? Or just no idea at this point because after six years of training, I mean, you ve got a lot of years toward public service loan. Forgive me if you stay on this .

yeah yeah you know i've considered that throughout the years i've ultimately made the decision and more just a personal decision, I was going to pay off to that. So as not as much of an issue at the public student loan forgiveness ve made some i've done some steps along the way after medical school. I did a great doctoral fellowship for a year at the medical school that I went to and spent a year there.

And they took care of my tuition for the last couple of years of medical school. So I ve made some steps long the way to really minimize the amount of a medical school dead that I have um if just been kind of A A goal of mind to be able to to pay after that. So that's my plan as soon as I start making an attending paycheck is to pay off the death.

Very cool. Now, are you single married at sea? Single.

single. okay.

And so all of this a all of this progress you've made financially been due to your income as our writers have been some lottery in. There are big inheritance or something .

along the way to note. Note is this in a single income and living purposefully, living frugally and saving everything that I can.

So what have you been paid as a resident? Sixty, sixty five thousand dollars, something like that year?

Yeah, yeah. About that. I think we're at sixty seven this year, but sixty to sixty seven has been the range.

okay. And what person is that? Did you say? I mean, you've accumulated one hundred and seventy one thousand dollars in in just over forty years, really how much that we're you saving?

You know I figured I I had a savings rate about fifty percent wow of gross income. So yeah, it's been a good journey. I think I let go of the range just a little bit for medical school when I know wasn't making any money. So I feel like i'm living comfortably enough um for my position in life, but I ve been tried to know trying to travel away as much as much as I can. savings.

There are a big bunch of residents out there whose job just dropped that you like they're struggling to live on there. Sixty or sixty five or sixty seven thousand dollars year, they're barely able to save anything. Tell us how you did that.

I mean, being in michigan rather than san Francisco might help a little bit, but tell us how you do that. I mean, what what do you drive? What kind of place do you live in? Do you gone trips? Um how often eat out? What what does your life look like over last four years financially speaking?

Yeah no I think I kind of identified as the big expenses, not in people's lives as rent. And um you are paying for their cars. And i've really tried to minimize my monthly expenses in that I feel like i've i've been able to to sacrifice.

I I don't you know i'm single. This is a good time in my life where I can live in in very cheap sing, do everything I can to save on that side of things. Then car for the first half of residents. Y, I drove a two thousand and stuvic, and IT was north of two hundred and fifty thousand miles. So had that that gave up on me, I was able to just go on and find a relatively cheap car IT. It's not know something that I plan on driving forever, but like I said, kind of being raised with dave rounds of principles, driving the beef ter and living that way now so that in the future, when when I do have you know more money, I can um spend IT however I want but you know making the sacrifices now again, when i'm single and and and residency I think is going to be a whole lot easier than you when i'm making a significantly more amount of money yeah and .

there is no doubt that you're going to have a lot more money later giving your ability to live on fifty percent of a resident salary now, right? I mean, where do where do these habits come from? Where when did you become financially later? IT winded, managing money well become important to you.

You know, I I think growing up, my my family, my my father and one of eleven kids. And so my father taught us financial principle facility as a Young age, if you're wanting to do college or beyond our even expenses beyond, you know, just a, you know, the regular of food and know of cause he provided a good place to live in everything. But that that was kind of up, up to us.

So the age of thirteen, I was delivering newspapers before school and putting that in the savings. And and that just kind of continued throughout high school and delivering newspapers and and getting odd job um citing that where really wasn't ingrained in me the importance of a saving money and then no, I just kind of became fun. I feel like, you know throw out medical school. I actually live in advance through our medical school. What's the band .

parts done by the river by chance?

Exactly exactly. Um so I started myself around with good friends. Um as as well you're people trying to save money and and kind of seen this as a game, an opportunity to set ourselves up for you know later in life and in making the sacrifice is now delayed. Gratification has been, you know big model, something that I ve lived by.

I mean, you're pretty far out on the bell curve of what people are willing to do lifestyle SE in medical school and residency. But that sounds like it's a comfortable place for you and certainly is gone to work wonders for finances.

Yeah absolutely. I I over the past several years, I really try to be minded full of not being cheap versus frugal and trying to find A A good baLance where i'm i'm enjoying life and um unable to you enjoy experience to celebrate miles on things like that. But in a way that I am still preparing myself for the future. Yeah.

I mean, I often talk about the five money activities, right, earning, saving them in spending, giving IT. At some point, given your habits, you're gonna a lot of money to spend and going to have to spend some time working on learning how to spend well as well, which is an awesome chAllenge to have. By the way, this is not a bad thing.

This is a wonderful problem to have to work on. Far differ from what most americans and even most doctors have to work on. But you know, I think you recognize that already and and that's a good thing.

But this is a fun jacket position for me because the interview I did just before this said, you all heard last week, know we released in a week before this interview, but I recorded a two minutes before this interview was a discussion with a deck millionaire radiologists. You know, twenty years out, that is the past way you're on, right? You're going to be at that point.

You know, on twenty years from now, you're going to be able to do whatever work you want, part time, full time and foreign, whatever you want to do, no work at all, and be a deca millionaire at that point. Have you thought about that? What your future financial life is gonna like and what changes, uh, and you might make IT.

yeah, I think so again, along with, you know, enjoying being fruit and and what not, I thought a lot about, you know, being focused on purpose with your money setting goals. And you know, I think down the line, that's absolutely a goal of mine.

I the more i've IT involved with the White coat investor picking IT up in in medical school um and really listening to every powerpc f you put out and reading all of the all of the articles, I I think money is become much more than something that i'm saving at this point. I D really like to can involve in in real estate and you do different things with with my money in the future, some more than just trying to save money. I think I do look forward to the future and you know getting involved in you know about i'm putting my money to work and expLoring that side of things.

Now certainly the foundation you have laid is going to serve you well. What tips do you have for somebody that, you know, working toward getting back to broke there? They're feeling a little depressed about know there are debts being bigger than their assets.

They wonder if they are ever going to to get back to a network of zero. Maybe there are resident, maybe there a medical student, maybe there are a few years of training already. What advice you have for them by getting back to broke?

The first thing is to sec goals. I I think you know looking at, no, I had one hundred and seventy thousand dollars in debt, but you I understand that people may have upwards of three, four, one hundred thousand dollars and it's not one event or one thing that you're going to do that's going to change all of that. It's it's little steps so long the way it's setting little goals again, delayed gratification I think is is the most important thing that I try to talk to people about and you know sacrificing today and it's tough with spending five or ten dollars today doesn't seem like a big deal especially in the the grand skin with things for all about creating habits um and the mindset of saving money and ultimately I think you need to you know have fun things planned for your money as well. Things that you know when I when I reached this point, when I you reach million dollars 在， you know whether it's, you know what am I going to do with with my money to celebrate and enjoy my money so I think it's being purposeful is is probably the most important thing for somebody who is trying to who's either just starting restaurant and seen has a lot of that or know someone that's just at the beginning of their financial journey.

Ah awesome. I love the emphasis on intentionality will kill. Congratulations to you on your success. IT may feel like a very small milestone, a very early milestone, but IT is one of the most important. So congratulations to you and thank you for coming on the podcast to sure and inspire others to do the same.

thanks. yeah. Appreciate you have in me.

all right, I hope you enjoy that interview sometimes. A White code investor and y code investor community and those of you on the facebook group were the forum or the sub reit. You know you get this reputation or you know you make fun of people that are a little bit extreme in their financial habits, right? They drive a really old, a really inexpensive car or uh, you know they save a huge percentage of their income as settle.

But i'll tell you what, there's great power in being an extremist for a little while, right? Uh the beautiful thing about living in what many doctors will consider an extreme way is that you now know exactly what you value and you can spend money later on what you value for example, um you know I used to drive really an expensive cars, you know, before I was wealthy, I bought a car once for one thousand fifty ology. This is as an attending physician, and I dropped for four years.

The next car I bought after that with four thousand dollars, and I drove that also for several more years as an attending physician. Now the ci drive is not inexpensive. It's kind of ridiculous actually um but IT has you know every possible safety feature that could possibly be put on a car in twenty twenty three as well as a massive turing capacity and uh all kinds of cool stuff I love about IT.

The point of being super frugal is not necessarily to be super frugal. Your whole life is to get yourself in the opposition where you can live your life in the way you want to do so. So when I tell people to live like a resident that for a period of time of like two to five years, not forever, I don't necessarily want you to be living like a resident when you're fifty eight.

Okay, that's probably not a baLanced way to live your life. Likewise, I tell people to, uh you know be frugal in what you spent on a car, right? But I don't think a forty eight year old, depending buying a car, should be looking at the same cars as a thirty two year old attending buying a car, right? You're in a different place financially, I hope, and look at a different cars.

I'm a big fan of driving a beef for a while, but I am not a fan of driving a beef for your entire career, right? You're doing that wrong if you feel like you have to drive a beater when you're fifty five years old, gay, that's not the way this is supposed to work. So I think it's pretty awesome, uh, to look at the the two people we had the last couple of weeks on on the podcast, right?

We've got a deca millionaire that feels like you spend a lot spent in a couple hundred thousand dollars a year. We've got a resident that is a no spending half of a resident salary. What may not be entirely clear are these are really the same person or the same type of person, twenty two years apart.

One of these things leads to the other being very, very frugal and very mindful with how you spend and save and and best and earn your money early on leads to be in a deck million aie twenty years later. Uh, it's a it's a very interesting connection. I thought between two people have been very successful in different ways, but we all said and done will both be very financially successful.

So find some balancing your life. You do not have to drive a twenty five year old car to be financially successful as doctor, okay? You do not have to save fifty percent of your income, especially as a resident, to be financially successful as a doctor.

You do not have to be a deck of millionaire to be financially successful as a doctor. Figure out what you want in your lights, figure out what's important to you, and find a baLance between spending money now on current you and saving a little bit of money for future you to also have a nice life. I promise to the beginning that we can talk about the basics of real estate.

So let's do that. Real estate investing. Why do I like real estate? I like real estate for two main reasons.

You know, when you boil IT all down these, the two main reasons I invest in real state and is not because I gotto feel like I can put my hands on my investment, is not because all the tax breaks are so awesome. It's not for passive income, right? There's two main reasons I invest in real state.

One is high returns, and realistic returns are high, like stock returns. And so that's a good thing in your portfolio. In fact, with a little bit lever attitude, they can be a little by higher than stock returns.

Um you know because dark turn typically aren't level is obviously you leverage those you'd expect a little higher return to. And the second reason is relatively low, you know low to moderate correlation with stocks and bonds in your portfolio. I think it's the best of the alternative asset classes out there.

So when I I don't know that I even think about is an alternative anymore. When I think about a reasonable portfolio, I think about stocks, bonds and realist, yeah, you can add some other stuff to IT if you want you and add a little gold or something or some big color, uh, some other nitch asset class, fine. But in generally, you keep those are relatively small percentage of your report folio.

When we're talking about stocks and bonds in real estate, I think most people are okay with those being pretty good chunks of your portfolio, but those are the reasons why I invest in real state. Now the tRicky est part about investing in real estate is that you have to learn more than you do to invest in stocks. Let's be honest, stock investing is super, super, super easy.

And because the right way to invest is very clear from the data is to go get low cost, broadly diversified index funds basically by all the stocks and hold them forever. And as how you invest in stocks profitably, it's not hard. It's not complicated.

You can buy all the stocks in the world in thirty seconds. You don't have to know a thing about one of the individual companies, right? And you're going to get the market return over, you know, the two or three decades or whatever you're saving for retirement.

And that's gonna be enough as can be enough to for you to reach your goals. Stop investing. Super lazy.

We will. Investing not is easy. It's gonna take more effort. And I am sorry. I mean, there is that one similar way to invest in real state is relatively easy and ask for people that one into the spectrum that want maximum diversification, minimal hassle, maximum liquidity and as to go by, uh, an index fund of the real al estate companies in the stock market. And so you already have those if you own a total stock market fun.

But h this would give you a chance to put a little bit more of your portfolio in the real estate. My favorite, holding marriage, just a vanguard real state in next fund, the D A version's V N Q. It's a almost free like most van guard index funds.

And I think they're one hundred and twenty or something real estate investment just that you buy when you buy that. And that's cool. You can invest in real estate that way.

That's often the way people start with. Realised ate investing is just tilt in their portfolio bit by adding that fund into IT. Super easy.

Uh, no big deal. You do metal. And some of the benefits of real state investing, you can get by investing in another way. But the important part, when you decide invest in real states to figure out where on the spectrum you belong.

Some people belong on the part where they're building houses and other properties from the ground up, right? Others are doing fix and flips. Um you know there's long term rentals. There's short term rentals. You can get off the direct side of real estate investing.

You can invest passively uh, in the source of projects but still privately you know with syndications funds basically you know eight or ten twice fifteen indications uh and then finally on the public be traded side with with the index fun, like B, M, Q. The important part is that you match you. Those are all reasonable waste.

Invest, right? You can have a turn key property and be a good realist investor. You can be a fixed and flip and be a good realist investor.

You can be investing as indications be a good really investor. But you've got to match what you choose with you. That's the important part. If you're somebody that does not want to get your hands dirty, you don't want any tenant calls, you don't want to have to you know uh mess with, uh, evaluating uh, syndication Operators. Well, you're probably going to be dealing with mostly publicly traded real estate, maybe a few private funds.

On the other hand, if you're the type of person you like, well, what's the greatest tax benefit I can get at this restate? How how can I get my return? Um you know I want to be able to drive by my investments and show me off my family. Well, maybe you can be somewhere else on the spector. Maybe you'll be, you know, turn key investor.

Maybe you'll be, you know, in short term, uh, rentals, but you've got a match yourself and and that's a really important aspect, a real estate investing because if you don't even be unhappy, if you're really a very passive person and you've built some empire of short term rentals, you I can be happy. On the other hand, if you're like, uh, I don't trust anybody else and I don't you know, I think stocks or paper access, well, you're probably going to be a lot more on the left side of that spectrum of that continuum of different types of real state investing. But none of it's wrong, right? He just needs to match you.

okay. A few other things I think you to know about realistic investing. It's important to understand what's called the capital stack and what is the capital step.

Well, the bottom of IT is the debt. So you go buy a property. And typically, this is leverage in some way. There's some borrowed money is bought partially with other people's money right alone.

And so the bottom of that capital stack is the one and the debt, the mortgage, whatever you want to call IT. And typically, that mortgage has first position. Mean, if something bad happens with this investment, the lenders is a person who gets their money first, and that's the least risky place to invest in. Realistic, you can be the lender, right? And obviously, if you only lend on one property, that still pretty risky because you're not very diversified.

But if you're learning you on a whole bunch of properties like a real state dead sun, um that's a pretty safe place to invest, right? Because when things go bad, that dead fund can foresee and sell the property know if you're only loan in sixty percent of the value of that property and they're doing a terrible job management. They're not paying you but they must must be paying you and you for clothes well, you can probably stop sell the property for sixty percent right of what it's worth um no matter how badly they've been running IT.

And so you're pretty protective there. Of course, you're returns or limited, right? You're not going to get more and they interesting you agree to and that can be pretty good when you're running money to developer sometimes because they're on the borrowing money short term bll twelve percent and two points to borrow money for six months or nine months.

And so you can often have a pretty good return. A lot of these debt funds have returned in the seven to eleven percent range. Now you can move up the capital step by the next place to honor is typically measured debt, sometimes called preferred equity.

No slight differences between those two. That's kind of the next place in the company stand. You're not in first lean position when you're investing in those types of investments, right?

The first people to get their money is the primary lenders, and they get all their money first and all the interest, the road and then and only then if there's any money left over does the messene data prefer equity. People get their money, but they get their money next, right? So I really went a little bit Better.

Not terribly bad. You may still get all of your principal back and all of the interest you expected at the top of the capital stacks of the equity investors. And these are the people who want the great returns.

There are hope and everything goes awesome. And they make twenty five percent on this investment, but they get paid last. And so it's a risk yer investment. And the more leveraged is on this property, the risk for that position becomes when deals go bad, when properties do not do what they were expected to do, when the vacancy rate goes way up, when IT costs way more to rehabilitator property than anybody expected, uh, when interest rates go through the roof, you know, when an area becomes depressed, for whatever reason, economically, those are the people who get hurt. You know there is the top of the capital stack and uh so the last ones to get paid.

So gage your risk in how you in the capital stack understand who's ahead of you know what the terms are on that debt, especially if you're the equity investor, know what death is there, how much and what the terms on IT are because a lot of times that's going to make a difference. So whether you get um you know a solid return or even get your principle that all right, I think those are some of the basics to really understand about real estate investing. If you'd like to learn more, we do have a real estate course, uh you can check out we call IT, no hype, real state investing.

We actually have a web r on the twelve that you should check out if you want to learn more about real estate. I'll be teaching that way in our and we're in going to a lot more detail we did in this podcast. But if you're interested in get in the real state, uh, that's a great free resource out to check out the web on our free in the courses, not but IT does come as usual with our money back here and tea like all of our online courses.

So uh, thanks for check and stuff out. If you're interested in doing more as real state, if not, remember, this stuff all totally optional, is possible to become financially never invest in in anything, the stocks and bonds you do not have to invest in real state that if you're gonna go outside the stock combined universe, I think, is probably your first stop. Our sponsor for this episode is compelled, I mentioned at the top of the podcast working loops with compel th the number one staff in agency.

But compel t isn't just a little comes agency. Compel test regular, permanent positions across the nation as well. They also offer telehealth medical missions and more.

That's what makes them unique. They can look at your situation now for multiple solutions to build your career the way you want IT and meet your financial goals. And they other stuff, especially when he comes time to negotiate contracts, which they are willing to do for you.

So whatever career move you're looking for, use the power of compels to build your career your way, learn more and compile, not come. Thanks for being witness today. Ah I enjoy doing these interviews with you guys.

I know you guys that come on, enjoy talking with me for a few minutes before after the interview. If you're interested applying to beyond the milestones podcast, you can do so. Why can investor dot com flash milestones is where you apply? And we don't care what the milestone is.

You know you might be a pental million aire. You might be, you know, having just paid off the first thousand dollars of your student loans. I don't care.

We'll celebrate with you will use this to inspire others to do the same. Keep your head up in your shoulder back. You've got this. We'll see the next time on the forecast.

The host of the White code investor are not licensed to countless attorneys or financial advisors. This podcast is for your entertainment and information only. IT should not be considered professional or personalized financial advice. You should consult the appropriate professional for specific advice relating to your situation.