A Doctor’s Guide to Real Estate Investing
Real estate investing can be a scary proposition. When I was younger, I used to think real estate was only for the very uber-rich. Then, I read Rich Dad, Poor Dad and learned that real estate investing and passive income generation is HOW the uber-rich get that wealthy.
So, when Josh and I started buying real estate, we did it through the lens of ultimately wanting to be real estate investors. Now we have one single-family rental. We thought we knew what we were doing.
I had the pleasure of reading Dr. Cory Fawcett’s new book recently- The Doctor’s Guide to Real Estate Investing. My favorite part about blogging is expanding my mind by reading and collaborating with successful financial experts. And MAN did I learn a lot by reading this book.
I have been binging on real estate investing podcasts and blogs recently and I’ve picked up some tidbits here and there. But, if you’re looking for a quick way to get a hard-hitting summary to learn about multi-unit residential property investing, this book should be your go-to.
So let me tell you a little about it.
Who is this book for?
For doctors looking to get started with investing in multifamily residential properties. Cory owns a few of these (64 rental units in 5 apartment complexes), so he can give us a really good primer on how to make a deal and manage these properties. My 4 year old also took an interest in the book and asked me to read it to him at night. He had a lot of good questions like, “What are taxes?” and “What is selling?” lol. That’s harder to explain than I thought! I can’t wait to let him help when we buy our first multifamily. Oh hey, and I also got a haircut! Another post coming soon on how much I love my short hair.
What does the book contain?
Why Invest in Real Estate
The book starts with WHY you should be a real estate investor. It is well written and entertaining- I found myself chuckling at this paragraph.
“There are so many mistaken perceptions about owning rental real estate. Someone will hear of my properties and feel the need to tell me they wouldn’t want to unclog a toilet on Thanksgiving. In these conversations, you would be surprised how often a toilet causes the hypothetical problem and the holiday is Thanksgiving. Why people feel obliged to tell me this is an interesting phenomenon.”Dr. Cory Fawcett
The answer to the question “Why invest in real estate, as opposed to index funds?” is cash flow. Rental real estate provides the passive income you need for early retirement without any age caveats. As a bonus, property values tend to increase over time. Depreciation and maintanance costs provide us with tax deductions to shelter our clinical income.
Evaluating the Property
Dr. Fawcett tells us how he obtained his first million-dollar property. Surprisingly, it was with no money down and WITHOUT a bank financing it.
Then, we get to the meat of the book- how to evaluate a property and make an offer. Cory teaches us how the 1% rule is only a screening tool, how the cap rate is calculated, it’s pitfalls, how it can be manipulated, and how cash flow is king when evaluating real estate.
I learned some really valuable information on how to evaluate the numbers on a property during the due diligence phase. An important note was to ask for the schedule E for the property for the last 2 years and make sure the numbers align with the numbers given by the seller on the properties income and expenses. Also included is a nice worksheet to come up with a cash flow analysis on a property.
Buying the First Property
At this point, I couldn’t put the book down. I flew through the rest of the book until the end. I was eager to find out how I could get in as well.
In Chapter 8, Cory tells us about how to finance our deals. I thought traditional financing through a bank with 30% down was the only option. I learned that seller financing is a thing- it’s less expensive for the buyer (no loan origination fees or mortgage insurance) and it can be made attractive to a seller with a paid-off property.
The seller would have to do something with the money they get from the sale anyway- why invest in a CD with a 2% return when you can get a 5-8% return on a mortgage to a buyer? If the buyer defaults, the seller gets the property back to resell. In fact, Dr. Fawcett has offered a similar loan to a buyer of this property. As Cory states, “It’s like having an annuity without dealing with an insurance agent.”
Then, we learn about what contingencies to put in an offer, HOW to present the offer to the seller, and what to do at closing. Phew! Lots of really good information here.
How to Manage the Property
After we own the property, we’ll need to know how to manage it. Dr. Fawcett, helped his grandmother manage her properties as a young man and then managed his own while working as a full time surgeon for many years, so he has a lot to teach us.
There is some really good information in this book about how to handle vacations and emergencies, how to show apartments and screen tenants, how to do maintenance and repair, and if and how to use management companies.
How to Handle Taxes
Finally, we learn about how to keep the books and benefit from all the tax advantages of providing housing for the community. Dr. Fawcett explains capital gains taxes and why a step-up in basis is so beneficial when passing property on to the next generation.
When Should You Read This Book?
This book is a good primer to the world of multifamily investing if you’re looking to get an overview of the process, as well as a taste of the nitty-gritty. Dr. Fawcett does an excellent job of summarizing a lot of important concepts in an easy read manner. When I am ready to buy a multifamily building, I plan to go through this book chapter by chapter, again, to refresh all the details.
Where Should You Read this Book?
Well, my son wanted me to read this book to him at bedtime. But, you could really read it anywhere. It’s a quick read and entertaining enough to keep you engaged where ever you are.
How should you read this book?
Well, I’m a note-taker and I love the feel of a book in my hand, so I like to have a hard copy. But, it is also available on kindle.
Dr. Fawcett is a prolific writer. He does not disappoint here. He delivers a book packed with great content in a conversational and easy to read manner. He does a good job of addressing all the lingering questions and concerns I had in the back of my mind about multi-family real estate investing. He shows us, through his own example, that real estate can fast track our path to financial freedom and that it’s not all fixing broken toilets on Thanksgiving!
Thanks to this book, owning multi-unit properties has gone from a bit of a question mark in my mind to a definite goal to start working towards. My 4 year old is also convinced cash flowing rentals is where it’s at! If he actually helps out, he’s looking at a well funded Roth IRA in his future! *proud mom* Anyway, I would highly recommend this book to anyone who is interested in learning more about multi-familiy real estate investing.
Thanks for reading and stay frugal!
Standard Disclaimer: Not meant as individualized financial or medical advice. This post contains affiliate links.