Syndicator machines (passiveincomeMD) targeting physicians

[sloh]

This article was ironically shared on the Physicians on Fire facebook group. Will probably be taken down by the admins lol. Posting in this group bc you anesthesia folks are savvy with money and investing.

In March, three doctors were prepping for their latest operation.

Success would be measured not by patient outcome, but by the physicians’ salesmanship for their real estate venture.
That is, could Peter Kim, Pranay Parikh and Mithulan Jegapragasan, the three doctors behind investment firm Ascent Equity, rake in enough $100,000 checks to cobble together the $22 million needed to buy a Phoenix-area multifamily property?
By design, they had an in with their target audience. They were pitching themselves, leveraging their credibility to collect money from other doctors to buy apartment complexes, also known as syndication.

“PASSIVE INVESTING THAT DOCTORS CAN TRUST,” is how Ascent shouts its branding online. The firm, founded in 2020, connects other physicians with “low-risk, high-growth” multifamily deals in which it is already a partner.

Ascent is one of a rash of firms that mushroomed in the years after the 2012 JOBS Act passed and subsequently drove the multifamily syndication boom.

But investing carries risk and trust can cloud judgment. Syndicators that produced stellar returns when rates were low have watched deals struggle or fail over the past year. Interest payments on floating-rate loans have soared, rent growth plateaued and value-add plans stalled.

While a critical mass of MDs or MBAs may have helped syndicators grow, they do not appear to have shielded syndicators from the downturn.

Some have already weathered the fallout, like limited partners in Applesway, who lost millions after the group lost a Houston portfolio to foreclosure.

Others have yet to see the other shoe drop.
“You just say, ‘I want to target someone that has browsed a real estate site in the last 30 days and is likely to make this amount of income’,” Ippolito said. “It’s really easy to reach a lot of people.”

“It’s pretty weird, as it’s basically syndicators giving money to syndicators, further hurting investors,” the principal added.

Feeder funds generally charge an acquisition fee for finding the deal and layer it on top of the acquisition or asset management fees that sponsors demand.

“I don’t understand why an investor would invest in a feeder fund, because you’re paying double fees,” said another principal of a multifamily investment firm.

“Some people do it right, but more than half don’t,” Chernobelskiy said. “Then one person is clueless about real estate investing, and they’re being led by another person clueless about real estate investing.”

“It could be Indians targeting other Indians or Jewish people targeting other Jewish people,” said Ian Ippolito, a crowdfunding investor and commentator. “They’ll also market to church groups — anywhere there’s a small community where people really trust each other.”

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[sloh]

Poster:

Thanks for posting this. I've always said that people like PassivelncomeMD, SemiRetiredMD and many others wouldn't be peddling their courses if doctors weren't easy targets especially with burnout related to our jobs. We're an easy group to target for access to capital as the article mentions and take on all the risks. Invest in global total market index funds for your risk tolerance and enjoy life. Majority of these groups list Robert Kiyosaki and his books as their inspiration and that alone should be a red flag for anyone thinking about investing with them. They create a sense of exclusivity by offering waitlists ad exclusive access to secret networks that promise all the rewards with minimal to no downside.

PassinveIncomeMD:

Imagine there's a real estate syndication group:
- Whose founders have internally pledged not to take a single penny of profit from any deal until all investors' capital is secure and protected, setting up a system where they can only win after everyone else has won, and have kept that promise.
- Who are the largest investors in nearly every deal.
- Who have poured their own personal funds into covering any rare shortfalls so investors wouldn't have to contribute more money in the form of a capital call.
- Who isn't just a feeder fund, but is a true JV or Co-GP in every deal, where they have major decision rights to protect investors and have actually taken over the lead on operations on deals that weren't performing to their standards to right the ship.
- Who invested heavily to build an asset management arm to protect their investors' capital.
- Who "targets" physicians because that is the community they have a mission to help and protect, and have put their own families' finances at risk to do so.
I'm proud to say that this is what my partners and I have built at Ascent as fellow doctors. I did this not for the money but because, like all of you, I want to be able to look at myself in the mirror and into the faces of my spouse and kids each night and say, "I might not be perfect, but I give it my all to help my community with heart and integrity."

If anyone would like to talk about this or anything else in life, please email me at [email protected], happy to find a time to chat. I'd rather answer your questions directly instead of you hearing misinformation from the tabloids or cyberbullies. I really appreciate and respect everyone in this community, thanks.

Poster:

imagine selling courses to physicians on how to be a better LP for thousands of $$ and even way more expensive courses on how to become a GP this year for $30k while your deals are not performing to projections and there is real question of how much of a GP your team actually is. Imagine thinking about your community as a funnel. Even worse imagine being a physician who thinks this is ok

 

[GassYous]

Yep, wci is really advertising real estate courses and syndications heavily too. It's sad to watch his journey.

 

[BLADEMDA]

Yep, wci is really advertising real estate courses and syndications heavily too. It's sad to watch his journey.

The road to riches is paved with salesmanship. He is now one of the wealthiest men peddling advice/courses/referrals on the web to physicians. He is every bit as successful as Dave Ramsey is to his target audience, and these days, well beyond. What started out as simple blog has morphed into a multimillion dollar per year enterprise with books, speeches, conferences and business ventures. Jim has made millions in real estate himself. I watch his videos and read his posts. He offers great advice but be wary of his sales pitches and real estate ventures.

Many have used his recommendations for insurance and advisors. By no means am I disparaging him but rather urging caution in understanding where he stands today.

 

[BLADEMDA]

Jim Dahle now employs 12 people via his WCI business. Dr. Dahle is more a businessman than a physician the past few years in terms of where his money/income comes from. As such, one should be cautious of recommendations or sales pitches without doing due diligence. I recommend Bogleheads and Dr. Dahle has been a speaker at their conferences in the past. I agree with Jim Dahle 90% of the time on investing but when it comes to Real Estate please be careful and look for local, experienced investors in your area rather than syndicated companies. Sevo has done it correctly as have many others.

 

[BLADEMDA]

Watch from 8 minutes until 11 minutes. Great Advice- "Live like a Resident for 2-3 years."

 

[anonperson]

Yep, wci is really advertising real estate courses and syndications heavily too. It's sad to watch his journey.

Lol. He has to drum up extra crap to make money. There's only so many articles you can write that talk about spending wisely and investing in a broad market fund consistently which is basically what any physician needs to do generate a healthy seven figure portfolio.

Without anything new, his website will lose revenue and he may **gasp** have to see a patient or two to make a buck. ( Although with the amount I think he's made, he should be financially independent).

 

[GassYous]

Lol. He has to drum up extra crap to make money. There's only so many articles you can write that talk about spending wisely and investing in a broad market fund consistently which is basically what any physician needs to do generate a healthy seven figure portfolio.

Without anything new, his website will lose revenue and he may **gasp** have to see a patient or two to make a buck. ( Although with the amount I think he's made, he should be financially independent).

He still does clinical work and he was making over a million a year the last time he made a disclosure. I used drdisability quotes from his website and I thought they were good. I have own occupation with all necessary riders at 10k a month for just over 3k a year thanks to him. His original white coat investor book has been instrumental in my journey to financial freedom. I remember when he used to post on this website. But he has strayed a bit from his original purpose.

 

[BLADEMDA]

He still does clinical work and he was making over a million a year the last time he made a disclosure. I used drdisability quotes from his website and I thought they were good. I have own occupation with all necessary riders at 10k a month for just over 3k a year thanks to him. His original white coat investor book has been instrumental in my journey to financial freedom. I remember when he used to post on this website. But he has strayed a bit from his original purpose.

I believe his WCI business generates well over a million per year alone. That's his cut from the business after paying all his employees. I suspect the actual number is $2 mil + when you include his real estate investments which are separate from his WCI business.

 

[BLADEMDA]

He still does clinical work and he was making over a million a year the last time he made a disclosure. I used drdisability quotes from his website and I thought they were good. I have own occupation with all necessary riders at 10k a month for just over 3k a year thanks to him. His original white coat investor book has been instrumental in my journey to financial freedom. I remember when he used to post on this website. But he has strayed a bit from his original purpose.

I agree with you that the original WCI website and his investor book did a lot of good things for a lot of people. But, WCI pre-2018 is not WCI in 2024 which has morphed into a true business with some questionable real estate ventures for physicians. I would steer clear of a lot of his "new" recommendations on where to invest your money. This is different in 2024 than say 2018 where he would recommend low cost, passive index funds and REITS for diversification.
Jim Dahle still recommends passive, low cost index funds but he now includes speculative real estate which he pushes pretty hard on his website and lectures.

Dr. Dahle has taken a side business/hobby and made it into a multi mullion dollar per year enterprise; He recently announced he was giving $5 million to each of his 4 children as part of his estate planning very soon. This proves he has a huge net worth far exceeding 99.9% of the posters on SDN. I congratulate him on his success and wish him well. But, I would be wary of his recommendations in 2024 so do your due diligence.

 

[rick roller pump]

My theory is that the push for real estate (at least post 2020) is the new way to "scam" physicians. The financial industry knows we are high earners but not necessarily financially literate. Probably all of us knows a colleague who is interested in being a real estate investor (because all this stuff is marketed so heavily to us) but clearly has no idea wtf they are doing. In the past physicians used to lose their money to financial advisors, high cost mutual funds, individual stocks, and high fee insurance such as whole life. Now (thanks to blogs such as WCI) most docs are on board with a DIY simple approach to insurance and investing with simple portfolios and index funds, maximizing tax advantaged accounts, term life, good spending habits and good disability insurance. That's the secret to success and it's quite simple. On a physicians salary if you do all this stuff you will be fine. But sites like WCI know you can't keep making money off content like that. So here comes real estate to save the day. If you read any of these blogs they always talk about the merits of real estate and tell you that the simple investment strategy of funds and REITs is not enough. They suggest that every doctor needs to own real estate for "passive income" in case you get burned out. Or they push that you need a "side hustle" for extra income. Guess what, for the vast majority of us the best side hustle is just picking up extra shifts or working locums. If I can make $200/hr (post tax) at my job, can I really expect to make this off of a side hustle? I don't think that the new posts of any of these blogs (WCI, POF, PIMD) are worth reading anymore, and in fact may actually be counterproductive to financial security. Also to those of you on this blog who have been successful in real estate, I am glad it worked out (seriously), but I think with high prices and high interest rates the game has changed and I don't see how the finances could work for those trying to get into real estate now.

 

[BLADEMDA]

My theory is that the push for real estate (at least post 2020) is the new way to "scam" physicians. The financial industry knows we are high earners but not necessarily financially literate. Probably all of us knows a colleague who is interested in being a real estate investor (because all this stuff is marketed so heavily to us) but clearly has no idea wtf they are doing. In the past physicians used to lose their money to financial advisors, high cost mutual funds, individual stocks, and high fee insurance such as whole life. Now (thanks to blogs such as WCI) most docs are on board with a DIY simple approach to insurance and investing with simple portfolios and index funds, maximizing tax advantaged accounts, term life, good spending habits and good disability insurance. That's the secret to success and it's quite simple. On a physicians salary if you do all this stuff you will be fine. But sites like WCI know you can't keep making money off content like that. So here comes real estate to save the day. If you read any of these blogs they always talk about the merits of real estate and tell you that the simple investment strategy of funds and REITs is not enough. They suggest that every doctor needs to own real estate for "passive income" in case you get burned out. Or they push that you need a "side hustle" for extra income. Guess what, for the vast majority of us the best side hustle is just picking up extra shifts or working locums. If I can make $200/hr (post tax) at my job, can I really expect to make this off of a side hustle? I don't think that the new posts of any of these blogs (WCI, POF, PIMD) are worth reading anymore, and in fact may actually be counterproductive to financial security. Also to those of you on this blog who have been successful in real estate, I am glad it worked out (seriously), but I think with high prices and high interest rates the game has changed and I don't see how the finances could work for those trying to get into real estate now.

Great Post. CNBC said that the cost to own is 25%-50% higher than the cost to rent. So, until mortgage rates go back to 4-5%, investment properties need to be purchased below market value to make up for that 25% higher cost. This typically means homes which need to be fixed up or remodeled. Most Physicians don't have the time or skill to remodel a home.

I am helping my son rent a home. The cost of his rent is 25% less than if I gave him a 20% down payment and he took a mortgage at 6%. He would also have to maintain the home. Sure, he gets the appreciation but as of now he earns 25% on his money each month. What I would need to do is a buy a run-down property which is discounted 30% from market value then fix it up for him. Again, this isn't easy to do and most will fail at it.

 

[BLADEMDA]

The top 10 metros with the largest rent versus buy savings:

1. Austin-Round Rock-Georgetown, Texas – $2,165 monthly rent savings (141.5% difference)
2. Seattle-Tacoma-Bellevue, Wash. – $2,422 (121.1%)
3. Phoenix-Mesa-Chandler, Ariz. – $1,528 (99.0%)
4. San Francisco-Oakland-Berkeley, Calif. – $2,689 (95.5%)
5. Los Angeles-Long Beach-Anaheim, Calif. – $2,539 (89.7%)
6. San Jose-Sunnyvale-Santa Clara, Calif. – $2,780 (86.7%)
7. Nashville-Davidson-Murfreesboro-Franklin, Tenn. – $1,366 (86.0%)
8. Portland-Vancouver-Hillsboro, Ore. Wash. – $1,396 (84.4%)
9. Sacramento-Roseville-Folsom, Calif. – $1,514 (82.1%)
10. Houston-The Woodlands-Sugar Land, Texas – $1,103 (80.0%)

Renting is Cheaper than Buying in US Cities | Realty News Report

HOUSTON – (Realty News Report) – It’s now cheaper to rent than to buy a house in every major city in the nation, according to the new Realtor.com Rental Renting is Cheaper than Buying in US Cities

realtynewsreport.com

 

[sloh]

Another great post on syndications below. Pulled from WCI Facebook group. Do your due diligence or stick to maximizing income with your primary job and vtsax
(Most of us should be doing the latter):

Multifamily real estate crash course. This is what you need to know to understand why I don’t love these types of deals for the average passive investor and suggest most doctors DCA sp500 and ignore this crap and not get sucked in.

Syndications are a way for the syndicators to raise money from other people to buy large multifamily complexes (usually 60-300 units per property). These properties typically cost $10-40 million dollars depending on the location and # of units.

Here is why I don’t like them for passive investors. The syndicators usually take 3 types of guaranteed fees off of your money that they raise to buy the deal.

1) Acquisition Fee - Usually 1-2% of the PURCHASE PRICE. $10M property means they get $100-$200k in fees just for acquiring the property with your money. Bigger the purchase price, more fees they take. It’s not uncommon for them to make $500K in just fees upon acquiring the property. They get this immediately at closing. Just as you give them your money they take a fee from your money from day 1. As soon as you part with your money, they get paid!!

2) Asset Management Fee - Usually 2% of the GROSS RENTAL INCOME. Whatever the top line rental income is from all of these units, they take 2% of that per month right off the top no matter what. This continues for the entire duration of ownership of the property. This is not the net amount. This is the top line rental amount before expenses. Think whatever rent you paid in residency for your apartment, they get 2% of that from every tenant every month. Another way they get paid for sure!!

3) Disposition Fee - Usually 1-2% of the price of the property upon a sale or refinance. So, if they bought a property for $10M and sold it for $15M, they would get 1-2% of the $15M price upon sale as another guaranteed fee for them. If they don’t sell and refinance, they also get the fee for whatever the refinance price is and then again upon sale. So, in a refinance case they often get 1-2% of the price TWICE! Again, guaranteed fees before you get anything.

All of these fees come to them even before you get your principal back. They win for sure with all of these fees and then whatever is left over goes to investors.

Now, here is the worst part. Often times, the syndicators will say that they have their own money in the deal. What they don’t mention is that they put their own money in the deal but they get most of it (sometimes all and some profit) back when they get their acquisition fee. So, now they are playing with house money (aka your money) and they have very little to lose except their reputation.

So, with all these fees, it’s no wonder they want to acquire property after property and buy their villas and whatever else with the fees. Of course, they HOPE they make you money but it doesn’t really matter if they do or not because by the time you realize you made a bad decision by investing with them they have bought many properties and collected millions in fees over the 3-5 years they can get away with doing this until people realize they suck at investing and don’t give them more money. Of course, they then find new suckers or if they made enough they just close up shop. Some of the more sophisticated ones will create a new LLC so the old one with all the angry investors is dead and they can start over with a somewhat clean slate since there is no bad press on the new entity.

Now some people say it’s not their fault that interest rates went up so fast. And we shouldn’t blame them. But, they have virtually no risk since they got all their acquisition fees. Why did they do floating rate loans when interest rates going up was a risk? Because, they can’t win the deal unless they did a floating rate loan. If they had done a more conservative fixed rate loan, none of this would be an issue but then they wouldn’t be able to make the math on the underwriting work for the loan and acquisition. They HAD to do floating rate loans to get the properties or they won’t get their fees. They know this and they took this risk because they want to close deals. They are not trying to preserve or grow your capital as their primary goal. If it happens, great for all, but if it doesn’t they still win.

Then the headaches of dealing with all the K-1s on your taxes is another huge pain and as a passive investor the tax benefits aren’t the same as the active investor. You only get a benefit when you sell and roll over the money into more deals. Otherwise, you pay taxes on the gains. You basically have to keep investing all your gains in more and more multifamily deals or else you have to pay the taxes.

My point in saying all of this is that it’s a rigged game in favor of the syndicators who will gladly take risk with your capital because they have almost nothing to lose. So, if you’re wondering why everyone has floating rate loans and expiring rate caps, it’s because they had no choice but to buy properties with floating rate loans or else they wouldn’t be able to close the property. They knew this was a risk and now they want to blame the Fed for rate hikes.

I put a lot of money into these deals and I regret it. If I had just done DCA sp500, I’d have full control of my capital and not be at the mercy of these syndicators. I learned my lesson and now only DCA sp500. Markets go up and down and the issue is you can’t know when the multifamily market goes down and if you have to keep rolling your profits into deals to avoid taxes, eventually you will get burned. It’s just a matter of time.

Or you can just avoid all this brain damage and DCA sp500 and enjoy your life. You will beat virtually all investors and have ZERO stress. This is the advice Buffet gives all of us for free and he’s one of the best investors of all time. So, before you put your money into a real estate syndication with BS projections that only paint a best case scenario, think about Buffet and Bogle and their advice to avoid this noise and DCA sp500. It really is the best way with the least risk to compound wealth. No one has ever lost doing DCA sp500 but many have lost some or even all of their wealth in other investing methods.

I have nothing to gain by sharing this. I don’t make any money from this advice. I already made my bad decisions in 2021/2022 investing in these types of deals with floating rate loans. I was stupid and greedy. In mid 2022, I just started to DCA sp500 with every penny and I’ve neve been happier and I sleep better at night and see my account keep growing with no stress. You don’t need an advisor or to diversify (aka diworsify) into lots of things. It’s just BS sold to you by investment professionals. Trust Buffet and go back to enjoying your life…..unless you love investing and then good luck to you!

 

[BLADEMDA]

Another great post on syndications below. Pulled from WCI Facebook group. Do your due diligence or stick to maximizing income with your primary job and vtsax
(Most of us should be doing the latter):

Multifamily real estate crash course. This is what you need to know to understand why I don’t love these types of deals for the average passive investor and suggest most doctors DCA sp500 and ignore this crap and not get sucked in.

Syndications are a way for the syndicators to raise money from other people to buy large multifamily complexes (usually 60-300 units per property). These properties typically cost $10-40 million dollars depending on the location and # of units.

Here is why I don’t like them for passive investors. The syndicators usually take 3 types of guaranteed fees off of your money that they raise to buy the deal.

1) Acquisition Fee - Usually 1-2% of the PURCHASE PRICE. $10M property means they get $100-$200k in fees just for acquiring the property with your money. Bigger the purchase price, more fees they take. It’s not uncommon for them to make $500K in just fees upon acquiring the property. They get this immediately at closing. Just as you give them your money they take a fee from your money from day 1. As soon as you part with your money, they get paid!!

2) Asset Management Fee - Usually 2% of the GROSS RENTAL INCOME. Whatever the top line rental income is from all of these units, they take 2% of that per month right off the top no matter what. This continues for the entire duration of ownership of the property. This is not the net amount. This is the top line rental amount before expenses. Think whatever rent you paid in residency for your apartment, they get 2% of that from every tenant every month. Another way they get paid for sure!!

3) Disposition Fee - Usually 1-2% of the price of the property upon a sale or refinance. So, if they bought a property for $10M and sold it for $15M, they would get 1-2% of the $15M price upon sale as another guaranteed fee for them. If they don’t sell and refinance, they also get the fee for whatever the refinance price is and then again upon sale. So, in a refinance case they often get 1-2% of the price TWICE! Again, guaranteed fees before you get anything.

All of these fees come to them even before you get your principal back. They win for sure with all of these fees and then whatever is left over goes to investors.

Now, here is the worst part. Often times, the syndicators will say that they have their own money in the deal. What they don’t mention is that they put their own money in the deal but they get most of it (sometimes all and some profit) back when they get their acquisition fee. So, now they are playing with house money (aka your money) and they have very little to lose except their reputation.

So, with all these fees, it’s no wonder they want to acquire property after property and buy their villas and whatever else with the fees. Of course, they HOPE they make you money but it doesn’t really matter if they do or not because by the time you realize you made a bad decision by investing with them they have bought many properties and collected millions in fees over the 3-5 years they can get away with doing this until people realize they suck at investing and don’t give them more money. Of course, they then find new suckers or if they made enough they just close up shop. Some of the more sophisticated ones will create a new LLC so the old one with all the angry investors is dead and they can start over with a somewhat clean slate since there is no bad press on the new entity.

Now some people say it’s not their fault that interest rates went up so fast. And we shouldn’t blame them. But, they have virtually no risk since they got all their acquisition fees. Why did they do floating rate loans when interest rates going up was a risk? Because, they can’t win the deal unless they did a floating rate loan. If they had done a more conservative fixed rate loan, none of this would be an issue but then they wouldn’t be able to make the math on the underwriting work for the loan and acquisition. They HAD to do floating rate loans to get the properties or they won’t get their fees. They know this and they took this risk because they want to close deals. They are not trying to preserve or grow your capital as their primary goal. If it happens, great for all, but if it doesn’t they still win.

Then the headaches of dealing with all the K-1s on your taxes is another huge pain and as a passive investor the tax benefits aren’t the same as the active investor. You only get a benefit when you sell and roll over the money into more deals. Otherwise, you pay taxes on the gains. You basically have to keep investing all your gains in more and more multifamily deals or else you have to pay the taxes.

My point in saying all of this is that it’s a rigged game in favor of the syndicators who will gladly take risk with your capital because they have almost nothing to lose. So, if you’re wondering why everyone has floating rate loans and expiring rate caps, it’s because they had no choice but to buy properties with floating rate loans or else they wouldn’t be able to close the property. They knew this was a risk and now they want to blame the Fed for rate hikes.

I put a lot of money into these deals and I regret it. If I had just done DCA sp500, I’d have full control of my capital and not be at the mercy of these syndicators. I learned my lesson and now only DCA sp500. Markets go up and down and the issue is you can’t know when the multifamily market goes down and if you have to keep rolling your profits into deals to avoid taxes, eventually you will get burned. It’s just a matter of time.

Or you can just avoid all this brain damage and DCA sp500 and enjoy your life. You will beat virtually all investors and have ZERO stress. This is the advice Buffet gives all of us for free and he’s one of the best investors of all time. So, before you put your money into a real estate syndication with BS projections that only paint a best case scenario, think about Buffet and Bogle and their advice to avoid this noise and DCA sp500. It really is the best way with the least risk to compound wealth. No one has ever lost doing DCA sp500 but many have lost some or even all of their wealth in other investing methods.

I have nothing to gain by sharing this. I don’t make any money from this advice. I already made my bad decisions in 2021/2022 investing in these types of deals with floating rate loans. I was stupid and greedy. In mid 2022, I just started to DCA sp500 with every penny and I’ve neve been happier and I sleep better at night and see my account keep growing with no stress. You don’t need an advisor or to diversify (aka diworsify) into lots of things. It’s just BS sold to you by investment professionals. Trust Buffet and go back to enjoying your life…..unless you love investing and then good luck to you!

I have made quite a few financial errors in my career; I learned from those mistakes just as you have done. I came away with the exact same conclusion:
Buy the overall market or Russell 1,000 for 30-40% of your portfolio and let the smartest, greediest, savviest CEOs of the best companies on earth make you money.

Dollar Cost Average each month or quarter and let the market do its magic for you. Sprinkle in small caps, international, Reits, Commodities, gold/bitcoin and some fixed income/bonds to round out the portfolio. Then, sit back and let it all compound/grow over time.

 

[BLADEMDA]

As of May 4, 2024, the Stocks/Bonds 80/20 Portfolio returned 5.45% Year-To-Date and 10.07% of annualized return in the last 10 years.

I advocate for an 80/20 portfolio as the risk/return is better than 100% stocks. If you can't make your retirement number then 90/10 just to soften the bumpy ride a bit. As for myself, I am 65/35 and unless stocks get a lot cheaper (doubtful) I won't increase my allocation to equities. But, I am old school and have lived through several big market crashes. I know the next one could be around the corner and these decimate a 100% equity portfolio.

 

[BLADEMDA]

Now of course, not all bond funds are the same. Although VBLTX is considered a reasonable proxy for bonds

 

[BLADEMDA]

 

[circleK]

A side hustle only makes sense if it is in something that interests you since you will be spending lots of time on it if it’s at all going to be successful. I have zero interest in real estate.

I hate the advice live like a resident for a few years…we were all already living like a resident for many years until the age of at least 29. Better advice is everything in moderation forever.

But maybe I’m an outlier. I also don’t agree with the whole FIRE movement. If your entire goal is to retire early from medicine than maybe you just hate medicine and it isn’t the right job for you.

 

[anonperson]

A side hustle only makes sense if it is in something that interests you since you will be spending lots of time on it if it’s at all going to be successful. I have zero interest in real estate.

I hate the advice live like a resident for a few years…we were all already living like a resident for many years until the age of at least 29. Better advice is everything in moderation forever.

But maybe I’m an outlier. I also don’t agree with the whole FIRE movement. If your entire goal is to retire early from medicine than maybe you just hate medicine and it isn’t the right job for you.

Agreed.

Once you become an attending it's reasonable to loosten the purse strings a bit and enjoy life. Just make good decisions.

It's interesting in seeing the dichotomy online with people hyping FIRE versus what I see in my day to day life.

Most of the physicians I interact with at the hospital seems reasonably happy and aren't interested in early retirement. This is independent of specialty. We still have some general surgeons who are 70+ and operating regularly. Same for some of the Ortho guys. Even the primary care and peds docs are happily seeing patients and some are 65+.

 

[BLADEMDA]

A side hustle only makes sense if it is in something that interests you since you will be spending lots of time on it if it’s at all going to be successful. I have zero interest in real estate.

I hate the advice live like a resident for a few years…we were all already living like a resident for many years until the age of at least 29. Better advice is everything in moderation forever.

But maybe I’m an outlier. I also don’t agree with the whole FIRE movement. If your entire goal is to retire early from medicine than maybe you just hate medicine and it isn’t the right job for you.

I like "Financial Independence" not "Retire Early" as this career requires too much investment in time and sweat for a retirement before age 50 or even age 55.
I can understand scaling back but not retirement as why choose this career path if you don't want to actually work in the field for 20 years?

 

[GassYous]

I like "Financial Independence" not "Retire Early" as this career requires too much investment in time and sweat for a retirement before age 50 or even age 55.
I can understand scaling back but not retirement as why choose this career path if you don't want to actually work in the field for 20 years?

Because what you think of the career as a starry eyed college student vs what you actually experience as an attending are completely different things

 

[nimbus]

We just had a death announcement for one of our former group members. He started working in our group in 1959 and took mandatory retirement from our group at age 70 in 1997. At that point he joined the other group at the mixed staff hospital where he worked and continued working into his mid 80s until he retired for good in 2012. He practiced for 53 years. He was an Adventist so he just died at age 96.

On a related note, we recently got rid of the mandatory retirement age largely due to the shortage. Most people cut back to part-time before they hit 70 though.

 

[BLADEMDA]

Because what you think of the career as a starry eyed college student vs what you actually experience as an attending are completely different things

We can agree to disagree on FIRE. Like I have posted multiple times, I don't believe in early retirement. In fact, I think retirement at age 50 or 55 is "early" by my definition. A typical physician works well into his/her 60s if not 70s. Again, I can see a reduction in FTE status to 0.5 or part time as this field allows for such status. Anyone spending 8 years (12 if you include college) to enter a field should be willing to work 2 x that amount once he/she finishes the training process. I understand health or personal issues can get in the way of working but other than that the vast majority can work in some capacity until age 50.

 

[triggermaster]

Great Post. CNBC said that the cost to own is 25%-50% higher than the cost to rent. So, until mortgage rates go back to 4-5%, investment properties need to be purchased below market value to make up for that 25% higher cost. This typically means homes which need to be fixed up or remodeled. Most Physicians don't have the time or skill to remodel a home.

I am helping my son rent a home. The cost of his rent is 25% less than if I gave him a 20% down payment and he took a mortgage at 6%. He would also have to maintain the home. Sure, he gets the appreciation but as of now he earns 25% on his money each month. What I would need to do is a buy a run-down property which is discounted 30% from market value then fix it up for him. Again, this isn't easy to do and most will fail at it.

If there’s a bargain someone from the cartel of realtors would buy it before you even know it’s for sale.

 

[cincincyreds]

As of May 4, 2024, the Stocks/Bonds 80/20 Portfolio returned 5.45% Year-To-Date and 10.07% of annualized return in the last 10 years.

I advocate for an 80/20 portfolio as the risk/return is better than 100% stocks. If you can't make your retirement number then 90/10 just to soften the bumpy ride a bit. As for myself, I am 65/35 and unless stocks get a lot cheaper (doubtful) I won't increase my allocation to equities. But, I am old school and have lived through several big market crashes. I know the next one could be around the corner and these decimate a 100% equity portfolio.

I just do my age in TIPS bonds and the rest in the total stock market. And I max my 401ks and iras and roth them. I've cut back my hours greatly over the last 15 years now down to 3 days a week. When I started working I was doing 6 to 7. I agree these real estate things have too many moving parts, almost like cash value life insurance. Anytime I ask these people questions that actually yell at me and tell me how stupid I am.

 

[BLADEMDA]

I just do my age in TIPS bonds and the rest in the total stock market. And I max my 401ks and iras and roth them. I've cut back my hours greatly over the last 15 years now down to 3 days a week. When I started working I was doing 6 to 7. I agree these real estate things have too many moving parts, almost like cash value life insurance. Anytime I ask these people questions that actually yell at me and tell me how stupid I am.

I can't argue with simple. VTI plus Tips certainly works for a portfolio.

 

[sloh]

While we can disagree on whether physicians should shoot to retire early completely, I think we can all agree hitting that financial independence number sooner rather than later is a worthy goal if for no other reason than we can work on our own terms. Yes we all need meaning and purpose in life. But there’s a big psychological shift that happens when you’re working bc you want to, not bc you have to.

 

[BLADEMDA]

While we can disagree on whether physicians should shoot to retire early completely, I think we can all agree hitting that financial independence number sooner rather than later is a worthy goal if for no other reason than we can work on our own terms. Yes we all need meaning and purpose in life. But there’s a big psychological shift that happens when you’re working bc you want to, not bc you have to.

I agree with your post 100%. Everyone should have the option of cutting back by age 50 as much as they want. Financial Independence by age 50 is a worthy goal. I say age 50 because FI by age 40 or 45 is much harder to do for those with debt, family, mortgage, 2 homes, etc.

 

[castafari]

Another great post on syndications below. Pulled from WCI Facebook group. Do your due diligence or stick to maximizing income with your primary job and vtsax
(Most of us should be doing the latter):

Multifamily real estate crash course. This is what you need to know to understand why I don’t love these types of deals for the average passive investor and suggest most doctors DCA sp500 and ignore this crap and not get sucked in.

Syndications are a way for the syndicators to raise money from other people to buy large multifamily complexes (usually 60-300 units per property). These properties typically cost $10-40 million dollars depending on the location and # of units.

Here is why I don’t like them for passive investors. The syndicators usually take 3 types of guaranteed fees off of your money that they raise to buy the deal.

1) Acquisition Fee - Usually 1-2% of the PURCHASE PRICE. $10M property means they get $100-$200k in fees just for acquiring the property with your money. Bigger the purchase price, more fees they take. It’s not uncommon for them to make $500K in just fees upon acquiring the property. They get this immediately at closing. Just as you give them your money they take a fee from your money from day 1. As soon as you part with your money, they get paid!!

2) Asset Management Fee - Usually 2% of the GROSS RENTAL INCOME. Whatever the top line rental income is from all of these units, they take 2% of that per month right off the top no matter what. This continues for the entire duration of ownership of the property. This is not the net amount. This is the top line rental amount before expenses. Think whatever rent you paid in residency for your apartment, they get 2% of that from every tenant every month. Another way they get paid for sure!!

3) Disposition Fee - Usually 1-2% of the price of the property upon a sale or refinance. So, if they bought a property for $10M and sold it for $15M, they would get 1-2% of the $15M price upon sale as another guaranteed fee for them. If they don’t sell and refinance, they also get the fee for whatever the refinance price is and then again upon sale. So, in a refinance case they often get 1-2% of the price TWICE! Again, guaranteed fees before you get anything.

All of these fees come to them even before you get your principal back. They win for sure with all of these fees and then whatever is left over goes to investors.

Now, here is the worst part. Often times, the syndicators will say that they have their own money in the deal. What they don’t mention is that they put their own money in the deal but they get most of it (sometimes all and some profit) back when they get their acquisition fee. So, now they are playing with house money (aka your money) and they have very little to lose except their reputation.

So, with all these fees, it’s no wonder they want to acquire property after property and buy their villas and whatever else with the fees. Of course, they HOPE they make you money but it doesn’t really matter if they do or not because by the time you realize you made a bad decision by investing with them they have bought many properties and collected millions in fees over the 3-5 years they can get away with doing this until people realize they suck at investing and don’t give them more money. Of course, they then find new suckers or if they made enough they just close up shop. Some of the more sophisticated ones will create a new LLC so the old one with all the angry investors is dead and they can start over with a somewhat clean slate since there is no bad press on the new entity.

Now some people say it’s not their fault that interest rates went up so fast. And we shouldn’t blame them. But, they have virtually no risk since they got all their acquisition fees. Why did they do floating rate loans when interest rates going up was a risk? Because, they can’t win the deal unless they did a floating rate loan. If they had done a more conservative fixed rate loan, none of this would be an issue but then they wouldn’t be able to make the math on the underwriting work for the loan and acquisition. They HAD to do floating rate loans to get the properties or they won’t get their fees. They know this and they took this risk because they want to close deals. They are not trying to preserve or grow your capital as their primary goal. If it happens, great for all, but if it doesn’t they still win.

Then the headaches of dealing with all the K-1s on your taxes is another huge pain and as a passive investor the tax benefits aren’t the same as the active investor. You only get a benefit when you sell and roll over the money into more deals. Otherwise, you pay taxes on the gains. You basically have to keep investing all your gains in more and more multifamily deals or else you have to pay the taxes.

My point in saying all of this is that it’s a rigged game in favor of the syndicators who will gladly take risk with your capital because they have almost nothing to lose. So, if you’re wondering why everyone has floating rate loans and expiring rate caps, it’s because they had no choice but to buy properties with floating rate loans or else they wouldn’t be able to close the property. They knew this was a risk and now they want to blame the Fed for rate hikes.

I put a lot of money into these deals and I regret it. If I had just done DCA sp500, I’d have full control of my capital and not be at the mercy of these syndicators. I learned my lesson and now only DCA sp500. Markets go up and down and the issue is you can’t know when the multifamily market goes down and if you have to keep rolling your profits into deals to avoid taxes, eventually you will get burned. It’s just a matter of time.

Or you can just avoid all this brain damage and DCA sp500 and enjoy your life. You will beat virtually all investors and have ZERO stress. This is the advice Buffet gives all of us for free and he’s one of the best investors of all time. So, before you put your money into a real estate syndication with BS projections that only paint a best case scenario, think about Buffet and Bogle and their advice to avoid this noise and DCA sp500. It really is the best way with the least risk to compound wealth. No one has ever lost doing DCA sp500 but many have lost some or even all of their wealth in other investing methods.

I have nothing to gain by sharing this. I don’t make any money from this advice. I already made my bad decisions in 2021/2022 investing in these types of deals with floating rate loans. I was stupid and greedy. In mid 2022, I just started to DCA sp500 with every penny and I’ve neve been happier and I sleep better at night and see my account keep growing with no stress. You don’t need an advisor or to diversify (aka diworsify) into lots of things. It’s just BS sold to you by investment professionals. Trust Buffet and go back to enjoying your life…..unless you love investing and then good luck to you!

I had a feeling wci was on the way to selling out when he started adds on his podcast recommending financial advisors. I still listen to his milestone to millionaire podcast every Monday on the way to work for motivation but clearly the vibe is changing for the worst now that he is taking money from financial advisors to run adds

 

[abolt18]

I had a feeling wci was on the way to selling out when he started adds on his podcast recommending financial advisors. I still listen to his milestone to millionaire podcast every Monday on the way to work for motivation but clearly the vibe is changing for the worst now that he is taking money from financial advisors to run adds

He has ALWAYS done ads to make money. He has been nothing but open and forward about that while also expressing and describing the due diligence he performs before he ever lets anyone advertise with him, and asks people to provide feedback if they ever have a negative experience with an advertiser.

What he has advertised has morphed a LITTLE over the years, but it has consistently included financial advisors, insurance agents, banks for mortgages or student loan refinancing, and even real estate syndications! I have read his blog consistently since about 2013, listened to every podcast, and read 2 of his books. I will tell you that I would say he has overall been quite consistent throughout those years. Speaking as an unbiased diligent follower.

 

[triggermaster]

He has ALWAYS done ads to make money. He has been nothing but open and forward about that while also expressing and describing the due diligence he performs before he ever lets anyone advertise with him, and asks people to provide feedback if they ever have a negative experience with an advertiser.

What he has advertised has morphed a LITTLE over the years, but it has consistently included financial advisors, insurance agents, banks for mortgages or student loan refinancing, and even real estate syndications! I have read his blog consistently since about 2013, listened to every podcast, and read 2 of his books. I will tell you that I would say he has overall been quite consistent throughout those years. Speaking as an unbiased diligent follower.

I don’t follow wci, but I’ll withhold judgment until he allows advertising from whole life hucksters.

 

[ChiDO]

I don’t follow wci, but I’ll withhold judgment until he allows advertising from whole life hucksters.

I think there would be a mass exodus from the site when that happens. WCI used to come in this website occasionally.. I couldn't @ his usual tag 🤷

 

[BLADEMDA]

He has ALWAYS done ads to make money. He has been nothing but open and forward about that while also expressing and describing the due diligence he performs before he ever lets anyone advertise with him, and asks people to provide feedback if they ever have a negative experience with an advertiser.

What he has advertised has morphed a LITTLE over the years, but it has consistently included financial advisors, insurance agents, banks for mortgages or student loan refinancing, and even real estate syndications! I have read his blog consistently since about 2013, listened to every podcast, and read 2 of his books. I will tell you that I would say he has overall been quite consistent throughout those years. Speaking as an unbiased diligent follower.

I like the guy. Dr. Jim Dahle has consistently posted great advice until recently when he began the push for expensive real estate ventures. I disagree with his emphasis on putting 20% or more of your portfolio in speculative real estate. The average physician is better off in diversified real estate mutual funds or ETFs vs buying some local real estate and renting it out. I have friends who invested in apartment buildings with seasoned business people (who also invested) and they did fine. Similarly, buying up multi family units locally with others also works. I chose the Mutual Fund route myself. After seeing the fees the WCI realtor people want for investing, I would not recommend that approach.

Dr. Dahle has a huge net worth and can walk away from WCI tomorrow and retire extremely wealthy. He likes or even loves his new line of work more than being an ER physician (IMHO) so he isn't ready to call it quits yet. He runs his own annual meeting and is invited to other meetings across the country as a speaker. Despite my recent criticisms of him, he has done more good to help physicians manage their money, buy insurance and steer clear of expensive advisors than anyone else I can think of. He lists advisors, flat fee, costing less than $5,000 per year on his web site. But, by using Bogleheads you can find good advice and a few online advisors for even less.

 

[po_boy]

He still does clinical work and he was making over a million a year the last time he made a disclosure. I used drdisability quotes from his website and I thought they were good. I have own occupation with all necessary riders at 10k a month for just over 3k a year thanks to him. His original white coat investor book has been instrumental in my journey to financial freedom. I remember when he used to post on this website. But he has strayed a bit from his original purpose.

$10k/ month for $3k/year?! How ???

 

[chessknt]

$10k/ month for $3k/year?! How ???

A good deal is 1-2% of annual policy amount as your premium so this is an ok deal. I pay 3500/ yr for 18k/mo (1.6%)

 

[po_boy]

A good deal is 1-2% of annual policy amount as your premium so this is an ok deal. I pay 3500/ yr for 18k/mo (1.6%)

Where are you finding this? The quotes I’ve gotten through WCI thus far are $5-6k/ year for ~$13k/mo.

Apparently it varies between states. Do you think this accounts for the variability ?

 

[pgg]

If there’s a bargain someone from the cartel of realtors would buy it before you even know it’s for sale.

A couple months ago out of nowhere someone at the title company we used when we bought our place in 2021 called my wife and asked if we still had a copy of the covenants and restrictions doc for the development.

Not long after that we saw a bunch of yard work and renovations being done at a neighbor's house and then one day we saw a for sale sign. Then found out it had already been bought at a firesale price in the $400s by that title co agent because of the owner going through a bankruptcy, and the work was being down to flip it. Now it's listed for sale in the $800s.

No one had any idea it was going to go on the market. Good for her, I guess. The place looks really nice from the outside.

 

[centdoc]

All these guys are making money off of you. They take fees simply for closing a deal, then another fee for refinancing, then another for selling. That’s on top of the management fee. They make money regardless if the deal fails or succeeds. That’s why so many of these guys have gotten into syndication. For them, it’s not about the deal, it’s about the fees. Always do your due diligence on any syndicator. I wouldn’t ever get into a deal put together by another doctor. Just another way that doctors ripoff other doctors. That’s why they get ads from other vendors (accountants, financial advisers, etc) because those other vendors realized that these doctors are chumps.

 

[Dantrolene FC]

Where are you finding this? The quotes I’ve gotten through WCI thus far are $5-6k/ year for ~$13k/mo.

Apparently it varies between states. Do you think this accounts for the variability ?

Gender, state, and age will probably be the biggest determining factor in your price.

Males and younger are cheaper. California is expensive (as always).

 

[Ronin786]

Doctors and dentists exist in the perfect spectrum of "accredited investor" and absence of access to sweet private equity deals (usually). They're a prime target for hucksters since they can get away with the usual disclosures and sell an exclusivity that the general public isn't able to buy into.

 

[GaseousClay]

All these guys are making money off of you. They take fees simply for closing a deal, then another fee for refinancing, then another for selling. That’s on top of the management fee. They make money regardless if the deal fails or succeeds. That’s why so many of these guys have gotten into syndication. For them, it’s not about the deal, it’s about the fees. Always do your due diligence on any syndicator. I wouldn’t ever get into a deal put together by another doctor. Just another way that doctors ripoff other doctors. That’s why they get ads from other vendors (accountants, financial advisers, etc) because those other vendors realized that these doctors are chumps.

sad part is they rope their friends and colleagues into it without disclosing these fees transparently. Lot of the nonsense of "we are putting our own $xxx into this" is bogus because they recoup those from fees right off the bat.

 

[ChiDO]

The three Ds are a target: dentists, doctors and dumba$$es

 

[venacontracta]

There are some great forums and resources out there for passive investors in real estate. If interested in this or alts in general, I don’t get why one would gravitate towards the physician specific stuff. What advantage could it offer? It only puts a target on your back as potentially having more money than financial acumen.

 

[GaseousClay]

The three Ds are a target: dentists, doctors and dumba$$es

i am a ******* who put money in a few years ago and got lucky with basically 2x return, but looking back now I wouldn't recommend this given the lack of experience of most of the MDs as GPs and in real estate in general.

 

[<(^_^)>]

Now of course, not all bond funds are the same. Although VBLTX is considered a reasonable proxy for bonds

Probably worth noting the SP500 has returned 85% + dividends last 5 years (not reflected in that chart) while VBLTX has returned negative 13% + yield (so probably roughly flat). That said there are worse times to buy bonds than the present. Realistically rates will probably be cut to a degree in the next 1-2 years which will help boost returns of long-term bonds. I also see bonds as more of a capital preservation tool than a return generator.

As for any investment that is advertised heavily to you be extremely weary. That costs a lot of money. If someone thinks they found a golden goose they are unlikely to want to raise capital from outside sources, let alone spend a lot of money to raise capital from outside sources.

There is tremendous money to be made selling complicated investments. There is very little money to be made telling people to buy the S&P500.