8: Building Wealth through Direct Real Estate with Dr. Letizia Alto

When it comes to building wealth, the process takes time. But what if it doesn’t have to take as long as you might expect? Though it may take decades to realize financial freedom from your stock market investments, you can grow your wealth much faster with real estate. 

In this episode, I sat down with cash flowing real estate expert Dr. Letizia Alto to learn how women physicians can incorporate real estate into their financial plans. Letizia busts common myths and shares strategies for growing your real estate cash flow. Plus, she unpacks the unparalleled tax benefits that come from Real Estate Professional Status (REPS). 

One of the most important things to understand as a physician is the fact that you need to cultivate multiple income streams. Letizia emphasizes that life in general and our profession specifically can be unpredictable. While you may be earning a good income now, building multiple income streams into your portfolio can help you weather any financial storm.

Cash flowing rentals are one way to do that. A cash flowing rental is a property that generates the landlord a steady income each month. These properties might be single-family dwellings and they might also be multi-family properties. By investing in multi-family properties, you are better able to withstand vacancies. In either case, though, you can generate income much more passively than you can as a physician.

As you start to grow your portfolio and possibly even scale back your physician hours, you may be eligible for Real Estate Professional Status. To obtain this status, real estate has to be your primary profession. You also have to clock 750 hours a year on real estate, with at least 500 of those hours being work on your own real estate portfolio. With this status, you can then use your paper losses in real estate to shelter the income you earn as a physician. Even without the Real Estate Professional Status, cash flowing rentals can be very valuable because that cash flow income is tax-free. 

When your real estate portfolio grows, your income and your tax benefits grow as well. This is one way that you can invite more financial security into your life on the path to financial freedom. 

In this episode, we also explore:

  • The key differences between market appreciation and cash flow real estate
  • How property managers can make direct real estate much more passive
  • A comparison between the relative risk of being a physician and owning real estate
  • How Letizia has been tax-free for five years
  • Examples of how Real Estate Professional Status can shelter your income
  • How to get started with cash flowing rentals with limited funds
  • When the BRRRR strategy might be right for you 
  • Overlooked strategies to find investment funding

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Featured on the episode:

  • Learn more about Semi-Retired MD and enroll in their free video mini-course here.
  • Check out this guide to understand how women can use real estate to achieve financial independence.
  • Understand how much money you need to start investing in active real estate with the breakdown in this post.
  • Learn more about how to manage your mindset with Wealthy Mom MD.
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