Money

If you’re looking to grow wealth, real estate should be part of your plan. Not convinced? Consider that Andrew Carnegie, the author of Think and Grow Rich, once said, “90% of all millionaires became so through owning real estate.” For many people, though, real estate seems too confusing or too much of a time commitment. If that’s the case, you need this overview on real estate to learn how both active and passive real estate might play a role in your overall investment plan. 

An Overview of Active and Passive Real Estate

There’s a good chance you’ve heard at least someone in your life (or on this blog!) mention the value of real estate investments. Perhaps you are interested but unsure, or maybe you’ve been avoiding it. What’s more likely, though, is that you don’t currently invest in real estate because you aren’t sure how to get started. 

The goal of this real estate overview is to explore enough of the benefits that you feel empowered to explore more. As an added benefit, we’ll take a deeper dive into passive real estate to see how this is something that can fit into your busy life and wealth-building plans. 

The Benefits of Real Estate

Whether you’re involved in active or passive real estate, it’s important to understand the benefits. Here is a general overview of four of the greatest benefits of investing in real estate. 

Speed

Perhaps the biggest benefit of real estate is the speed at which you can generate income. Real estate allows investors to make money relatively quickly compared to stock market investing. Between waiting for returns to compound and paying taxes, growing wealth through the stock market takes time. Real estate, on the other hand, can pay off much quicker.

Taxes

Some traditional stock market investments can be tax sheltered, but there’s no getting around the fact that you may pay quite a bit in taxes on your investments. Conversely, you reap the best and most tax benefits as a real estate investor. This is especially true if you achieve real estate professional status. Here’s a secret–the tax code is written for real estate investors and generally “punishes” employees. 

Familiarity

Another important consideration to make when getting started with real estate investing is the fact that you’re already familiar with it. Even if you rent your home now, you’ve still encountered the notion of home ownership. Because there are so many different types of real estate–more on that in a bit!–if you’ve actually lived in different dwellings, you have even more familiarity with this type of investing than you probably realize.

Tangible asset

Finally, real estate is a tangible asset. You can see the property that you own. This is vastly different than numbers on a screen that relate to shares of a company that you might own via the stock market. For some people, the fact that this is a tangible asset actually makes people feel more confident. 

How Real Estate Makes You Money

There are several different ways that real estate makes you money. When you’re deciding between active and passive real estate (or maybe considering doing some of both), it’s important to have at least a surface-level understanding of how wealth is generated.

• Cash flow – If you own direct real estate, and the rent you are paid is more than your mortgage and other expenses, you’ve created cash flow.
• Appreciation – Generally speaking, real estate appreciates over time. That means that the value of your investment should hopefully continue to increase.
• Tax benefits – There are numerous tax benefits, such as the real estate professional status, that are only afforded to real estate investors. 
• Leverage – Someone who is leveraging is using borrowed money to make more money. This is a novel concept to many since many of us would not otherwise consider taking on debt to make money.

Types of Real Estate

Houses are probably the most common type of real estate that people think of. However, there are actually many types of real estate you can invest in. 

Some types of real estate include: 

• Raw land
• Single-family homes (this is the traditional home that you probably live in now)
• Multiple-family homes, such as duplexes or triplexes
• Apartment complexes
• Mobile homes
• Commercial real estate
• Self-storage facilities 

Equity and Debt Investing

You can think of real estate investing in two ways: equity and debt. By understanding the two ways that you can invest in real estate, you’ll be a much more informed investor.  

Equity 

An equity investment in real estate is when you own the property. This can take on many different forms. In the case of direct ownership, you own the property that you then rent out. 

Additionally, you can also invest in syndications, crowdfunding, or real estate investment trusts (REITs). When done in this manner, investors profit from the promised interest return and then again with a share of the profit when the properties are sold. 

Debt

If you’re familiar with how bonds work, you can think of debt investing in real estate as something similar to that. You lend money to another person or entity so that they can buy real estate. As an investor, you will typically receive monthly interest payments. These interest rates can be quite high, especially compared to bonds. After a period of time, usually a year, your capital is then returned. The high interest rates plus the fact that they are simple and relatively secure make debt investing powerful. 

It is important to remember that debt investing is taxed as ordinary income. The only exception to that would be if you are buying them inside a tax-advantaged account. To do that, you would need to set up a self-directed IRA. By creating a self-directed IRA, the account custodians will then allow you to invest in a debt fund, and the money in the account is tax sheltered. 

Looking at the Spectrum: From Active to Passive Real Estate

Direct ownership is the most active type of real estate investing. For some people, the fact that direct ownership also comes with the most tax benefits thanks to that real estate professional status is enough to justify the work that often goes into direct ownership. 

However, there is a good chance that you’re looking to build more passive streams of income. Whether you are thinking of real estate as a side hustle, a secondary income stream, or even an opportunity to downshift from your full-time medical practice, it’s important to understand the more passive options. 

Turnkey real estate is less work than direct ownership but you still fully own the property. In this process, an investor is still buying and possibly rehabbing a property, but they use a third-party to make it more hands-off. 

Even more passive than turnkey real estate are syndications. Syndications pool funds from a group of investors into various real estate projects, generally projects that a single investor would not be able to buy on their own (think multi-million dollar projects). 

Finally, crowd-funding and real estate funds are the most passive types of real estate investing. You should know that they are the most passive, and they also come with the fewest tax benefits.

A Deeper Dive into Passive Investing

The idea of diversifying your portfolio with real estate sounds appealing to most people. However, it’s true that active real estate can sometimes feel like another full-time job. If you want something more hands-off, you’ll want to explore some of the more passive real estate investing options. 

Crowdfunding

If you’re familiar with the concept of crowdfunding in terms of ideas or products (think Kickstarter), you already have an understanding of how crowdfunding real estate works. Crowdfunding real estate is fairly new, at least in a formal capacity. However, investors have been pooling funds for centuries. 

In crowdfunding real estate, investors combine their resources to invest in any variety of real estate projects. Online platforms streamline the crowdfunding process further. That way, investors can bypass the parts of active real estate–working with agents, brokers, and contractors–that can be so time consuming. 

Real estate crowdfunding can involve both debt and equity deals. 

Syndications 

Recall that a real estate syndication pulls together funding from multiple investors. This pool is then used to purchase a larger real estate project. Typically, the investments including properties like high-rise apartment buildings, assisted living facilities, or self-storage centers. By pooling money together, the expenses are shared and the risk is split.

REITs

A real estate investment trust, also known as a REIT, is another form of passive real estate investing. Generally, the trust purchases a property and rents the space. The income that is generated from the rental is returned to shareholders in the form of dividends. You can purchase shares of a REIT through a brokerage, like Vanguard or Fidelity. 

Final Thoughts on Active and Passive Real Estate 

You aren’t likely to become an expert investor after reading one blog post. But consider working through this overview of active and passive real estate a crucial first step to growing wealth via real estate. Next week, I’ll go more in depth about syndications. 

If you’re ready to take the next step with passive real estate investing, check out Dr. Peter Kim’s Passive Real Estate Academy. In this 4 week online course he will teach you everything you need to know to vet and analyze a syndication deal so you can be confident investing in it. As a special bonus to my readers, if you purchase through me, you will receive two books: Rich Dad, Poor Dad by Robert Kiyosaki and How to Invest in Real Estate: The Ultimate Beginner’s Guide to Getting Started by Bigger Pockets.

Disclaimer: Please note that some of the links below are affiliate links. This means that I may receive a commission if you purchase through one of my links. I highly recommend all of the products & services because they are companies that I have found to be helpful and trustworthy. I use many of these products & services myself.

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New! Once a quarter or so, I’ll write a behind the scenes type post about my business. I know many of you are entrepreneurial.

In all aspects of life, mentorship is important and when it comes to business, I would say it’s paramount to have mentors. Whether it’s direct mentorship or someone to learn from, from afar.

This post is timely as a month ago I was at FinCon 2019 and just returned from Amy Porterfield’s Entrepreneur Experience. FinCon is the annual conference for financial bloggers, coaches and advisors. There are keynote talks and mini sessions but the main reason we all go is to meet people “in real life” and network. This was my second FinCon. A lot has happened in the past year–it has been a year of immense personal and business growth.

Just prior to last year’s FinCon I started working with a life coach trained by Brooke Castillo. This is when I started what I call my residency in online entrepreneurship.

I went to medical school and residency to learn how to become a doctor. I knew nothing about running an online business or being an entrepreneur. When I saw or read about others doing that, I would always think “Wow, I’m just not like them. I’m not creative.”

I’ve been learning (and still am!) from the following people and what they all have in common is a mindset of growth and abundance and over-delivering in value. For each one, I’ll share their one tip that has helped me to propel myself and my business.

Amy Porterfield

Your online business’s success is tied directly to the energy and size of your email list. List building should always be in the top 3 business priorities.

Amy is probably my main and favorite business mentor right now. I’ll be honest, I am not even sure how I stumbled upon her but I am so glad I did! Amy is the queen of digital courses and list building.

She hosts the podcast called Online Marketing Made Easy where she shares her tips for online business success. Her voice has this confidence and authenticity that is hard to match.

I’ve enrolled in almost everything Amy has to offer starting with her List Builder’s Society – a course on how to build your email list. I’ve also bought other people’s courses through her (see below) getting special bonuses only Amy gives. I’ve learned how to organize my business’ assets, how to streamline business communication and build my team.

She encouraged me to hire my integrator (also known as a project manager), an elevated position so I can be free to work on the things that only I can do. Hiring my integrator a few months ago was definitely a leap of faith (and dollars) but I am confident I made the right decision. At some point, you just can’t run every aspect of your business anymore and you need to focus as the visionary and content creator. 

And … I just returned from Amy’s live event, The Entrepreneur Experience. Not only did I get to meet Amy “in real life” but I was able to spend time with like-minded entrepreneurs, share struggles and wins in an empowering and safe environment.

Marie Forleo

Everything is Figureoutable!

Yup that’s me and Marie! I had the honor of meeting her on her book tour for “Everything is Figureoutable.” Go get this book now! 

I first learned about Marie through Amy Porterfield. Every spring Marie opens the doors to B-School – her widely popular course on how to start and run an online business. Her mission is to help all heart-driven entrepreneurs.

Marie combines Jersey girl sass with some Italian sprinkled in. She has an award-winning show Marie TV in addition to her recent book Everything is Figureoutable. 

Stu McClaren

The more money you make, the bigger impact you can have on the world

I learned about Stu through Amy (notice a pattern here?!). Stu is the king of all things monthly membership sites and Amy is the queen of digital courses. Stu and Amy say that courses and memberships go hand in hand like peanut butter and jelly.

He was my favorite speaker at Amy’s Entrepreneur Experience. He infuses passion, energy and comic relief. 

He learned early on that there is nothing wrong with making money. He said the more money you make, the more impact you can have on the world. He co-founded Village Impact, a Canadian foundation that builds schools in Kenya. They are working on building a college for budding entrepreneurs. Wealthy Mom MD made a donation to Village Impact which I will talk about in a future blog post.

There will be setbacks and there will be epic “failures.” Success comes to those that persevere and adapt. Share on X

Summary

Amy, Marie and Stu have guided me this year. Their overarching message to me is to change my relationship to failure. Business is not a straight linear adventure. There will be setbacks and there will be epic “failures.” Success comes to those that persevere and adapt.  My ability to handle the highs and the lows and move forward anyway is how I will be successful in business.
As I look ahead in 2020 my focus will naturally shift to learning from Brooke Castillo of The Life Coach School as I finish up my coach certification. I’d love to hear from those of you running a business – who are your mentors and why? Drop me a line here.

Disclaimer: Please note that some of the links below are affiliate links. This means that I may receive a commission if you purchase through one of my links. I highly recommend all of the products & services because they are companies that I have found to be helpful and trustworthy. I use many of these products & services myself.

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Did you know that you have money beliefs? First, let’s define beliefs:

Belief, noun

1. a state or habit of mind in which trust or confidence is placed in some person or thing

2. something that is accepted, considered to be true, or held as an opinion : something believed

3. conviction of the truth of some statement or the reality of some being or phenomenon especially when based on examination of evidence

Believe, verb

1a. to consider to be true or honest

1b. to accept the word or evidence of

2. to hold as an opinion

Notice that “scientific truth” or “proven in a court of law” are NOT in the above definitions. This is good news–this means beliefs aren’t really true and means you can change the ones that don’t serve you. We all have beliefs that don’t serve us:

“I’m fat”

“I’m just not a good public speaker”

“I can’t ever get up early”

“I’ll never be able to retire”

“Money is tight”

Our money beliefs have been spinning in our minds for decades. Let’s explore how they came about.

Your Past Money Beliefs

We all learn about money in different ways but for the most part it’s a culmination of what our parents taught us (or didn’t), what they said, what our friends said. What society believes. And we’ve internalized it …. And think it’s true.

I was just under 2 when my family emigrated to the United States from South Korea. My father’s company sent us here with green cards. He lost his job a few years after. I remember them trying small business idea after idea only for them to end in failure. After several failed ventures to make ends meet they filed for bankruptcy when I was in elementary school. So, it was obvious right?

Money is hard.

And so we moved … we moved a lot. Always to a smaller apartment. I never had my own room and shared it with my younger brother. I grew up attending church. We would often spend time with church families and a few of them were quite affluent (well at least they appeared to be so). They had nice big houses, cars and other nice stuff. And of course, I remember that the kids all had their own big rooms with nice things. So it was obvious right? 

We just aren’t going to be rich like them.

Fast forward – I’m in middle school and I’ve started making some money with a babysitting job. At that time, the fancy people had these black suede shoes by Bass — and I’ve finally saved up enough money to buy myself a pair. I’m so proud of myself and thrilled that I  can finally have these shoes. So I go to the mall with friends and buy them. But my mom made me return them. She said they were too expensive and it’s not good to want or have nice things. I remember feeling ashamed to want something nice for myself.

It’s bad to want nice things. 

What money beliefs did you grow up with?

Your Current Money Beliefs

For the most part, our past informs our present beliefs–perhaps somewhat upgraded:

“I’m a pediatrician so I’ll never be rich”

“It’s too late for me to retire early”

Over a year ago I found myself in a private practice not making what I thought I was going to make. I was angry and blamed my employer for months. My belief at the time was something like this “It’s their fault I’m not making enough money.” And I felt incredibly trapped. It wasn’t until I was able to see that this was a belief and not the truth that I was able to do something about it.  As long as I was placing blame on them there was absolutely nothing I could do about it.

Have you ever paused and considered whether these thoughts are actually true or not? For some of us – you’ve believed these thoughts over and over again so many times that they seem like the truth. And other people (your colleagues) agree with you … further validating your beliefs.  

What if all of these beliefs are not true? What if I told you that these thoughts are not only NOT true but you have the ability to create new money beliefs? 

If you could believe anything about money – what would you believe?

If you could believe anything about money – what would you believe? Share on X

How about:

“Money is easy”

“Money is fun”

This may seem like a big stretch for you if you currently believe money is hard. Using bridge thoughts may help such as:

“It’s possible that money isn’t hard”

“I’m open to learning that money can be easy”

What we think and believe is paramount because it affects how we feel which in turn affects our behavior or actions.

What does our behavior and actions over time give us? Our life. Everything we have or don’t have, everything we are now, is because of actions we took over time.

What do you think truly wealthy people think about money? I bet it isn’t “Money is hard to come by.” It’s easy to think they are unique or unicorns instead of considering whether what they are able to do is available to us.

Your new money beliefs should make you feel good! Now identify one action you can take towards creating wealth. Write it down! You do not need to know the whole plan or how-to at this point.

Read More about Your Money Beliefs Are Probably Not Serving You

Sign up for my free live masterclass–Take Charge of Your Wealth. It’s based off my session at Brave Enough conference a few weeks ago. 

Debt is bad, right? It must be, since so many finance bloggers talk about how you need to pay off debt ASAP. I used to be in this camp too. I used to recommend that doctors should pay off their student loans within 5-10 years max. In fact, I paid off mine within 3 years.

Now, there is nothing wrong with paying off debt quickly. I’ve just come to realize that this strategy does not work for everyone. 

And if I may be bold here, it probably isn’t the right move for most women physicians.

Debt isn’t bad

The truth is debt is only bad if you make it mean “bad.” Debt itself is neutral. There are consequences if you don’t pay it off, of course, but having debt isn’t bad in and of itself.

It does make sense that financial experts tell us to get rid of debt. All debt comes with a financial penalty in some form or another (interest rate, etc.). You always end up paying back more money than you owed–and that gets expensive the longer you have it.

Consider all the options

One of the most common questions I get is whether one should pay off debt rapidly or invest instead? The answer isn’t simply all or none. It depends.

Have you considered this? Any additional money you pay towards debt is money you can’t use for other things. I know you know this on some level, but most of us think about spending on things instead of using money to create long-term money-making machines. 

Wait, isn’t that the same as investing? Yes, but let’s think beyond traditional investing, which most of us associate with stock market investing (and to generalize even further – index fund investing).

You can certainly invest extra into your retirement accounts, especially the ones you can’t go back to years later to “fill-up” such as a 401(k) or Roth IRA. You will reap the rewards–several years later as compound interest takes a lot of time.

Or, think of this: successful real estate investors deliberately increase their debt load by using it as leverage to invest in real estate.  In other words, they take on debt on purpose to create another source of income.

Many of us don’t think about creating multiple streams of income besides our job and stock investments (which will provide income for us in “retirement” so we don’t need to rely on a job). 

It’s too risky to invest in real estate or start a new business, right? Well, have you considered that only relying on your job for income is riskier?

Paying off your debt ASAP may not be the best action for you

It’s too easy to take a myopic view on your finances and focus on the action right in front of you. Have you taken a moment to think about your overall goals and the timing of them?

All of us have different ideas of what we want our financial lives to look like. It all depends on a constellation of factors like your current age, your goals for “retirement” vs. your goals now, whether or not you have children, your other financial obligations, and so on.

So hit pause on your debt pay off plan momentarily and think about the bigger picture. You may conclude that paying off debt rapidly is the best action for you. Or maybe it is not. 

“Paying off debt ASAP probably isn’t the right move for most women physicians." Share on X

Sorry those student loans aren’t going away by themselves

You must have a plan for paying off your student loans (or other debt you may have). Otherwise you’ll end up paying thousands of dollars (if not tens of thousands) in additional interest and fees, simply by not taking the right actions.

Your student loan pay off plan initially comes down to two choices:

1. Pursuing public student loan forgiveness (PSLF), or
2. Refinancing high-interest loans if you’re not pursuing PSLF.

Pretty simple, right? 

And who should you refinance with? The absolute best bank to refinance with is First Republic Bank–however most people will not qualify due to their strict location & loan requirements, but if you do, you may be able to lock in a rate as low as 1.95% fixed. I jumped at the chance to refinance my student loans with them.

If you don’t meet the location and/or income requirements of First Republic Bank, then you may want to take a look at SoFi. I’ve just negotiated a great deal for my readers with SoFi— you will receive a rate discount of 0.25% through December 15, 2019. This is in addition to the 0.25% rate reduction if you enroll in auto-pay for a total of 0.5% off! For additional loan refinancing options, click here.

Once you refinance those student loans, I encourage you to figure out if paying off debt ASAP is right for you. You could be using your money to create other pillars of income (besides your job) that in turn, you can use to pay off your debt! 

In Summary

That idea of debt not being bad is pretty intriguing, right? 

Most of us tend to see money through the lens of dollars and cents, so we focus on the math behind our money. However, money is also a mindset. That means the way that we choose to frame our debt can often color many of our money decisions. 

After your student loans are paid down, it’s worth examining your debt situation closely. No two people should make the same decision. Just because someone else considers debt to be bad, doesn’t mean that has to be the case for you as well. 

Perhaps you’ll decide that paying down debt aggressively is the right answer. Maybe you’ll do a combination of debt paydown and investing. Or perhaps, you’ll choose to leverage your money to see how many other pillars of income you can create. The best answer about paying down debt is the one that fits your situation and your money mindset. 

Disclaimer: Please note that some of the links in this post are affiliate links. This means that I may receive a commission if you use products or services through one of my links. I recommend these products & services because they are companies that I have found to be helpful and trustworthy.

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Another FinCon is on the books! I just returned from #FinCon19 in Washington, D.C. What is FinCon? Simply, it’s the annual conference for money nerds. It’s where content creators (bloggers, podcasters, youtubers, course creators), financial advisors, and anyone else in the “industry” converge to exchange ideas, learn, and connect in person!

This was my second FinCon, and I love seeing the number of physician finance bloggers grow and collaborate. Also, we had more than twice the amount of women physicians this year!

This just goes to show the need for women's voices in the personal finance space.

FinCon is also a chance for me to run into and see some of my money celebrity crushes. Like running out of the elevator to chat with Ramit Sethi (author of I Will Teach You to Be Rich). 

I also got to meet Rob Berger, the podcaster behind the Dough Roller Podcast –the first money podcast I ever listened to, back in 2014. He was gracious to take a selfie with me. 

On top of that, I got to meet Emma Johnson of Single Wealthy Mommy. I love her message for single moms–that they can be wealthy financially, in love, and in life. 

So like last year, here are some lessons I learned from #FinCon19:

Creating your team is probably the most challenging part of growing a business

Can I get an amen? You may not be running a business, but I’m betting many of you have had to hire a nanny or perhaps a personal assistant. A pearl I learned at FinCon is to take the stance that you are 100% responsible for their success or failure. It’s too easy to think it’s not your fault if they don’t deliver or meet your expectations since it takes you off the hook.

What if their success was all on you? I think we would all approach and show up for our team very differently. Never assume they know what you want or need. They also can’t read your mind. 

Literally ask them to repeat back to you what you asked them to do.

Choose your friends and colleagues wisely

You may have heard the saying, “Your net worth is the average of the 5 people you spend the most time with.” I will take it a step further: you are limited in what you can do, accomplish, and make (money) in life by the people you spend the most time with. What do I mean exactly? If you spend time with negative nellies all the time, then you’re also probably a negative nellie too. You play it safe since that’s what all your friends do, too. 

"You are limited in what you can do, accomplish, and make in life by the people you spend the most time with." Share on X

On the flip side, what if your friends all believed that anything was possible? What could be possible if your friends encouraged and supported your growth, whether it is personal or business growth? 

This is exactly why folks in business join and continue to participate in masterminds. These are groups of like-minded people committed to growing their business by investing in personal and business development. We get together and openly share our secrets to success to help each other. A few of us got together at FinCon and had a “hot seat” where we each took turns asking for advice on a business problem. A mastermind is part advice, part rah rah, and 100% committed to cultivating a growth mindset.

Let’s get rid of money shaming

Ramit Sethi gave one of the opening keynote talks at FinCon and boldly declared that there is no shame on spending a tremendous amount of money on things you love. I couldn’t agree more. And to take it a step further, though we are beginning to share the message of financial literacy to physicians, we are barely touching the subject of money shaming. There is a lack of money transparency and there is plenty of money judging going on. I’d love to see that end.

There is so much shame about how and on what we spend money. We are judged if we are perceived as having too much money. We celebrate paying off multiple 6 figures of debt, and yet we stay hush hush about reaching multiple 6 or 7 figures of net worth. Why? 

There are only 3 answers: Yes, No, and Being Ignored

Cat Alford talked about “failure” in a way I haven’t heard before. In business (and in life), you often put yourself out there, whether it’s asking someone if you can collaborate on something or asking for someone to be a guest on your blog or podcast. Or, on the personal side of things, reaching out to a new friend or asking someone out!

Cat made it really simple: there are only 3 responses: yes, no, and being totally ignored. If you go in knowing that, it’s freeing. It really becomes a numbers game. 

So instead of feeling bad when you get a no, or worse, no response, don’t take it personally. You got 1 of the 3 responses, so just keep putting yourself out there and you’ll eventually get the yeses that move the needle.

Final Thoughts:

So that was FinCon 2019! Of course I could go on and on, but those were my major takeaways. I always learn so much when I go there, and if you ever have an opportunity to attend, I highly recommend it! (Drop me a line so I can meet you there!)

In the meantime, if you’re interested in watching the speaker sessions from this year’s FinCon, check out this link and get access to tons of material from the conference at a fraction of the price! If you do take advantage of it, head over to the Wealthy Mom Physicians community and let me know what lessons you learned!

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Editor’s Note: This is a guest post from Ethan, my stepson who is currently 12 years old and in 7th grade.

Having Financial IQ is knowing how to handle money responsibly and save according to a plan.  As a 12-year-old, I never thought I’d be introduced to this term. It has never been brought up in school and I didn't even know what it meant until my stepmom told me I needed to develop a Financial IQ.  

It is never too early to start learning about money.  She gave me a copy of Rich Dad, Poor Dad to help me understand more about my Financial IQ and what it could mean. 

Robert Kiyosaki, the author of Rich Dad, Poor Dad, started to learn at a young age and why it is crucial to develop your Financial IQ. The benefits of starting at a young age are that you will be able to understand more and more as you grow older. You will recognize opportunities such as:

• Acquiring assets that work and grow with you
• The ability to explore all the opportunities life presents to you. It’s not “I can’t afford it” but “How do I afford it?”
• Retiring early. I never thought about retiring, I mean I’m only 12… but I think if you are able to retire young, at like 40 or 50, then you can live a better, fuller life without the worries of money.

With that in mind, I am hoping (I’m 12, so cut me some slack) to write a series of posts over the next year on this book. Rich Dad says, ”Broke is temporary, poor is eternal.” He means that being rich is a mindset and the greatest asset is your brain.  

Simple Lesson One

Robert and Mike (who were best friends, and Mike was also the son of “Rich Dad,”) took jobs working for Mike’s dad at one of his bodegas. After several weeks of growing frustrations with little or no pay, Robert didn’t want to work anymore and was going to quit. Rich Dad said “I will not pay you,” so Mike and Robert had to find a way to make money. 

At the comic place in their town, they were throwing out comics. Robert had an idea he asked if he could have the comics, and the store owner said yes as long as he did not sell them. So, he made a library and charged people $1 to read them to read as much as they want, and it is not selling so they did not break the deal.

Rich People Buy Luxuries Last

As a rich person, you have a lot of money, but you should not spend it on clothes. Spend it on assets to grow your money and then you will not have to worry about losing it because you will have a steady income and will not have to have to worry about finding a job or worry about losing your money. The rich know how to invest in assets–that’s why they’re rich. But the poor do not know how to invest in assets, and that's why the rich get richer and the poor get poorer, and the reason for Rich Dad is to educate the non-financially smart people and to get them to understand money.

Rich People Take Risks

Do not be afraid of taking risks when it comes to money. Rich Dad says that money is managed by fear with most people, and if you are scared of losing money than you could miss an opportunity to make even more money and become even more wealthy.

My friend is a bit of an entrepreneur. He buys trendy clothes and resells them for profit. Sometimes he makes no profit or even loses a bit of money. Resale is like the stock market.

What I Learned

My takeaway is that I did not know that money is living and breathing. It grows it shrinks and is sometimes unpredictable, but by teaching yourself about money, you can kind of make it work for you. Having knowledge about money is great because you learn and you make more money.

Do you think it is important to develop a financial IQ? 

Why or why not?

Read More about What is Financial IQ for a 12-Year-Old? Lessons from Rich Dad, Poor Dad

This is a guest post by Alpha Investing, a private group of experienced investors with strong relationships with high-quality sponsors. Alpha Investing aggregates investments from its members into a syndicate and invests into sponsor projects – allowing members to access exclusive real estate projects at significantly reduced minimum investments. We have an affiliate partnership and I invest with them. Most of Alpha’s investment opportunities are common equity, but they do provide quarterly access to a commercial debt fund run by one of the oldest real estate families in NYC.

How Real Estate Debt Funds Work

Real estate debt funds help connect borrowers (often developers) with short-term capital for commercial real estate projects like multifamily buildings, shopping centers, construction loans, and many other property types. Real estate debt funds rose to prominence in the wake of the 2008 crash. Today, real estate debt funds occupy a small but profitable niche in the world of commercial real estate lending.

What is a Real Estate Debt Fund?

A real estate debt fund consists of private equity-backed capital that lends money to prospective real estate buyers or current owners of real estate assets. Investors in these funds receive periodic payments for the interest charged against loaned capital, and security charged against property assets, which takes the form of a mortgage. These funds offer loans collateralized by senior real estate assets to borrowers for a wide range of commercial and business real estate needs. 

Most debt funds are focused on a particular loan strategy or investment idea. For example, some funds will focus on offering residential construction loans to multifamily apartment builders, while others might concentrate on financing retail and shopping developments. Other common loan types include industrial, construction, hospitality/hotel, and vacant land. 

Which Borrowers Turn to Debt Funds for Capital?

Debt funds can offer commercial real estate borrowers loans and terms that traditional lenders cannot, or will not offer. They work with borrowers who have complex financial situations or do not have access to conventional credit for whatever reason. Some of the most common loan types include:

• Bridge Loans/Lease-Up Financing
• Construction Loans
• Property Rehab/Redevelopment Loans

What Sets Real Estate Debt Funds Apart

Real estate debt funds first took off in the wake of the 2008 housing crisis. At the time, traditional lenders like banks were suffering from significant liquidity issues, and commercial real estate credit dried up. Many private lenders, including real estate debt funds, stepped into this gap and began lending to commercial real estate investors and businesses. 

Although banks, agency, and Commercial Mortgage-Backed Securities (CMBS) lenders are again lending commercial capital, many traditional lenders have yet to go after borrowers in need of bridge or construction loans, leaving that sector mainly in the hands of debt funds and other private financing. Debt funds offer loans in the sweet spot where borrowers need amounts too large for small lenders and not large enough for non-bank institutional lenders, generally less than $100 million. 

"Debt funds offer loans in the sweet spot where borrowers need amounts too large for small lenders and not large enough for non-bank institutional lenders" -Alpha Investing Share on X

If a business requires capital quickly, streamlined processes allow debt funds to meet their needs faster than a traditional lender. This nimbleness can be particularly beneficial in the real estate sphere, where tight closings are common and not securing funding in time can be disastrous. Owners and developers that lack the equity, or the balance sheet required by traditional lenders, or those requiring a higher loan to value (LTV) loan than a bank can offer may also turn to debt funds for financing. 

How Real Estate Debt Funds Generate Income

Real estate funds generate most of their income through interest on borrowed capital and in the case of a default, obtaining title to the collateral underlying the loan. The fund charges borrowers interest rates often starting at 9%+, which can fluctuate based on market conditions. Payments on the loan are made monthly, and rates are fixed, or priced at a 30-day LIBOR plus spread, with a floor.  Borrower fees for loans may include due diligence, origination, servicing, draw, modification, extension, or exit fees. Depending on the fund types, these non-interest-based fees may be distributed to investors in whole or in part. 

Loan amounts can range from $5 million up to $150 million or more. They offer short-term loans, for example, between 1 and 3 years. The LTC (Loan To Cost ratio) or LTV (Loan To Value ratio) for loans is dependent on location, and the specific attributes of a property- for the most part, it is not greater than 80%. 

As we mentioned earlier, in the case of default the fund may take possession of the title of the loan collateral. The fund may also look to restructure the terms of the loan with the borrower or sell the underlying note to another investor/lender. In each scenario, the lender's goal is to maximize the loans disposition value – taking into account cost and timing factors related to foreclosures and bankruptcies. With that said, the greatest upside lies in taking possession of properties that collateralize defaulted loans. Methods for increasing value differ but may include stabilizing, improving, or otherwise completing a property with the goal of achieving the highest disposition price in the shortest amount of time. 

Summary

Real Estate Debt Funds occupy an important place in the commercial real estate finance markets. The industry has helped facilitate the construction and operations of thousands of properties across the United States and lent billions of dollars to investors and developers. Their ability to move quickly and their more accessible lending criteria make it likely that real estate debt funds will continue to occupy a critical place in the real estate markets. 

Think of debt funds like the bonds of real estate vs. buying property (the stocks or equity equivalent). An accredited investor can buy into a debt fund. Keep in mind that debt fund payouts are taxed at ordinary income rates and that commercial real estate debt is not as predictable as corporate or government bonds. A great way to tax shelter this is to place your debt fund investment into a self-directed IRA. This is just a regular IRA that allows you to invest in alternative investments besides the typical stocks and bonds. The popular custodians like Vanguard and Fidelity do not offer these.

Read More about How Real Estate Debt Funds Work

Editor’s Note: This is a guest post by a fellow Wealthy Mom MD that goes by the alias Hatton 1 in the online world. This female physician is the blogger behind doctoroffinancemd.com and now part-time GYN who has achieved Financial Independence.

Miss Bonnie asked me to provide some pearls for achieving financial independence.  Who am I? Why am I qualified to give advice? I am a prolific poster on the White Coat Investor forum.  If I was saying stupid things I would have been shot down a long time ago. I also run a blog called DoctorofFinanceMd.com.  My main qualification is that I have been FI for years.  I am OB/GYN. I was able to stop delivering babies about 5 years ago and do GYN part-time.  

The younger you have your “AHA MOMENT” and start paying attention to money and finance the easier your journey will be. 

The only real difference between finances now and when I went to medical school/residency is the student loan burden. I would add that salaries are inflation-adjusted much higher now immediately out of residency to partially compensate for this.  I think learning every detail about your loans and different payback possibilities is incredibly important these days. I also think when you are a resident you need to live like one and minimize living expenses that you are borrowing!

Do not buy a house when you are a medical student, resident, or new attending!

I know you want one. This is one of the biggest mistakes you can make financially. It is really dumb if you have $500k of student loans.  You will find in life that there is always someone who will loan you money when you have MD (or DO) after your name. You have to continue to delay gratification if you want to achieve FI.  If you are young you may not yet realize that your first job is likely not forever. It really complicates your life when you are contemplating a job change. I know this because I bought a house as a new attending.  I was lucky to sell it quickly but it was luck and I made no money on the deal. The rule of thumb is not to buy unless you plan to be there for 5 years.

"You will find in life that there is always someone who will loan you money when you have MD (or DO) after your name. You have to continue to delay gratification if you want to achieve FI." Share on X

The smartest thing that I ever did was front-loading my retirement investments. 

What do I mean? I filled up my retirement space early every year then I dumped lots of money into a taxable account.  I started doing this at 31. By 45, I was working 3.5 days per week and paid off my house. The key principle is funding your accounts at a young age so you can benefit from compounding.  A taxable account is very flexible. You can put anything you want in it. You can access it at any age. You need some level of self-discipline to not raid it, however.

Whatever type of retirement investments are available to you is what you need to learn about.  Become an expert on your accounts. Quit worrying about stuff that does not apply to your situation.  For example, I know I cannot do a backdoor Roth IRA contribution because I have a large SEP/IRA. I do not want to pay a large amount of pro-rata rule taxes so I do not stress over the steps to do a backdoor Roth.

Choose what you worry about. 

Life insurance (if you have dependents), disability insurance, and umbrella insurance all are very important.  Quit worrying about losing a malpractice case greater than your policy limits.  

Be very careful about associating with Doctor Jones.

Who you associate with can really derail your path to FI.  I would recommend reading The Millionaire Next Door series of books and thinking about them.  Decide what is important to you. I see a lot of doctors derail their personal finances when they start trying to keep up with other very wealthy families they meet either at a country club or private school.  You can do these things but just be careful.

I personally do not invest in crowdfunded real estate, apartment buildings, bitcoin, timber, gold, silver, hard money loans, leveraged ETFs, VIX, or “angel” investments. 

I invest in stocks, bonds, REITs, and MMFs. Boring. Investing should be BORING. Over time boring investments will make you kinda rich. Guess what I am doing in about 10 days?  I am paying cash for a house. If you follow my advice you can also. 

Read More about COMMON SENSE TO BECOME FINANCIALLY INDEPENDENT

Note: In this post I got a bit behind the scenes here at Wealthy Mom MD. I hope you enjoy it!

Earlier this year I discussed my 5 productivity tips. I’m always up for learning how to be more productive. After FINCON18, I decided I was going to take my business to the next level–while still working close to full time as a dermatologist, being a mom to Jack, and a fiancee to Matt. And I still wanted “me” time, too–seeing friends, working out, etc. 

Unfortunately, I don’t have the ability to create time, so I knew I’d have to learn how to juggle all of these things and hope to still feel sane.

First, is it really possible? YES. 

I was initially inspired by The Life Coach School’s podcast episode Throw Away Your To-Do List.  Brooke Castillo knocked down the all-pervasive notion that you must be busy in order to be successful or “get sh*it done.”

In reality, “busier” people are simply sloppy with their time management and there is no direct correlation with how successful one is and how much time they have available.

Brooke Castillo

I knew this was going to be an amazing episode when she said that. In fact, Brooke “works” 3 x 6hr days and earns a multiple 7-figure income. I’d like for you to challenge the belief that working hard and putting time in equates money or success. It doesn’t.

Soon after, I discovered Michael Hyatt’s new book, Free to Focus. Michael, like Brooke, challenges the idea that productivity is NOT about finding or saving time. Productivity is about working less AND having more free time. Can I get an AMEN?

But wait, you may say. I have LOTS of stuff I need to do. Do you? Michael challenges us further by saying that all things are a choice and you can choose not to do something.

Here are a few things I’ve started implementing in my own life and business in order to work less and have more free time:

Batching

This is a powerful tool I just recently learned. 

What is batching? 

Batching is when you work on similar tasks or projects in one, long, uninterrupted swatch of time. One popular example is batch cooking on the weekends so you have pre-prepped meals or ingredients for the week. I know some folks batch cook for the month by preparing freezer meals.

Why is batching this effective? It minimizes task switching. Every time you switch tasks–aka multitask–you lose up to 40% productivity. It gets worse. It’s been proven to increase stress and anxiety, kill creativity, drain your brain of precious resources, and effectively reduce your IQ to that of an 8-year-old. 

You may think you’re good at multitasking–checking emails, responding to texts, and working on a paper all at the same time–but no one is.

I’ve implemented the batching method in my business by batch-writing content (blog posts), my weekly emails, and my social media. Instead of scrambling the night before to write something for my blog, it’s been planned and batch-written at least a month ahead of time. I hope to increase that to 3 months ahead of time soon.

Schedule Checking Your Email (and Other Forms of Distraction)

How many notifications and beeps come from your phone everyday? Or your computer? (Every website now seems to want the ability to notify you…) You may think it’s no big deal when your phone beeps or vibrates. However, it’s been proven to increase your anxiety and the only way to relieve it is to check your phone.

High performers are not at the mercy of their devices. They schedule specific times to check email and may even minimize checking their phone for text messages.

Batching is powerful if you stay focused on the tasks at hand. You may have to turn off internet access while doing your work. The classic “let me check what’s happening on Facebook” scenario where, one hour later, you forgot what you’re working on. We’ve all been there.

Ideally, I’ll check my email twice a day and address them to reach Inbox 0. I turn my phone to silent and put it out of sight when I’m in batch mode.

In reality, “busier” people are simply sloppy with their time management and there is no direct correlation with how successful one is and how much time they have available. @BrookeCastillo Share on X

Outsource

I’ve always been a huge fan of outsourcing. As the content creator of my business, it is not a good use of my time to do things like approving members to my Facebook group, edit and upload blog posts to Wordpress, or schedule social media content. I know how to do all of these things and did all of this for a long time, but a time comes when it is no longer a good use of your time and will hinder your business.

It’s just like how you don’t room your patients or check them into your office. What other things in your life (or business) should you no longer do? Learning how to delegate tasks and ensure quality are skills you can learn.

Schedule YOUR Time First

Most people schedule their days or weeks by scheduling their work or other “must do” items before scheduling “fun” time or family time, or whatever their personal priority is. Then they wonder why they never make it to the gym or see their friends.

Schedule these things FIRST! And protect this time! Just like you’d never schedule a friend date in the middle of your clinic, (you wouldn’t even entertain that, right?) you need to schedule and protect your time as well.

Mondays to Fridays 5pm-8pm is my protected family time. Jack goes to bed at 8pm. During those hours, I do my best to put my phone aside and be with my family.

Just Say No

“The difference between successful people and really successful people is that really successful people say no to almost everything.”

Warren Buffet

You don’t have to say yes to everything you’re asked to do. In fact, if you want to be more productive and have more free time, you need to learn how to say no. If you’re a really nice and helpful person, this can be difficult to do. But saying yes to everything you’re asked can lead to you overbooking yourself and stressing out, which will hurt your productivity overall. 

Learn how to say no, especially when the things you’re asked to do cut into your family time, personal time, or time you planned to spend batching. That way, when you are able to help someone, it won’t be stressful or counterproductive.

Read More about Batching: My New Productivity Weapon