Commercial Real Estate Investing 101 For Doctors
“Analysis by paralysis” is the phrase that first comes to mind when speaking with many new Passive Investor Circle members.
I vividly recall speaking with a doctor living in the Northeast that knew as much as or more about investing in commercial real estate than me.
He knew several real estate terms such as: Cash on Cash return, cap rate, pref return, triple net lease, asset type and equity multiple. So I was surprised when I asked how many syndication deals he was invested in when he answered….none.
I’ll admit, investing in your first passive investment such as a real estate syndication can feel overwhelming and daunting. It’s nothing more than the “fear of the unknown.”
You may logically know there are possibly hundreds of other doctors with the same investment strategy, yet feel as if you’re walking this road alone.
Learning the lingo, reviewing deals, and committing a huge chunk of savings can bring up all kinds of fears. But I can tell you from personal experience that as you continue to research, learn, and have conversations about passive commercial real estate investing in syndications, you’ll naturally gain peace of mind.
Here’s 5 steps for working through these initial insecurities including:
- doing research
- asking questions
- connecting with other investors
- reviewing old deals
- taking all the time you need to choose your first deal
5 Steps Doctors Should Take Before Commercial Real Estate Investing
#1 – Research
The best way to battle fear before investing in your first deal is to get educated. That’s the MAIN reason that I decided to start this site.
When I first began to invest in real estate, there wasn’t a one stop shop for doctors for education…so I decided to create one based on my own personal experiences. I share both failure AND wins.
Transparency is one of the things that I wanted to show my readers. Building trust takes a long time but losing it only takes a second. If I’m going to put my reputation on the line then I want to give it my best.
Investing $50,000 or more is no joke, and you should build your investing confidence with books, podcasts, articles, and online communities.
Once you send off your investment for investment properties then it’s a done deal. Preparation beforehand is the key to success.
So, gaining insight and perspective from podcasts, other investors and real estate investing blogs will be of utmost help.
One of the best books to get your mind right with investing is Rich Dad, Poor Dad.
#2 – Ask Questions….all of them
Inevitably, while doing your research, you’ll come across a question you can’t find an answer to or something you don’t quite understand. This is where some of those online forums may prove useful.
When you’re starting out, no question is too dumb and people in communities like BiggerPockets love to help. Plus, you can read through and see what others are asking, which may answer questions you didn’t even know to ask such as, “What type of track record should we look for in a sponsor?”
Asking questions shows you’re engaged and serious about doing your own due diligence. That’s the type of investor we want to partner with – confident investors who think critically throughout the life of the project.
#3 – Connect
A real estate syndication is, by definition, a group investment in commercial real estate property. There are possibly hundreds of other doctor investors just like you.
Some are in your same shoes (newbies) and others remember those days fondly and are itching to share advice or steps as to what they wish they knew back then.
Connect with other investors, new and experienced, through online forums, local networking events, and by asking sponsors if they’ll put you in touch with some of their current investors.
Creating a community of support from like-minded investors around you will help you walk through any fears AND assist you in finding future investment opportunities.
Commercial real estate investing can be made much easier with support from these types of communities as there is strength in numbers.
Join the Passive Investors Circle#4 – Review Previous Deals
Investment summaries contain loads of real estate and investment lingo and can be completely overwhelming to the new doctor investor. However, the more investment summaries you evaluate, the more easily you’ll be able to decode that lingo (no different than med school lingo).
For this reason, we suggest you look past the first few shiny, seemingly perfect deals you see and approach each one with an open mind. Compare details across deals, learn how each sponsor communicates, and make an informed decision.
Unfortunately when I first started investing, the ONLY two things I looked for were:
- investment returns
- pictures of the deals
I had NO IDEA the most important piece of the puzzle was WHO you’re going to work with as I relied on the websites to do that for me.
Related article: What I Learned From Losing $50,000
#5 – Take Time
New investment opportunities fill up in just a few days, which can give the illusion you might miss out on the “best” deal and that opportunities are passing you by.
However, as a new investor, it’s utterly important to avoid that panic and take all the time you need to feel comfortable, educated, and confident.
For this reason, don’t sink your cash in the first shiny new deal you come across.
Research, networking, and education all take time. Allow yourself that space, so when you do invest in your first real estate syndication, you’re confident and excited every step of the way.
Recap
Commercial real estate investing is no easy feat, especially for the busy doctor. And it’s completely normal to be fearful, worried, confused, skeptical, and even anxious about your first deal. I was!
It’s important to remember that even the most successful investors were once in your shoes.
In preparation for selecting your first real estate syndication investment, walk, don’t run, through the steps above.
By taking your time, you’ll be able to avoid the confusion and overwhelm you experience along the way because you’re preparing yourself to building massive streams of passive income.
One day, you’ll look back and be so glad you did.
Passive Income
Are you new to real estate investing? No worries. I’ve created something to help educate and provide you vetted deals called the Passive Investors Circle.
Join today as you’ll be glad you did.