How I Bought My First Investment Property Despite Little Time, Big Loans and Bigger Doubt

Now that we are in the New Year, let’s talk action. Specially action related to getting started in real estate investing. The three biggest reasons that physicians give for buying a real estate investment property are:

1. I don’t have enough time to buy an investment property,
2. I don’t have enough money to buy an investment property, and
3. I don’t know enough about it

It makes sense to me that physicians are so hesitant when it comes to real estate investing, and really investing in general.

We spend years of schooling and on-the-job training analyzing risks and benefits. With every decision we make, we seek to minimize risks. Human lives are in the balance. It sounds dramatic but it’s true.

When we evaluate investment opportunities, it’s only natural that we apply the same analytic skills that we have developed over so much time.

Combine that with the common narrative around real estate investing – the stories of people losing it all in poor investments, of having to deal with leaky toilets at 2 A.M., of getting taken advantage of by a shady dealer – and the grand majority of doctors decide to steer clear of real estate all together.

Creating a counternarrative

A funny thing happens though when you dig a little deeper into those common negative narratives around real estate investing. They are usually told by people who have never invested in real estate. 

Would you take technical advice from a surgeon who had never performed the operation being discussed? I wouldn’t. Maybe these non-investors are trying to justify the fear that kept them from getting into the game?

I heard all of these stories and had written off real estate investing as of just a couple of months ago. I told myself that:

1. I don’t have enough time,
2. I don’t have enough money, and
3. I don’t know enough about it

But then I changed my mindset

I figured that I might as well listen to people who actually had invested in real estate. I’d see what they had to say and if real estate investing still wasn’t for me, I would only be out a few hours of my time.

What I realized was that the counternarrative was very different. These investors still shared their failures, but they also shared their successes, all in a very honest way. And the successes outweighed the failure. The risk-benefit analysis suddenly tilted in the other direction.

The other thing that each investor shared was that when they started, they initially felt like:

1. They didn’t have enough time,
2. They didn’t have enough money, and
3. They didn’t know enough about it

But they did it. Why couldn’t I? Why can’t you?

Buying my primary residence

The funny thing about this revelation was that it happened about 3 days after my family and I moved into our primary residence.

Had I missed my opportunity to get started in real estate investing? I worried that I had. But that was a limiting belief.

A whole separate post will be dedicated to my advice for physicians buying versus renting a primary residence when they get their first job. I’ll keep it simple here.

We bought a home that was much less than 2x our annual income. It is 1.2x our annual income. We bought the house using a doctor’s mortgage with 0% down and a sub 4% interest rate. Our house debt to income ratio was much less than the recommended 28%. 

We negotiated to have all furniture included with the house. We were able to negotiate a price well below market value. (These last two points helped us actually increase our net worth by thousands before I received my first paycheck.) For various reasons, this was a win-win deal for us and for the seller. This is always the kind of deal that you are looking for.

All of these circumstances aligned (not by chance, but by our hard work) and we made the decision that we would buy the house. If we had not found such a perfect opportunity, we would have rented.

Buying the house in this fashion gave us the financial flexibility to also pursue an investment property.

Overcoming limiting beliefs

Despite having this financial flexibility, we did not recognize it at first. We immersed ourselves in real estate investing, reading books and blogs and even joining an online course by Semi-Retired MD.

But we still felt like:

1. We didn’t have enough time,
2. We didn’t have enough money, and
3. We didn’t know enough about it

These are all limiting beliefs. This is negative self-talk. We decided to invest in real estate and wrote it in our written personal financial plan. We decided we didn’t want to do this, we had to do this.

I’ll share how we overcame these beliefs

Let’s address #3 first. I have an easy, ironclad argument. On the night before your first day of residency, did you feel like you knew enough to be someone’s doctor? I can tell you that I did not! And my wife can confirm for you. I’m sure that all of us were in the same boat.

But it didn’t stop us! We had prepared and reached a point where we could no longer learn more without being on the job. It’s no different in real estate investing. Get prepared, but at some point you will have to make the jump. And you will never feel ready.

We jumped.

Time and money are two huge hurdles for would-be investors to overcome

We were not different. But I’m here to tell you that they are mental, even though they seem so material. I can say that because I’m on the other side and overcame these hurdles to buy my first investment property.

Let’s hit time first. 

Isn’t time undefeated?

I’ll share a quick anecdote.

Before my wife gave birth to my first son, we would sit at night and wonder out loud, “How are we going to find time for everything when we have a kid? We are already so busy with X, Y, and Z.” Then my wife gave birth and we made it all work.

Then we decided to have another child. Right before my wife gave birth, we commiserated, “Ok, for real, how are we going to find time for anything with 2 kids?! We are already so busy with kid #1, X, Y, Z, and now A,B, and C.” Then my wife gave birth and we made it all work again.

Time is a finite resource. But the beauty of time is that you can spend it however you want. Any minute spent doing one thing is taking one minute away from something else. You prioritize what is important. Our financial well-being and security is a priority for us, so we make time for real estate investing. You can too.

But if there’s no money, there’s no money…is that game over?

I think that this is the single most prevalent limiting belief when it comes to real estate investing.

Like I said earlier, we had created financial flexibility (on purpose) in buying our primary residence. But we didn’t think we had created enough to buy an investment property. Going into things, we didn’t plan to buy our first property for a few months until we had saved up more money. Then we decided to let go of our limiting beliefs and jump in.

We determined the criteria that we were looking for in an investment property. A big part of this is determining what your price range is. This is based on how much money you have available for a down payment (generally needs to be 20% for an investment property with conventional financing), closing costs (2-5% of the purchase price), and any renovations/repairs needed. Once you determine how much money you have for this, you can work back to figure out your general price range. 

We had to figure out how much money we had. At first glance, we didn’t have much. We had about $5,000 in our savings that we could set aside for this. Remember, this was in between our graduation from fellowship and PhD programs and before we started our new jobs. We hadn’t made our first paychecks yet.

This didn’t deter us

We were determined.

We set our why, set our goals, and looked at our written financial plan. My wife had an old IRA account (~$8,000) from a prior job and I had an old 457(b) account (~$29,000) from my residency.

Our written financial plan called for these funds to be excluded from our future financial plans. They were extra. We decided to use them for real estate investing. Combine that with a personal loan and we had enough to buy our first property.

Plan, meet action, meet investment property #1

The next part was easy. We evaluated tons of properties based on our criteria. We found one that met these criteria, made a decisive offer, and got our first investment property!

I’m not special. My wife is not special. We have no more smarts or investing chops than any of you. But we decided to take action and didn’t let anything stop us. And we won’t let anything stop us in the future. 

You can make that same decision and get started on your path to financial security!

The first steps cannot be skipped though. These are:

1. Understand why real estate investing is a huge wealth building accelerant, especially for physicians
2. Learn to screen and analyze investment properties like a pro!

Start taking these steps today by reading this post addressing both aspects!

What do you think? Have you been held up from investing because of any limiting beliefs? Can you allocate your time and money to your financial well-being? How did you buy your first home? How did you buy your first investment property? Leave a comment below!