As a doctor, you have invested a lot of time and money in your education and training, and you want to make sure that your hard-earned income is well-managed. Real estate investing is one avenue that many doctors are increasingly turning to in order to grow their wealth and create passive income.
But why should doctors consider investing in real estate and what are the easiest ways to get started?
In this blog we discuss some of the different ways to invest in real estate, considerations to make when investing, and how a mortgage broker for doctors can help.
What are the benefits of investing in real estate for doctors?
The first major benefit of owning real estate is the ability to leverage up your financial position and grow your wealth. Medical professionals have access to lending arrangements that allow the purchase of a property with a 5% or 10% deposit (or equity). Therefore, doctors can acquire residential investment property without a significant capital outlay.
For a small outlay, a doctor can control a substantial asset and that asset only needs to appreciate a modest amount each year for clients to significantly grow their wealth. Well selected property can offer considerable long term capital growth over a medium to long term investment timeframe.
The second benefit is the ability to produce passive income over time as debt is paid down. In the simplest terms, doctors will collect rent from their tenants and, as the value of the property increases, you can sell it for a profit.
The third benefit is that residential property can produce some tax benefits, for example through depreciation deductions, mortgage interest deductions, and more.
Real estate is also a good hedge against inflation. The value of property and rental income tend to increase with inflation, making it an attractive option for doctors looking to protect their investments in the long term.
Finally, real estate investing will allow you to diversify your investment portfolio, reducing your risk of losses if another investment goes south. By diversifying your investments, you can safeguard your financial future and help to ensure long-term stability.
Considerations for doctors to make when investing in real estate
It’s important to carefully evaluate several factors before diving into your first real estate investment opportunity.
Real estate investing can require a significant time commitment, especially in the early stages of researching, hunting, purchasing, and managing properties. As a doctor your busy schedule means you’ll need to plan your time effectively to compensate for the extra time real estate investing will take. We recommend utilising the service of a quality ‘buyer’s agent’ to assist in the research, due diligence and negotiation of a residential property.
As a doctor you also need to consider your investment capital and determine how much you can comfortably invest without jeopardising your financial security.
It is important to understand your lending options, specifically how to structure the property purchase to get the best tax, financial planning and interest rate outcomes It is also important to be aware of how much a bank is willing to lend you and what deposit or equity is required.
Finally, it’s important to have a clear understanding of your risk tolerance to help determine the best real estate investment options for you. Our financial advisors will be able to help you understand these options so you can make informed decisions and increase your chances of long term success.
Some of the ways doctors can invest in real estate
You may think that investing in real estate is as simple as buying your first property. However, there are several ways for doctors to jump into the real estate market.
- Direct ownership – Direct ownership involves purchasing and managing the property yourself or with the help of a property manager. Walshs recommend direct property ownership as the preferred structure for residential real estate investment. This method can require significant time commitment, but it also provides the greatest potential for returns. You may decide to get help from a buyer’s agent to reduce the time-consuming research and house hunting aspects of your investment journey but, even still, this option will demand the most of your time.
- Real Estate Investment Trusts (REITs) – REITs are publicly traded companies that own and manage real estate properties. Investing in a REIT provides passive income without the time commitment of direct ownership.
- Real Estate Syndications – Real estate syndications involve pooling funds from multiple investors to purchase and manage a property. This method provides access to larger investments and reduces the time commitment of direct ownership.
How to Start Investing in Real Estate
If you’re considering investing in real estate, there are several steps you can take to get started.
First, determine your investment goals. Do you want immediate passive income or are you looking for long term appreciation of your assets?
Next, research the real estate market in the area where you plan to invest, looking into factors such as the potential value increase over time and rental demand. A reputable buyer’s agent can help you find properties that fit your investment goals and provide valuable insight into the local market.
Depending on the investment method you choose, you may need to seek financing to purchase the property. Our team of mortgage brokers specialise in home loans for doctors and can work with you to obtain the best possible loan.
Finally, once you have purchased your investment property, it’s essential to manage it effectively to ensure that it provides the returns you desire.
How a mortgage broker for doctors can help
Mortgage brokers specialising in home loans for doctors can be an invaluable resource for those looking to invest in real estate. With access to home loans specifically designed for those in the medical professions, our team can help you find the best mortgage rates, negotiate terms with lenders, and provide guidance on the best financing options for your investment goals.
With our knowledge and expertise our team of home loan experts will help make the process of obtaining finance for your real estate investment smooth and efficient, allowing you to focus on building your real estate portfolio.
To find out more about how our teams of professionals, including financial advisors and specialist home loan experts can help you, as a doctor, invest in real estate please get in touch.
