Real Estate Intensivist: $190,000 in Debt to a Positive Net Worth Before the First Real Paycheck

Allow me to introduce you to R.E.I, the Real Estate Intensivist. He first contacted me early in 2021 with an interest in sharing his FI journey as he starts from scratch.

As you’ll learn below, to start with nothing is quite a feat, considering the fact that he started with close to $200,000 in debt, and, as of this initial post, has yet to receive his first paycheck as a new attending physician.

While most physicians will take a more traditional path investing in VTSAX, a three fund portfolio, and the like, R.E.I., as the name suggests has become a real estate investor.

Let’s see how he got started, where he’s at, and what the future has in store for this intensive care physician.

 

real-estate-intensivist

 

Hello FIRE-land,

My name is Real Estate Intensivist (R.E.I.) and I am absolutely thrilled to be writing this!

As you may have guessed from my name, I am an ICU doc, and yes, I am also intensely interested in real estate.

I am a recently graduated critical care fellow, and I just started my first attending job. I have been a FIRE devotee since around 2014, but my passion for finance and business probably began in my teen years and has continued strong.

Money represents different things to different people. To me, money is a tool that simply gives you options to pursue whatever you choose, which in my case happens to include traveling, my family, entrepreneurship, and medicine on my own terms.

I have been reading PoF for years now and have learned so much from his blog. In fact, this post is in part inspired by one of his guest bloggers, E.T.F. !

I still remember reading E.T.F’s first blog post and I have enjoyed following his awesome journey and posts (thank you E.T.F!). My plan is to write a similar series of posts where I track my journey to Financial Independence as I begin my attending career, however as opposed to E.T.F and most other FIRE bloggers, I will be using real estate as the primary vehicle to financial independence from the start as opposed to equities and index funds.

I also plan on writing a few posts regarding why I chose this path, its unique benefits, and what challenges it brings.

 

Getting Out of Debt Without an Attending Paycheck

 

First I have to admit, I have NOT paid off my students loans yet, and frankly, I would never pay them back early (well maybe that last payment!). I know this is a controversial viewpoint in the FIRE community, but I will confess, I am NOT ANTI-DEBT.

I do not think that “attacking debt” is a good thing, and I am comfortable with a moderate amount of debt provided the interest rate is reasonable and our cashflow situation is secured (I will discuss this view more in a future post). Instead, my wonderful spouse and I have gotten to the point where our net-worth has gone from negative $190,000 to roughly a positive $80,000 before a single attending paycheck thanks to the power of real estate.

Before I go on, I want to emphasize a point that others have noted in many FIRE-style postings and that is how crucial your spouse/partner is to your success. While it is true that you can succeed through brute earning force, having a partner that shares your values and goals is absolutely essential and I owe my success (in med school and investing) to my spouse’s unwavering support and incredible work ethic.

I also want to point out that we had an incredibly supportive family, which I acknowledge is a privilege that not everyone has. This opened up doors for us during medical school which otherwise, would have needed to wait until residency and would have set back our FI timeline at least one year.

 

SO How Did We Do It?

 

This tale is obviously long but begins in my third year of medical school. We were living in a large east coast city and paying rent to live in a glorified shoebox. We had saved up some cash over the years and decided to embark on a partnership with family members to buy a small condo.

Our idea was to live in the condo with my brother-in-law initially and to then rent out the place as an investment property. In my fourth year of medical school, we happened on the idea of renting out the extra bedroom (aka office) to a fellow med student which offset a sizeable portion of the mortgage while we still lived there.

I would later learn that this is called “House Hacking”. When we moved out for residency, we rented our room and then after my brother-in-law moved out, all the rooms were rented to medical students exclusively.

 

Pro tip: medical students generally make some of the best tenants/roommates, since they’re either never home or studying all the time.

 

Over the next 2 years, we paid off the minimums on our student loans, carried no credit card debt, drove used cars, and only invested in retirement funds to get the full employer match while I was a resident and my spouse was a grad student. But we saved ferociously, tracking expenses and making sure that we only spent money on what brought us true joy and fulfillment.

By my second year in residency, we had enough to partner with another family member on a dedicated rental property. This was more of the usual small multifamily property that comes to mind when you think of a mom-and-pop investor. Needless to say, we were no longer in a high-priced market and this property was in a modest part of town since our budget was limited.

This property was cashflowing, meaning that it generated more revenue than it cost to maintain and service, however, family members did need to manage it for a while. Note: As I will explain in future posts, actively owning real estate is NOT a passive investment unless you invest in specific vehicles and structures such as syndications which are often discussed on multiple FIRE blogs.

 

On the Move

 

Fast forward another 2 years and it is time for us to move for fellowship. This time, we used a physician loan (which I first read about on PoF!) to buy our first home with only a 3% down payment. We had been saving of course but we figured that the extra cash could be used for other investments that came along.

We bought a reasonably-priced 3-bedroom home that needed a lot of cosmetic work and over the course of a month, my incredible wife and her parents worked on the house while I was finishing residency and starting fellowship (I did provide unskilled labor on occasion as well, but not much).

It has been 3 years since that project was completed. When the COVID19 pandemic hit, like many healthcare workers, I started to think of my own mortality as well as my family and what would happen should I no longer be around.

Being the financial nerd I am, I started to create a financial blueprint for my wife to implement with the life insurance proceeds to ensure that she and my family (and the doggies!) are taken care of for the next 40 years.

During the course of those calculations, something odd happened with the math. I had always assumed that our net worth (which I had never really calculated before) would be a river of red, instead, it was barely so. It has been 14 months since those calculations and in that time, asset prices have continued to climb.

We sold our first condo, realized the gains, and sold the small multifamily property for a price that exceeded my highest estimates. Using the proceeds from the sale, we invested in 5 more rental properties. Our primary residence has also appreciated massively thanks to forced and passive appreciation.

Of course, we have also benefited from the massive tailwind that low interest rates and accommodative monetary policy have been to assets such as real estate and equities. As of this writing I can say, even using conservative valuations (valuation is always tricky in real estate) that we are now proudly at least flat broke (and maybe even a little in the black), before I have even gotten my first “adult” paycheck.

This is obviously the 30,000 ft view of the journey. I hope to post a series about my journey along this path to FI using real estate as the primary mechanism to achieve this goal. My extremely ambitious vision is to get to that goal within 10 years!

 

I've got my 2 acres of non-leveraged, crop-producing, cashflowing farmland via AcreTrader. Get yours.

 

Tabulated form of real estate investment returns

Note: Monthly cashflow and mortgage paydown are excluded in this table for simplicity.

 

Name Description Purchase Price + Rehab Market Value Equity Share Sales Price Net Investment Returns/ Current Equity
The Beginning 3-bed condo in expensive market $715,000 $887,000 30% $887,000 $49,000
Modest Multifamily Duplex in B neighborhood $130,000 $269,000 50% $269,000 $82,500
Little House on the Prairie Single Family Fixer Upper $266,000 $410,000 100% $144,000

 

[PoF: Intrigued by R.E.I.’s wealth accumulation methods? Coach Carson is the best educator I know on the topic, and he’s been in real estate for decades now — his free 7-day real estate investing course may be right up your alley.]

 



 

Has real estate offered a jumpstart on your FIRE path? Share details in the comments below!

 

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