Real Estate Investing for Doctors – What You Need to Know

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The latest in personal finance to help you make smarter money choices. 

You’ve undoubtedly heard the business adage, “It takes money to make money.” The often-repeated phrase is exactly what makes real estate investing an attractive option for doctors and other high-net-worth individuals.

But even with a doctor’s salary, you won’t be well off forever without an investment plan that puts your money to work for you. 

Real estate investments are hot and are only predicted to get hotter, and while the world of real estate can feel intimidating or overwhelming, the potential for high returns is there. In fact, real estate analysts and market researchers expect demand in many real estate market segments—including affordable housing and multifamily real estate—to continue their upward trajectory in the coming years.

Here is what doctors need to know before investing in real estate.

Why doctors and real estate investing are a good match

The potential for passive income and asset appreciation make real estate a great place to put your money.

Working in the medical field can be tiring and demanding. Investing in real estate can provide a way for doctors to accumulate additional wealth and save for retirement without having to spend more time at work.

For most people, the biggest barriers to entry into the real estate market are the high upfront costs and the illiquid nature of real property. For doctors and other high net-worth individuals, neither of those barriers is as big of an obstacle—making real estate an ideal investment opportunity. 

Compared to someone earning an average salary, doctors are in a better financial position to purchase entire properties, making rentals, renovations, and flips more feasible. And if you’re earning a physician’s salary it’s not as big of a deal if some of your money is tied up in an illiquid asset for a few years.

With growth predicted to continue in the global real estate market, there are plenty of opportunities to invest. Whether it’s in real estate funds, senior living facilities, or commercial properties, there are a number of different ways you can invest in real estate.

Different types of real estate investments 

Real estate investing can take many forms. From active investments like investing in rental properties and flipping properties, to more passive opportunities like crowdfunding and private syndications, there are plenty of ways for doctors and other high earners to jump into the real estate market.

Depending on the type of investment and the level of participation they require on the part of the investor, real estate investments are generally split into two broad categories: active and passive.  

Active real estate investing

Active real estate investing is more hands-on—the investor may personally identify and evaluate potential properties, secure any necessary financing, and eventually manage and oversee the property’s day-to-day operations.

Rental Properties

When an investor buys a rental property, that’s only the beginning.  There are a number of other steps that need to be taken to turn it into a profitable investment. 

Property managers are responsible for screening and accepting tenants, taking care of any repairs and maintenance needed for the property, collecting rent, and more.  Needless to say, the time you have to spend actively managing a property, dealing with tenants, and keeping up with maintenance can make it a full-time job in itself.   

Doctors looking for a more passive way to invest in rental properties can do so through real estate funds and crowdfunding deals. These types of investments give people the opportunity to earn consistent monthly income without actually having to purchase property themselves. Most crowdfunding investment opportunities require little to no work on the part of the investor; all that’s required is their initial capital contribution. More on that later.

Flipping properties

The typical fix-and-flip real estate transaction involves identifying potential properties, repairing or renovating them, and selling them to buyers at a profit. Unlike rental properties, no tenants are involved in a fix-and-flip, but the process still requires a considerable amount of time and effort on the part of the investor. 

Flipping land is basically the same concept, minus the house. Many investors buy undeveloped land and clean it up by clearing trees or doing whatever else needs to be done to make it easier for potential investors to envision ways to use the land. Sometimes that can be as simple as hiring a landscaping crew and a professional photographer for the afternoon.


Wholesaling is another active real estate investment with slightly less work. As a wholesaler, you do the hunting, find an undervalued property, put it under contract, and immediately (or as soon as you can) assign it to an investor in your network, who pays you a finder’s fee for doing the legwork. 

There’s less physical labor involved in wholesaling, but it still requires a significant time commitment, which can be difficult for doctors to fit into their schedules.

Passive real estate investing

Passive investing requires much less work from the investor’s perspective since you don’t have to purchase or manage the real estate properties yourself.  Instead, the responsibility falls on a fund manager or sponsor. 

Private syndications

Private syndications are an ideal passive real estate investment for doctors who want to diversify their investment portfolio or save for retirement but don’t have the time to actively manage properties.

In real estate syndications, multiple investors pool their money to invest in real estate. Syndications usually invest in larger properties like apartment complexes, office buildings, hotels, student housing, or retail centers.

A general partner (GP) oversees the project, handling everything from acquiring the property to managing the day-to-day operations. 

Every private syndication is structured according to the terms laid out in its official operating agreement, which contains information about voting rights, capital calls, and profit distributions. 

Real estate crowdfunding

Real estate crowdfunding platforms are online exchanges where real estate investment firms can sell shares in different investment properties. Crowdfunding platforms allow individual investors to access hundreds or even thousands of potential properties. The minimum investment amount required for a real estate crowdfunding platform can average anywhere from $1,000 to $50,000+, depending on the project.

Real estate funds

Real estate funds are another passive way to invest in real estate. Real estate funds are sort of like mutual funds that focus only on real estate. The income generated through the fund is distributed to investors in the form of regular dividends. 

Pros of real estate investing 

Like all investments, real estate has its pros and cons. Whether you’re pursuing an active or passive investment, it’s important to understand the advantages and disadvantages.

Hedge against inflation

In today’s interest rate environment, many investors are looking to real estate as a way to hedge against inflation. In the past, real estate values have often managed to rise at the same rate as inflation, if not faster.

Growth potential 

Historically, home prices have appreciated, but there’s no guarantee. Many factors affect real estate, including mortgage rates, the overall economy, and unemployment rates. But in the long-term, home prices tend to increase, making them a profitable investment for doctors looking to park their capital for 10+ years.

Tangible asset

Real estate is a tangible asset. In other words, you see it and touch it. In contrast, when you invest money in stocks, all you get is a paper certificate. 

Even if doctors invest in passive real estate investments, some physical property is at the center of it. Its tangible nature gives investors reassurance that, even in a downturn, the asset can be sold.

Cons of real estate investing for doctors 


All investments have some level of risk, including real estate. The real estate market is cyclical and fluctuates often, resulting in higher and lower values without much warning. There’s the risk of overleveraging yourself and ending up upside down (owing more than a property is worth) on a property. 

High upfront costs

Investing in real estate often requires a significant capital contribution, which may not be a major concern for doctors or others with a high salary; however, everyone should concern themselves with paying too much. Unnecessarily high costs eat into your expected profits, so even if you can afford the expenses, that doesn’t necessarily mean they’re reasonable.


Real estate investments are typically long-term commitments. While doctors with high salaries may not care as much about tying up their funds, it’s still a downside to consider.  

Less favorable tax treatment 

Passive real estate income doesn’t get the same favorable tax treatment, aka write-offs, as active income. Be sure to talk to a CPA or tax professional to ensure you understand the potential tax consequences of your investing decisions.

Measuring financial returns 

There are several ways to measure the financial returns earned on a real estate investment. Understanding different performance metrics can help investors manage their real estate portfolios more effectively. 


Return on investment, or ROI, measures the profitability of an investment using the income earned and expenses incurred on an investment relative to the amount invested. ROI is expressed as a percentage.


Net operating income, or NOI, provides a way for investors to quickly develop a rough estimate of a property’s value. It considers all sources of revenue (including rent, laundry charges, and late fees) and all of the property’s operating expenses. NOI is basically a property’s annual profit (or loss), and is expressed as a dollar value. 

Capitalization rate

Cap rates are used by investors to estimate the potential return that can be earned on a property. Capitalization rates are calculated by dividing a property’s net operating income by its purchase price.

Cash-on-cash return

Cash-on-cash return calculates the cash return earned on a property for every dollar invested. It ignores the impact of debt financing and the time value of money, but many investors still like to consider a property’s cash-on-cash return in combination with other performance metrics.

Cash-on-cash return is calculated by dividing a property’s annual pre-tax cash flows by the cash invested.


Real estate investing is a great way for anyone to grow their wealth. This is especially true for doctors, who are in a better position to take advantage of opportunities in real estate.

In the end, no matter which direction you take, make sure you’ve done your research and understand the risks involved.