Growing up, my father was a firefighter and my mother a homemaker. Our home was safe, loving, and we never wanted for anything. My parents believed you needed a strong foundation to build on, so I grew up knowing my academic life would include college. I was the first kid on the block to have a computer. That Radio Shack TRS-80 was a marvel of modern technology and made me the envy of my friends. Today, a TRS-80 is more like an abacus than a modern, functional computer.
I can also remember when my mom and dad brought home our first VHS recorder. Dad was smart and knew to avoid a Beta machine. Beta was sure to go the way of the eight-track, while VHS was built to last like vinyl records. At least that is what we thought.
I was in heaven the first time I played Pong on our brand new Atari. It was edge of your seat entertainment hearing that blip as I paddled that little dot past my older brother. With the video cards and interactivity of today’s games, Pong would be better suited as a children’s sleep aid.
A few years back, when visiting his grandma, my young son whispered in my ear, “did they have dinosaurs when grandma was a kid?” In a way, we all had dinosaurs when we were kids. In your lifetime, how many industries have you seen born, proliferate, and then die off into extinction?
Blockbuster was founded in 1985 and Hollywood Video in 1988. I used to be a member of both. However, with the introduction of satellite TV and video on demand, their time has come and went. Barnes and Noble is the largest book retailer in the U.S. Yesterday, Forbes published an article asking if Barnes and Noble will still be in business five years from now. Stiff competition from Amazon and online book sales threaten their existence. Just ask Waldenbooks, B. Dalton Bookseller, and Borders. Better yet, look around any waiting room and you will see the patients passing time reading books on their various smart devices.
In the face of rapidly changing industries, businesses must be ever vigilant to grow and evolve or they too will face extinction. We have all heard that 9 out of every 10 new businesses fail. However, unlike a tree that falls in the forest, when one of these bigger companies fall, the impact can be heard and felt worldwide. Investors are hurt, money is lost, and retirements are put on hold.
With rapidly changing trends, ever evolving technology, and global competition how can busy health care professionals keep up? Or do they have to? Instead, I invest in something that has always been in demand.
Multifamily real estate is an evergreen investment, as shelter is a basic need. I don’t need to look for insider information, track trends, or follow economic market cycles daily to know that people will need a roof over their head. It has always been that way and always will be. So just like a tree that never loses its leaves multifamily investments are evergreen.
It is no wonder that apartments have provided the highest returns of all the major real estate classes over the past 30 years. In addition to having the highest returns, multifamily also has the lowest risk profile of all the major real estate classes as well.
Having said this, you can still lose money if you make one or more of the following mistakes:
-Investing in a bad market with declining populations and or job growth
-Using a mediocre or poor property manager
-Using an inexperienced asset manager (whether that be yourself or a real estate investment firm)
-Not having adequate reserves
-Overpaying for the property
In my early years as a real estate investor, I made some of these mistakes myself. I learned the hard way how to avoid these landmines. Multifamily is a proven, wealth building asset class that every doctor, dentist, and other health care professionals should consider. When you combine the right asset class with the right market, a quality property manager, and a top-notch asset manager, you have a recipe that is VERY compelling.
Multifamily can provide multisource income that is tax-advantaged. It is a hedge against inflation and can provide true diversification for those who are heavily invested in stocks and mutual funds. Using direct fractional investing, you won’t have to become a landlord, but you will have to manage your mailbox as cash-flow checks arrive on a regular basis. Diversification into multifamily real estate investments that have no season might just save your portfolio from the next dinosaur extinction that is always just around the corner.
To Your Wealth!
Dennis Bethel, M.D.
P.S. Every doctor, dentist, and health care professional should strongly consider real estate investing in mutifamily due to its high returns, low risk, and evergreen nature.