Reasons You NEED Investment Real Estate

It’s a Business

There are huge tax advantages to owning a business, and doctors today are losing those advantages as medicine transitions to an employment model. By starting a real estate business, you can get back some of those lost advantages that employees do not enjoy. Owning a single rental property means you have a real estate business with all the tax advantages of any business.

This business creates a vehicle for using deductions. The ability to take depreciation write-offs is just the beginning. If you own a business, you can write off so many things on your taxes that are not available to you as an employee of someone else’s business. 


If you choose to manage the property yourself, you will need some tools to do the job. These are often tools you need at your own home a well. Anytime you can turn a tool into a tax write-off, it is a bonus. Some examples include a cell phone, camera, utility trailer, vehicle to pull a utility trailer, leaf blower, tools for minor home repairs, gloves, yard-working tools, lawn mower, computer, internet service, second line on home phone, answering machine, ladders, cleaning supplies, home office, and anything else you use to take care of your rental.

Unlike your personal expenses, these real estate business write-offs are not limited to the amount exceeding the current standard deduction of $24,000, if married and filing jointly.

In your business, every deductible dollar gets deducted. 

For example, due to the standard deduction, not all of the interest you pay for your home mortgage is deductible. The first $24,000 doesn’t count. But your investment property interest is fully deductible and is not affected by the standard deduction. 

Hire Your Family

Since you now own a business, you can employ your family. There are great tax advantages to having your children work in your business. If you hire your kids as minors, they may not have to pay Social Security tax, Medicare tax (FICA), or federal unemployment tax (FUTA). They also get their own standard deduction of $12,000, making the first $12,000 they earn federal tax-free. The child can use the money to fund their Roth IRA with pre-tax dollars, since they have zero tax liability. You also get to take a business deduction for the money you pay your kids, which you might have given them anyway without a deduction, which decreases your tax bill.

It makes remarkably good sense to hire your children and pay them at least enough to make a $6,000 Roth IRA contribution. Imagine the financial impact of a child earning compound interest through age 65 on money that will never be taxed.

If your child worked for your business each year and earned $6,000 ($500 per month) and put it into their Roth IRA from ages 12 through 20, they would have contributed for nine years with a total contribution of $54,000. If they never put another dollar into their IRA and earned an 8% return over their lifetime, at age 65 they would have over $2,800,000—which will never be taxed. 

Another Retirement Plan

Because a real estate investment is a business, you can have an additional retirement plan. As an employee, your retirement investment options are limited to only what your employer offers. If you add a real estate business, you can create additional retirement plan accounts and put away even more money in tax-protected accounts. With additional retirement plans, you can give yourself the same benefit you gave your child with their Roth IRA.

Passive Income

Real estate is a passive form of income. I love this feature. It is very important to generate passive income that protects you from job loss and provides for a nice retirement. When I was younger, I took an active role in the management of my real estate. I was the manager. This was a part-time job that I enjoyed doing about 10-15 hours a month. It was a nice change of pace from what I did as a physician. 

But when I retired from medicine, I wanted to travel a lot. I couldn’t manage my real estate investments from Europe, so I hired a property management company to do the work. So you can choose your involvement level, from running it all yourself to merely cashing the checks. I do spend a little time keeping an eye on the management, but even that is optional. Because I am still the business owner, I can still take advantage of all the tax advantages I listed above.

The cash flow is running right into my pocket and is increasing each year as rents rise and mortgages fall. The property continues to appreciate in value. Both of these things are happening while I am somewhere else in the world. Even while wearing my bathrobe, sitting in my motorhome in an RV park in Las Vegas, Nevada. Despite being 770 miles from home, the property is still spinning off profits for me to buy show tickets and pay for an RV space.

Anyone Can Do It

I think this is the most important point of all—anyone can do it. I didn’t need a special license to buy my first investment property. I didn’t need a permit to manage it myself. The knowledge I needed to be a real estate investor is readily available. I can read books in the library or find articles on the internet. 

My grandparents hadn’t completed high school when they started investing in real estate. They would save up a little money and use it for a down payment on a very inexpensive rental house. Then the rental income from the tenants would pay off any remaining mortgage over the years. They did this about a dozen times.

My grandfather did not have a contractor’s license, but he was able to fix things in the rentals as needed. He was not a roofing contractor, but he put on new roofs. He was not a journeyman plumber, but he could fix a dripping faucet. He was not an electrician, but he could replace a faulty light switch. You get the picture.

My grandparents could easily have said they didn’t have the education or the money to get into real estate. They never said or thought that. They just went out and did it. They often took me along as a teen to help them fix things and I suspect that is where I got the notion to try it for myself. 

Everyone else in the family saw what my grandparents did, just like me. But no one else became a real estate investor. I realized that if my grandparents could do it, with an eighth-grade education and a millworker’s income, then anyone could do it. Even me!

If my grandparents could become real estate investors with a 40-hour-per-week job, and I could do it as a busy professional with a 60-plus-hour-per-week job, and millions of others could do it as well, then so can you. What are you waiting for?

“Buying real estate is not only the best way, the quickest way, the safest way, but the only way to become wealthy.”

—Marshal Field

Additional advantages that real estate investments have that buying stocks, bonds and CD’s don’t have include: appreciation, depreciation, and an income that increases with inflation. If you are ready to dive into this very lucrative investment or want to learn more about how a busy professional can create passive income through investing in real estate, get a copy of my book The Doctors Guide to Real Estate Investing for Busy Professionals

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2 thoughts on “Reasons You NEED Investment Real Estate”

  1. With decent paychecks, which are normal for doctors, investing some of this money makes a lot of sense. You can start off with smaller properties and then build up from there. I’ve always though that, instead of squandering money, one should find ways to make it ‘multiply’. Overall the real estate industry is going upwards (even with the periodical crashes) and it’s a great way to get an income even after leaving the workforce.

  2. The vast majority of the ultra wealthy have real estate in their portfolio and so it is wise to try and emulate that.

    I think syndications and crowd funding have opened up the doors so that any one can get in on commercial real estate (the caveat being that due diligence is required to vet the asset and company first).

    For those physicians that can take advantage of becoming a real estate professional there are even more tax benefits (this can be done far easier if the spouse doesn’t have a regular job)


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