Christopher H. Loo, MD-PhD
Financial Freedom Through House Hacking
Updated: Apr 22, 2022
Note: transcription provided by Otter.AI, which is a technology company that develops speech-to text transcription and translation applications using artificial intelligence and machine learning.
Christopher H. Loo, MD-PhD: Today we have a special guest, Dr. Gupta. He's in New Orleans right now, covering the Peds ER in New Orleans with Hurricane Ida. So, we all live in COVID times. So without much ado, I'll bring Dr. Ayush Gupta up and we'll get started. Welcome to the show.
Dr. Ayush Gupta, MD: Hey, thanks for having me. Super excited to be here.
Christopher H. Loo, MD-PhD: So you're a Pediatric Emergency Physician, and you help medical professionals reach financial freedom through house hacking and real estate investments. So last week, we talked about real estate syndicates. And this week, we're going to talk about house hacking. Before we begin, just tell everybody about yourself. And we'll get started.
Dr. Ayush Gupta, MD: Yeah, so I am originally from India, I did my med school, I moved to New York City to do residency from 2013 to 16 in Michigan, moved down to New Orleans two years ago. And, and has been here it's been like a whirlwind of like, up and up and down like COVID. It’s funny, I'm actually calling in right now from the hospital ER, we are under a Hurricane Ida lockdown. So I've been here for a couple of days. And another couple days ago before I get to go.
And I think before COVID I was just like a lot of physicians who come out of training and go ahead and buy a dream house because finally after like years you're struggling to make your salary. I was on the same path. I was looking at a single family house at that point. And then I COVID hit. I got into a summit and got into a few seminars and then just learned about how the physicians are changing their life by doing a lot of other things. That's how I decided to go house hacking. I didn't even know what the term was. I was just learning all these things. And then and now it's like Fast Forward one year. I've done a cycle of house hacks, and now I'm looking to invest more into real estate. Yeah, I learned a lot. Just just a change in mindset, I would say in the last year or so.
Christopher H. Loo, MD-PhD: That's awesome. And before the show started, we were talking backstage and you were saying how you just closed on your last deal. So that's really exciting. So, a lot of the audience, they don't know what house hacking is. So give a brief description and introduction to what it is.
Dr. Ayush Gupta, MD: Yeah, House Hacking has been going on for years, it was just not coined like that. In short, it's basically sharing a space with somebody and dividing the rent among yourself. So, it can be done in various, various formats. So the most common format is, you buy a house, using your own finances. Suppose you can use a FHA loan, a VA loan, or even conventional financing. And then if you buy a four bedroom house, you have other roommates for the residence, you have other three roommates in the room, and then they are paying you rent, and then your mortgage is coming out of that. So basically, you're coming on top in terms of not paying rent, living for free, and also having all the advantages of the property, like the property appreciates, all the tax benefits, all those things. So that's a short version of house hacking, you can do it by room, you can do it by having a duplex, you can do it by having an ADU or commission dwelling unit, there's so many ways to do it these days. What I did was, I bought a Four Plex. And, a lot of times people say that as an attending, you should not be doing that because you don't want to live around the neighbors and I was the same. But I bought a Four Plex. And I got, I mean, I live on one of them. It's beautiful. It's one of the historic buildings in New Orleans and all the three tenants pay me rent, and I come out positive every month. So I haven't paid rent, or I haven't paid a mortgage or my pocket in over a year now.
Christopher H. Loo, MD-PhD: That's awesome. There's so many creative ways of personal finance. And I actually find house hacking really fascinating because that's what I did during medical school. It was actually my first condo. I purchased a med school. I rented out the other room and he was a med student. So it was basically, that the rent was covering the mortgage, and I had to pay something like 50 bucks a month extra, but, compared to paying 1500 or 2000 or wherever you live per month, there's a lot of cost savings.
Dr. Ayush Gupta, MD: Exactly, and I think we as medical professionals have so many advantages of doing it like you have like physician loan, dock loan and go to like, residents, fellows, everybody, we just don’t know about it. I wish somebody told me about it like eight years ago and I would be so far ahead at what I am right now but at least we can make this this to everybody out there like to maximize residence like you did. And look at you right now. So financially free I think it starts with house hacking.
Christopher H. Loo, MD-PhD: What inspired you to get into house hacking? And why is house hacking, perfect for medical professionals, even if they don't have time or money to start with?
Dr. Ayush Gupta, MD: Yeah, so what got me started into house hacking again, just listening to various podcasts and learning about it and seeing how to get your feet wet. How the packing is, is not the be all end all for me, but it was a great, great, great opportunity to get into a big one of the biggest businesses, which is real estate. And it's a safe point of entry. As physicians, we try to stay safe. Especially the money, with patients, with everything, like I'm an ER doctor, I do weird stuff in the ER, but with money we are always like we are so tight about it. When we are trying to get real estate we think hey, what's gonna happen if we lose hundreds of thousands of dollars? House hacking was a safe starting point for me. I learned from people around me who have done it before and I had a mentor who was doing it like four or five times. So just learning those things. It was perfect.
Christopher H. Loo, MD-PhD: For physicians if they don't have time or money, because you're gonna live you're gonna live in the house anyway right? So why not generate some income from it and yeah.
Dr. Ayush Gupta, MD: 100% I mean for us like, imagine most of the residency is three years, three to five years most of the fellowship would be like 1-3 years. You will be staying in that city for that period of time. Very, very rarely do you get transferred and the program shuts down. It's the perfect getaway. So if you are only doing residency and not Even in fellowship, and you live at a place, you are going to pay rent. If you're not buying a house, if you buy a house and you live by yourself, you will be paying the mortgage. You can actually combine that you can buy a house in which you can get other residents as residents. I always had roommates, so I always had roommates, we will find doing that. You just like to divide the rent. And five years later, 10 years later, that house is going to appreciate, it's going to be cash flowing. You're gonna have tax benefits and amortization, you have so many advantages. That is just perfect. And also medical professionals. One thing that people think about, we don't have money to start with, I thought the same thing, you can I had a physician over here who who got paid on closing from physician mortgage, like people do it with 5000-10,000 to start with, but then never pay the 1500 or 2000 rent that we end up paying and residency and fellowship for the next like three years. Your ROI and IRAs in finance. I mean, there's a lot of returns.
Christopher H. Loo, MD-PhD: yeah. The other thing that came to my mind when you're talking is this, say you live in the house and you have your tenants paying, you're basically getting the asset, you're controlling the asset, and you own the asset. And it's the mortgages getting paid down by the tenants. So you're basically getting an asset for free, and then you can sell it or you can, you can move on and rent it out. So, especially if you live in an extremely high cost of living area, this is one way to decrease your expenses.
Dr. Ayush Gupta, MD: 100%. And that can be your down payment, whatever profit you make, either sell or give me a down payment for your first house, or your next house. And it does have the snowball effect of that.
Christopher H. Loo, MD-PhD: The other interesting thing was, I think, it was the interview from Joe Gebbia or Brian Chesky, the CEOs of Airbnb. And because a lot of people, after the 2008 crisis, they overbought properties and they couldn't know them and then all of a sudden, there's no jobs and the market’s tanking. So a lot of people resorted to house hacking, and they were saying that AirBnb saved them from getting evicted or losing their house. So it's one of the strategies that you can use. So it's quite interesting.
Dr. Ayush Gupta, MD: Yeah. 100%. So another advantage that you have for the Airbnb thing is, wherever you're doing residency, fellowship, or even working, you’re around the hospital, generally. And you will always have travel nursing, you will always have medical students who are coming for rotation, you will always have residents who need a place to stay for a short term. There you go. Your cash and cash return on that is so high, the percent is very high compared to long term, obviously have tenants turnover. So which can be automated again, which you don't have to deal with. Yeah, one thing I want to tell others, like, as everybody starting out in the real estate, things that I don't want to wake up in the middle of the night and go change the toilet. I think everybody's heard that. I have never ever changed a toilet, nor will I ever do it. There are ways that nobody expects you to do it. Your tenants respect you so much. They know that you're a physician, they respect you so much that you will have an advantage. I mean, when I was putting my units to rent out, I used to go and meet the tenants and they used to be so nice because they think that a physician owns the building. So we have a lot of limiting beliefs, a lot of negativity and the fact that we have to work in the middle of the night while we are on call for Thirdly, we are on call for orthopedic but we never never after that.
Christopher H. Loo, MD-PhD: That's awesome. So what's your number one tips for getting started for the view listeners and, what's your number one mistake for listeners to take caution when starting house hacking?
Dr. Ayush Gupta, MD: Yeah, number one tip for starting house hacking is don't overthink and do it. A lot of the time we try to read a lot more. I would say learn first, spend some time finding a coach or reading a book online. There's books on house hacking these days, read about it. There are always residents in your residency. There's always fellows there's always doctors around who are doing it. So in just a different way. They just don't advertise it or they just don't know the word for house hacking, but they're doing it, talk to them. Create a community. When you have people in proximity to you, you will probably be able to take a step.
I’d say the biggest mistake that I made was, t I got a little attached to the property that I wanted to buy. It was in a good area. It was four plex. I used to work around it and I got attached to it. So a lot, I think I might have overpaid a little bit, or that's what I thought. And then when I, I think I could have got a better deal, that is always what every real estate investor thinks five years or six months or one year down the line. Okay, I think I overpaid for this. But I just refinanced it, and I realized that actually it was like, I came out way ahead than what I did. Yeah, in one year.
Christopher H. Loo, MD-PhD: That's awesome. So I know you were recently on the house hacking podcast, and you have your own website. So I know a lot of listeners would be interested in house hacking as a strategy. So how would people get in contact with you to learn more about what you do and learn more about house hacking?
Dr. Ayush Gupta, MD: Yeah, I mean, we have an Instagram handle and a website. The link for both is @mdhousehacking. And www.mdhousehacking.com. Just give me a follow, shoot me a text, I'm always happy to connect with people just talk about it. If I can get like one person started per week on it. That would feel so good. Like, at the end of the day, you're not doing it to make money, I don't do this for making money. It's just to create awareness that somebody did not teach me 10 years ago. So yes, come to talk anytime. And it can be done in any city. I have tried to review multiple cities around the country. It doesn't matter if you live in New York City, or if you live in LA or you live on your own, that can be done in any place.
Christopher H. Loo, MD-PhD: That's awesome. And he also I know, even this technique can be applied. If you're even renting an apartment, you can just split the cost with a roommate. So there's so many different ways around the term house hacking. So yeah. I love this conversation. It was wonderful. What's your final parting words of advice for the listeners?
Dr. Ayush Gupta, MD: Yeah, I would say this, I'm part of a tribe. And we talk about thinking alike when you're part of a tribe and things like that. And so we say something called proximity is power. Surround yourself with people who are doing it, if you want to get financial independence, read, surround, read, books, podcasts, surround yourself, their residents, their fellows, there's other doctors who want to do the same thing. So have them in proximity, you're going to have, you're going to lift yourself up, like we say we are average of the five people. That is exactly the concept behind it. And doesn't mean that you will leave other people behind. But if that's what your goal is, surround yourself, be proximate to those people who can help you attain your goals.
And there's one more quote that I want to say which I firmly believe, is the Mark Twain said that, but there are the two big big days of our life is the day when we were born and the day we find our Why. So find your why. You're gonna have ups and downs during your investing career, have that somewhere on your wall in your book, you will look at that and you want to keep going forward.
Christopher H. Loo, MD-PhD: That's awesome advice. So for all the listeners, all of Dr. Gupta's references and all of his links will be in the show notes. And thanks so much for this awesome time. I know a lot of the listeners will get so much benefit out of it and they can start using these tactics and strategies right away. So thanks so much, and we'll look forward to having you on future podcasts.
Dr. Ayush Gupta, MD: Perfect. Thank you so much. Nice to meet you.
Christopher H. Loo, MD-PhD: Many thanks again for being here. If you’re new, you can find me online at Christopher H. Loo, MD-PhD, where I have links to other episodes or links to online resources that will support you on your financial literacy journey. I’ll see you there in on next week’s show. While I bring you thoroughly vetted information on this show regarding a variety of financial topics, I cannot promise you a one size fits all solution. This is why I caution you to continue to learn. Educate yourself and seek professional advice unique to your situation. If you want to talk to me, I welcome it. Please reach out via my website or email at Chris@drchrisloomdphd.com. I read and personally respond to all of my emails. Talk soon!
Editor's note: This transcript has been edited for brevity and clarity.