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Christopher H. Loo, MD-PhD: So welcome, everybody to this week's episode of the Financial Freedom for Physicians Podcast. Today we have a very special guest, Dr. Bala, and she is going to talk to us about financial freedom and how she achieved financial freedom by the age of 41. So today's talk is going to be all about finances, freedom, one of my favorite subjects. So I really love finding the topic of financial freedom, physician finances, so I'm going to bring up her bio.
Dr. Bala is a Radiologist. She's a mother. She's a real estate investor and mentor who helps high income professionals achieve financial freedom through real estate investing. So she did her residency at UMDNJ and fellowship at the Carol Baldwin Breast Center at SUNY in Stony Brook. So she's been a huge advocate for women's health in her role as Co-Section Chief of Breast Imaging at Staten Island University, and now she's in private practice in Bakersfield, California.
Dr. Bala is also a personal finance and real estate investing blogger and mentor who achieved financial independence at 41. Primarily through passive income from her multimillion dollar portfolio of long and short term real estate rentals in the United States and abroad. She's on a mission to help others get from trapped to financially free through her blog, social media communities and her course generating freedom through real estate investing. So you can find her on generationalwealthmd.com. And without much ado, Dr. Bala, welcome.
Dr. Parameshwari Baladandapani, MD: Thank you for having me, Chris. I'm so excited to be here. Just wanted to start off by talking about my journey. I'm a Radiologist in California, as you mentioned, and I started practicing almost 11 years ago and I did the traditional thing. I maxed out my 401k, did the backdoor Roth IRA, I was investing in brokerage accounts, and got a couple of rentals along the way. I thought I had it figured out. And 2019 was a transition year for me because there was a merger at work, the terms of the contract changed. It wasn't something that was acceptable to me and I decided to transition to a different employer.
It was a rough transition, especially because I had little kids. It was rougher than I expected it to be. But it really got me thinking about financial independence. I felt like most physicians, most high income professionals, are shackled by golden handcuffs. We could get used to a certain lifestyle. We're making a lot of money but it doesn't mean we're investing wisely or receiving a lot necessarily. And I did feel trapped and then 2020 the pandemic had, and I'm sure that affected a lot of us because it was just unexpected, right? Work wasn't what it was. What we weren't used to there was more uncertainty.
So just the combination of everything really made me introspect and look at my financial independence numbers, I started understanding that better, looking at it more closely. And I had the fortune of having a couple of rentals and my stock portfolio, right. So I looked at that, and that was my aha moment. I had a third of my money invested in real estate, and it was giving me twice as much onctor, then the cash flow and the equity build up that I could tap into. And that was to me, that was the moment where I realized that I had to be investing more wisely. Because all of us think about it, we save more, we earn more, and we think that may be the path to financial independence, but it's not, as you know. I think investing wisely is the key component over there.
And that that just shifted my journey, I started focusing on building my portfolio, growing it rapidly acquiring more long term rentals, short term rentals, I did a bar, which is buy a property, we have that force appreciation, tap into that equity, and then rent it out, I did a lot of things to optimize my returns from real estate and, and that's how this year early this year, I hit my financial independence numbers. And I know now that there can be no transition at work that is ever going to cause me the same anxiety because I'm at the point where cash flow, just cash flow from my portfolio is going to meet all my family's expenses indefinitely, which is a nice place to be.
And as you were saying your financial freedom, but I feel like financial freedom also gives me that time, freedom, location, freedom, where I can work from anywhere, and I mean, necessarily be anywhere and still have that money coming in. And then the emotional freedom that comes with it. So yeah, so it was a profound year. For me, it was great, it was a great journey for me, just knowing that having that knowledge makes a huge difference.
Because looking back, I realized that if I had known 11 years ago, when I started out as attending what I know, today, it would have made a huge difference. And I probably would have had my five financial independence numbers at 35. And that's what started me. That's when I realized I wanted to talk more about it. Because I was talking to all my friends that I felt I wanted to have a greater impact and reach more people. And so I started off with mentoring this community of professional women from across the country on social media platform WhatsApp, it just started growing organically from there, they wanted their spouses included. And then I just included more people in the group, the community started growing, I was doing Q&A’s, webinars and just talking to people about it. But there came a point when I realized that for two transformations to occur in their lives, there had to be something more structured. And that's where Generational Wealth MD came into place. It was initially of course, then transitioned into a coaching program, and I help people over eight week period understand everything about real estate that I think it's going to give them that Head Start and help them optimize returns so that they can actually accelerate towards financial independence and achieve get to the point where they take complete control of their lives and, and they can practice medicine any way they want to on their own terms, live the life that they want. And that's, that's where I am right now.
Christopher H. Loo, MD-PhD: That's such an inspiring story. So we come from some of the same mindsets, and what what I want to the listeners to get away with. So what are some of the challenges that physicians have, particularly when it comes to financial freedom, because everybody thinks once you're an attending or a doctor, you're set? That's actually not the reality. So why do doctors struggle so much with finances?
Dr. Parameshwari Baladandapani, MD: Yeah, before I talk about the challenges, Chris, I want to talk about two physicians who. What they're doing right now really inspires me to keep going every day. So one physician I know commutes for hours each day for two hours each way to get to work and come back. And it's not even a job that they're completely satisfied with. And, to me, for a physician who's worked so hard to get to where they are to still have to not be able to practice medicine on their terms, to just have to work a job where they're not completely satisfied, because they feel that they have no choice. I think that's really sad.
I have another friend who's a mom to two twins who are two years old, and she travels out of the city every week. So one week is away from the kids because that's the only job that fits her criteria that she's able to find this time and and often feel trapped. And as you said, we think high income means more money, more freedom, but it doesn't necessarily mean that because a) lifestyle creeps in. So the more we earn, what essentially happens is that the latter we lead as residents is likely not going to be used as Attending. So we live in a high cost of living area. Sometimes we have a doctor's house, a doctor's car, and all the expenses that come with it, and so you're not necessarily even saving more. Or you may be saving some, but it's not going to get you to that financial independence number anytime soon and you're going to be working decades and probably won't be able to retire before you're 60. So lifestyle creep is big.
And then there's also the bait that some jobs give you especially with the VA, or some other positions where they give me the benefits that so you're working, essentially, because you think, okay, you have the benefits. And then there's also sometimes the allure of having a pension or additional benefits in retirement, that makes you work till you're 58 or 65. And you almost be that's the only way to do it. So I think those are two big things that are part of the golden handcuffs. But then there's also the way we invest, and most of us do the traditional route, which is the stock market. Or you can save. And think you can save yourself to retirement, and it’s just not going to happen. Essentially, when I was at that point, in 2019, I looked and even with a half a million dollars in my bank account, that was gonna last me five years, if my financial independence number was $100,000. And if you have a portfolio, and you know this, but just for everyone who's listening, when you're withdrawing from a stock portfolio in retirement, you have a safe withdrawal rate, which means if you want that portfolio to last you anywhere from 30 to 50 years, which is what your nest egg should be doing. You're only able to safely withdraw around 4%. And that factors in your asset allocation and retirement and inflation numbers. So when you're left with that 4%, what it essentially means is that to have $100,000 in retirement, that you're able to withdraw annually, your portfolio needs to be close to two and a half million dollars. And that's a big number. And that's going to take your time if you're going to save towards that.
Meanwhile, with real estate, you have cash flow, and then you also have the equity build up. And once you factor all of that in, in just looking at cash flow, if you're optimizing returns a 12% cash flow, that is what you need. And so maybe anywhere from 500,000 to a million dollars, that you invest in real estate, you're going to get that same return. And so I think the reason, and the bigger reason is that we have lifestyle creep, and we're primarily investing in the stock market. And our asset allocation is not optimal, which is why you're trapped, because then we need to get that 25x number. So 25 times your annual expenses before you can even consider retiring.
And and then there's also the mindset, right, Chris, a lot of us think that that's just what you do, you work till you're 65. And that's just how it's done. And you have to wake up every morning and go to work. And if you don't like your job, you find another job. But that's just the way. And yeah, it was eye opening for me. And I just hope that everyone else realizes there's a different way to do it, you don't have to do it the traditional way. And that's where I think podcasts like yours are really now having a huge impact, because you're talking to so many physicians who are doing it differently, right. Some of them are earning differently, they're adding to their income by having additional multiple sources of income. And then the other people are investing very differently, where you can still be passive. And I think that's what I like about investing more optimally. Even with real estate, and I do direct ownership, but I can keep my portfolio super passive because I invest primarily out of state and I have property managers. I am shifting to a more active portfolio. But I want people to know that you can keep your portfolio super passive and still have significantly higher returns, where you feel like you could be spending a couple of hours a month and still get anywhere from five to $10,000 in post after tax dollars every month to spend, for your expenses. So I think that I think that's key to realizing that there's so many different ways of doing it.
Christopher H. Loo, MD-PhD: So for the listeners, Dr. Bala was mentioning ia different forms of real estate. And in her course she'll talk about her mentoring and coaching, she'll talk about the advantages and disadvantages of real estate. But real estate is one of the best vehicles for physicians for generating wealth. Taking your cash, your active earned income and transitioning into passive income so you can get your freedom. So what Dr. Bala is talking about is active versus passive real estate. So you talked a lot about the advantages. What are some of the challenges that physicians face when trying to get into real estate? I have a lot of physicians, they're Oh, I'm interested in real estate, but how do I get in? I live in San Francisco or New York City and I can't get in. So tell us some of the challenges.
Dr. Parameshwari Baladandapani, MD: I think the first biggest roadblock is the mindset. All right, Chris, because when they think about real estate, it's something that they have no idea how to get started the first time. That was the hardest. And there so then all your limiting beliefs come into play. The biggest limiting beliefs I've heard physicians say that I don't have the time for it. And then the other thing is, I don't have the money, or it's too risky. And I don't have the knowledge, I think those are the four biggest limiting beliefs. So we'll just break those down.
When it comes to time. And just like I was saying, Before, you can do real estate in so many different ways, you can be super passive, and you can be ultra active and people to do it more actively because you have significant tax savings, you can actually shelter most of your clinical income, just because you're investing in real estate. And that's a huge bonus for some people. And that's what makes them be super active. But I find that you can be super passive with real estate. And I think that's what most people need to understand. Because when I was investing in real estate for the first six, seven years, I was only spending and I was doing direct ownership, I owned my rentals out of state, I had a property manager management, I only spent I would say, an hour a month, but just to be safe averaging everything out over the year, a couple of hours a month to be able to generate that $2,000 in post tax dollars that was coming, which is which is more than I can do as a physician, even in high income specialties such as radiology. So I think I think that's one thing to realize, when I grew my portfolio to what it is right now, within the last year during the pandemic, to generate to hit my financial independence numbers, I was raising two kids, working a full time job as a radiologist and raising, at that time two and a five year old. And so it's definitely possible if you find the right systems to do it, I think real estate can be super passive. So the biggest objection is time. And I think that's a limiting belief that we need to overcome. And just talking to people who've done it, I think is the biggest way to realize that it can be done and, it's easy.
Then the other one is money. And you would think that physicians have access to a large amount of money, when putting down a down payment of $30,000 is not going to be a big deal. But what I've come to realize is that for some people, it can be a big deal just because of their lifestyle or their income or other circumstances. And that's why I say, if money isn't an issue, then you should be investing in real estate, because then the stock market is the traditional way, just gonna take you that much longer. Because with real estate, you have leverage, which really helps you scale rapidly. And I think the other big thing is, forcing appreciation, which is where you can take a property within a short period of time, you can do things to the property to increase the value of the property significantly, and then tap back into that money and pull your money out completely. So you have little to no money left in the deal. And I don't think that's possible with the traditional route, which is why I think, if money is a big challenge, then you should be investing in real estate is what I tell people.
And then the thing that people think the next thing is risk, right? Okay, so real estate investing is risky. I don't know what I'm doing. And so, am I going to be able to do this right. And that's where, again, they call it alternative investments. And that's because most of your financial advisors do not talk a lot about real estate, it's just part of the way their training is and that doesn't mean that real estate is risky, if you ask me real estate is really low risk compared to the stock market. And I'm a very conservative investor, I'm an index fund investor so you know how boring I am. I do the same thing with my real estate, I like a super conservative portfolio.
And that's what I try to teach even in the program is that you can have a real estate portfolio that is based on your goals and your risk appetite, you can have something that's super risky, which gives you a higher reward and higher returns. Or you could keep a super passive, super conservative like me, I like to do Class A, minus B properties, which means those are higher end properties where my tenant base is a better tenant pool, and I'm not dealing with people that have to deal with evictions or people who don't pay up so you can you could do that I do residential real estate is very conservative, and you know that Chris, you can pick what you want to do, and keep your portfolio super risk free. And so that's definitely possible.
And in even comparing the stock market and real estate, I just find that real estate is, in my opinion, is more risk averse, it's more to the liking of those people who like to be conservative, like me, because even when your stock when the stock market crashes, and you have all that uncertainty with it, if you look at rents, traditionally even during the downturn, or the last downturn in 2008, the home prices dropped significantly, but the rent the rents national average rents, if you look at those graphs, they'll stay pretty standard maybe a tiny bit of a dip for a little bit, but that was about it. And that's as risky as you can get. So I think getting over that limiting belief that real estate is risky is really important. Yeah, and so just I think those are the big limiting beliefs that stop people.
And then the last thing as well and I hear a lot of people say this is like I don't know enough to start investing in real estate. And so I'm going to make mistakes and that's why I say. This time. The time right now is like an amazing time. have all these podcasts like yours, Chris, people who write articles, and I've read a lot of your articles, and Kevin MD, your blogs, you have courses, depending on where you are and how much support you need, you have so much available to you. Where it took me 11 years since I became an attending to get to this point, even though I had a mentor early on, and he introduced me to a great team. But it doesn't take anyone who's thinking about this right now that long. I say, it can take you decades to learn about it. You can learn from your own mistakes, you can learn it in days. My program is an eight week program. There are so many resources out there where you can really rapidly learn and educate yourself and get to the point where you can start tapping into the magic of real estate. So it doesn't need the lack of knowledge doesn't need to be a limiting belief anymore.
Christopher H. Loo, MD-PhD: You've dropped so many gems and we'll have to have you back on in the future as another guest and or as a masterclass or webinars. So yeah, for all the listeners out there. There's more to what Dr. Bala is saying this is just the tip of the iceberg. So if they wanted to learn more from you or get in contact with you, how would they do that?
Dr. Parameshwari Baladandapani, MD: So the best way is the website, generationalwealthmd.com. So I have the blog on there, I have additional resources or replacements of the master classes I've done in the past, I always think that's a great way to get started. And then obviously there's the contact section where you can reach out to me and get in touch with me.
We also have a Facebook group by the same name Generational Wealth, MD. It's primarily for physicians and other high income professionals. Most of them are looking to get started. But it's also for those people who have a few rentals and want to scale rapidly. It's a great community, I always say the three things that you need are mindset, mentorship, and mastery. Mastery is the education part. Mentorship is also part of your team, you have a great mentor that's gonna help you build a team. But then mindset is super important. That's where the community comes into play. So the there are all these resources that anyone can tap in to.
Christopher H. Loo, MD-PhD: You've touched so many on, on mindset, and especially mentorship. Mentorship is huge. Find somebody that's doing what you're doing and is successful, and learn from them and replicate it. So Dr. Bala, what are your final words for our guests?
Dr. Parameshwari Baladandapani, MD: Yeah, and this is what I tell a lot of people, because oftentimes it's well, I want to do it, but I'm not ready. And I think the biggest thing is you don't have to be ready to say yes. And you don't have to be without fear to take the first step. Oftentimes, we're just jumping into things without fear, just knowing that that's just the way you do it, you don't get any returns for investments you haven't made. So you don't have to be ready, just say yes, just just get started, start learning. Just reach out and take that first step. I think that's important.
And the one more thing I wanted to say is, when people look at real estate, they say, oh, I should have done it in 2010 or 2012. I'm sure I felt that, a lot of you felt that, because I feel that a lot. But everyone just brings me back saying it's like the Chinese proverb which you've probably heard, the best time to plant a tree was 20 years ago, the second best time is now at the same real estate. That would have been awesome. But this is the second best time. And it still is a very exciting time, I think to be investing in real estate, just with interest rates that I think and inflation, the way things are headed. With the way the real estate market is right now. I think it's a great time. And if anyone's thinking about it, this is the best time to get started.
Christopher H. Loo, MD-PhD: Awesome, awesome. Real estate is how I got my financial freedom. Then definitely reach out to Dr. Bala for her resources. And we'll see you in the next episode. So thanks so much for being on the show. And thanks so much for giving your knowledge and your wisdom and we look forward to having you in the future.
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.