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Christopher H. Loo, MD-PhD: Today, we have Dr. Vanessa Peters, she's the founder of VMD investing. So she's been a real estate investor for 12 years in single family homes, commercial retail, apartment communities, short term self storage, land, and Home Park. So she's invested in over 2500 units across 15 properties and six funds. She's passionate about helping busy professionals build wealth through passive income producing real estate that provides attractive returns and a proven roadmap to financial freedom. She has a book called The Busy Professional's Guide to Passive Real Estate Investing - A physician's path to building wealth, creating financial freedom & leaving a legacy.
She earned her medical degree at University of Calgary in Canada, and in 2002 moved to the US. She is a Family Physician and the Chief Physician Officer for Graybill Medical Group, a primary care medical group in North San Diego County with 12 locations in 80. Plus, she's also very involved in her community and is on the Board of Directors for Interfaith Community Service, a nonprofit that focuses on reducing homelessness in San Diego County. And apart from that, she lives in Escondido with her husband and son and enjoys hiking, traveling and yoga. And she has a passion for aviation. And she's earned her private pilot's certificate. So without much ado, Vanessa, welcome.
Dr. Vanessa Peters, MD: Thank you so much for having me, Christopher. Loo, I'm so happy to be here.
Christopher H. Loo, MD-PhD: Yeah. No, we had connected through Dr. Mike Woo-Ming’s Mastermind. And we talked all about the different businesses that were starting all of these different side incomes. And I know for physicians, real estate is probably number one, just because of so many advantages. So I read your bio, but tell the audience more about yourself. I know you have a lot of different nuances.
Dr. Vanessa Peters, MD: Yeah, absolutely. Thank you. Yeah, like it says, in my bio, I moved down here to the US right out of residency, and started working as a primary care physician back in 2002. And I've been doing that now for 20 years, I’m in my 20th year, I can't believe it. And, and I still love medicine, and I still wanted to practice medicine. But about, I think it was about five years ago, I had a realization that all of the hard work that I had done, and being frugal and trying to save as much money as I could wasn't really getting me where I was hoping to get.
And that realization came kind of twofold. One was that I had been saving and tracking my net worth for several years, and realized that it was a fairly straight line. And that's a good thing. Of course, it was going up. But the delta between the years of saving was really what I had saved. And so the market was going up, I thought I would see more appreciation in my net worth but it wasn't there. And I kind of tried to map out where I would be when I got older and realized that it wasn't good enough, I needed to find something different.
And I inherently knew, we've all read Rich Dad, Poor Dad, and I read it early on in my career. And I had to just kind of put it away and I wish I hadn't. But for me, the lessons from Rich Dad, Poor Dad felt like I had to leave medicine and do that. Now I realized I could have done both. And back in 2002, I could have purchased a lot more real estate. But in any case, I had that in the back of my mind that that's where I should be looking. And so I started deep diving into real estate, learning about it, how I can invest in it. And have gone through a variety of things to figure out what the best types of investments are for someone like myself who was working. And we can get into that a little bit more if you like.
But the other thing that I realized too, was that I was on a vacation with my family and just had kind of an epiphany while we were riding bikes around a lake in Minnesota, it was just so peaceful and happy. And I had this strange feeling come over me. And I realized that it was a feeling of contentment. And it was a strange feeling. And I was like, Oh my God, I didn't realize I didn't have that, right. And so I decided right then and there to start a mission to find ways of getting more contentment. And that dovetailed very nicely with the idea of increasing my net worth and passive income so that I could be more financially free and able to take more of those times off work and vacation with my family.
Christopher H. Loo, MD-PhD: Yeah, that's a, it's quite an interesting journey. It's, it's amazing, because it's when you talk to physicians, and they have this real sudden realization that they don't have to do the rat race and they have this feeling of just peace and contentment, it's like almost surreal, because they've never experienced that they're just so used to the the hustle bustle and the grinding and all the long hours and all the overnights. So, tell us like, Did you just focus on real estate? Or was it different? What was it about real estate that was appealing to you?
Dr. Vanessa Peters, MD: Well, I did purchase a home in 2008. And so I would say that I had started my real estate journey in 2008. But it was only one house. And that was because a realtor friend of mine had suggested that the area north of San Diego called Riverside County was going to do really well. This, of course, was right after the crash. And so there were a lot of homes on the market for fairly low prices. And so I purchased a house in Riverside County. But since I purchased fairly early on in the downturn, the values went down for the next one and a half to two years. And so I wasn't sure I had made the right decision. At that point, I was busy. I was getting married, had a child and I sort of wasn't sure enough to proceed further down that path, which would have been the perfect time to purchase 20 of those homes. But you live and learn.
And so when I woke up, with this realization, about five years ago, I had been tracking the value of this house, and I realized it had doubled. And I was like, Oh, wow, yes, that's what I need to do. I need to do more real estate. And of course, I wanted to replicate what I had done. But by this time, I think it was 2018. There were no deals like that to be found in San Diego County. I couldn't replicate it. So I had to really do a deep dive. I came home with a stack of books from the library. My husband thought I was crazy. And started reading everything I could about real estate. Reread the Rich Dad Poor Dad books, Cashflow Quadrant, and also learned about BiggerPockets, and started scouring forums and learning how to invest.
I got a realtor and I started looking at purchasing something here locally. Even if it was a condo, I kept reducing my expectations from this nice big 2500 square foot house I bought in Riverside County down to like a 500 square foot condo because the prices had gone up so much. And I kept trying to run the numbers and thank goodness for BiggerPockets, because they have this calculator, which makes you plug in vacancy, CapEx, utilities, taxes, because on the back of a napkin, I'm like, oh yeah, this will work. This will work great. Then you add in the condo fees and all these other expenses and it doesn't work anymore. It's negative, maybe break even.
And so I got really frustrated. And the other thing was that I found myself extremely distracted at work and realized that I probably shouldn't be trying to purchase real estate myself like, in this fashion. So I started going to meetups locally meeting other Southern California investors like Hey, what is everybody doing? Of course, what you find at meetups, most people are young and hungry and have a lot of time but no money. And so they're bootstrapping it, they're ready to get in there and get dirty and do flips and things like that. And I was in a completely different position where I had capital, but I didn't have time.
And so I learned that a lot of people at these meetups were purchasing turnkey houses out of state. That seemed to be the thing of the day when I first started looking. Where someone would purchase a home in Memphis, Tennessee, through a turnkey company who had rehabbed it and they were going to do the property management. And that just seemed scary to me. I don't know anything about Memphis. I don't know anybody there. I don't really want to purchase a home. Yeah, they're cheap, but the income per month isn't very much and they would pick the tenants, and I just felt that was a risk.
Also, the more I read on BiggerPockets, the more I realized that when a house is empty, it’s 100% empty, and you know, that's a problem. This is 0% vacancy, meaning you have to cover the mortgage. And if the roof or the HVAC system goes out, then you might not have profit for a whole year. So I didn't want to do that. And I kept looking and finally found a little bit more information about real estate syndications. And when I talked to a few people who are knowledgeable in the space. I had trouble finding any information on it at that time. It's gotten a lot more available now. But they told me about the returns and the risk profile and the passive nature of it. And I was like, oh, okay, I think I might have found what I'm looking for. So I started investing passively in real estate syndications. Dallas, Texas, is where I started with a large apartment building.
Christopher H. Loo, MD-PhD: I was going to ask you, because you had gone from single families. And I've solely focused on single families. And when I got to a point where it's like, Oh, should I go into syndication or passive real estate investing? I was still deciding whether to do something else, or start my company or do other things. So what's the big shift between single family and going like commercial apartments syndications?
Dr. Vanessa Peters, MD: Well, it depends if you're managing them yourselves. I mean, I own one single family home. So I knew that it was better work. And I was lucky that I had great tenants. But then I purchased a short term rental, and realized that that's a whole heck of a lot of work. And didn't really want to scale that anymore. Because I could see, first of all, financially sometimes you're limited to purchasing 10 homes, 10 mortgages. And it's all scattered, you have to figure out all these things and need to hire help for that. The beauty of investing in a syndication is, you're diversifying your portfolio, you're very low risk. And you can pick and choose different operators to work with, which allows you to spread out your risk. Whereas if you're purchasing yourself, typically you would purchase in your own backyard, so that you can get to those houses and have a look at them. So those are some of the things I like about syndications.
Christopher H. Loo, MD-PhD: Yeah, and then also for I guess for some of the novice physicians, like they haven't bought their first house or they're a little bit priced out of it, describe some of the advantages for high income professionals for real estate, as opposed to starting a business or other investments.
Dr. Vanessa Peters, MD: Right, yeah, it depends on how passionate you are and how much time you have. And I know, I love that you have these four types of freedom, because time is really the reason I'm in this, is because I want more time. And so the beauty of investing in syndication, most of the minimums for these deals are $50,000. So that's not too bad. If you're going to buy a house, especially in a higher priced area, you're going to be putting out much more than that, capital wise.
Second, as a limited partner in a syndication, you have an ownership, you are a percent owner in that deal, it might be a .01%, but you're still an owner. Which means that you get a share of the depreciation, which is very important, because that is one of the benefits of investing in real estate. Now, I've heard many people, many smart people, say that the IRS tells you what they want you to do by providing tax incentives and benefits if you do what they want. And one of those things is investing in real estate, which is why it's so tax beneficial.
So as a limited partner, you get a portion of the depreciation, which means that you won't be paying as much tax on the income as you would if you were doing stock market investing, for example, and having capital gains, or lending money and getting a complete 1099 interest. So you're having to pay ordinary income taxes. So there's the depreciation, and of course, there's income from real estate, which is great. And then equity. Most of the deals are in an area that might be appreciated naturally. But it's really important to note that they're forcing appreciation by doing improvements. And so you buy an apartment building that's a little older and needs new kitchens, countertops, floors. They spruce it up, and then they can charge more for rent, increase the income and then eventually, sell it. And, of course, leverage is very important with real estate as well, because you can just make so much more when you're able to borrow for some of that instead of paying upfront cash for everything.
Christopher H. Loo, MD-PhD: I love that. Passive real estate allows you fractional ownership, it's diversified, spreads your risk, you get leverage, depreciation tax. So, that's wonderful. So, tell us more about your company and what you do. I know a lot of physicians may be interested in working with you and contacting you.
Dr. Vanessa Peters, MD: Yeah, so I started out as a passive investor. And it wasn't long after that that I became completely hooked, because once I started getting some checks in the mail, which was an 8%, preferred return, it was like, oh, the light bulb went off, and I moved as much money as I could, from my 401k through my work. I had some rollover money. So if you have a 401k, through your current employer, you can access the money that is from that job until you leave that job.
Let's say you had another job before, or if you have an IRA, you can actually take that money and put it into a self directed retirement plan, like a self directed 401k. And invest that in real estate. So I did that. And I had some extra capital and I had a bonus, and I put all of it into real estate. And so within about six months, I had about five deals. And that might seem fast, but I just, I just had a feeling I was like, This is it, this is what I need to do. And I had been searching for a while. So I was pretty confident in that. And I really enjoyed it.
And I joined a team, where I was mentored on syndications, how to do syndications, all the background stuff that you need to do. And so I joined a team, it was great, because it was low risk, I mean, a lot of the mentorships and teams that you can join now, they do require you to put in a lot of capital to start to get the coach. And then also, you're expected to bring a certain amount of money to a deal and things like that are really low risk and low pressure. So the first deal, I actually brought two people, and they were colleagues. And so me and two other people invested in the deal. So it was 150k we brought in, so not much. But that was okay, that was how I got started.
And so since then I've written my book, and I've done plenty of podcasts and just really word of mouth, I don't do any advertising. I have just a massive group of investors who I notify when I'm joining up with an operator on a new deal. And since I am still working full time, as a physician, I do like to partner with other operators, I don't have time to find deals and underwrite them and manage them. But I'm also living in San Diego. So that obviously doesn't work because nobody really invests here, it is way too expensive. So I partner with trusted people that I know that I've invested personally with. And when I have a great opportunity, I can provide that to my investors.
Now, I do like to diversify my assets. I have a pie chart where I keep track of my asset allocation. And initially, when I first started investing, the opportunities that were provided through that group were pretty much all in Dallas, Texas, which is a great market. But after you have five or six deals in Dallas, Texas, I realized I need to kind of get out of the box and do some other things. And so I developed relationships with some other operators. So now I have assets in Florida, in Dallas, South Carolina, North Carolina, and Phoenix. So those are kind of main areas, and also different niches. So not just multifamily apartment buildings, but also mobile home parks, self storage facilities, and land. Land entitlements and build for rent subdivisions, which are single family homes that are built just for rentals. And so I think it's really important to spread out your risk geographically, and also asset classes and also operators so that if anything goes wrong, you don't have all your money in one in one bucket, right?
Christopher H. Loo, MD-PhD: Yeah, that's a wonderful journey, how you scaled in then you start from single family to passive, and now you're doing syndications. And so and I know you mentioned a lot of resources and I know you mentioned Rich Dad, Poor Dad, you mentioned the BiggerPockets podcast, and what are some other resources that helped you you mentioned some coaching and mentorship.
Dr. Vanessa Peters, MD: Yeah, the coaching was great to teach me the underpinnings of syndications. If you're interested in multifamily syndications, Joe Fairless, who is a partner at Ashcroft Capital, and that's who I originally invested with, when I first started my kind of general partner journey. He has a great book, it's a big red book. It's called the Best Ever Apartment Syndication Book. That really goes through everything. It's pretty detailed. It's meant for people who want to do syndications. If you want to dive in like that, then that's a great option.
My book is much shorter, and it's more as a primer, just about here's the high level why I love syndications. And also the benefits and some of the terminology and the numbers and how it works. Because for example, commercial properties are they're not the value is determined based on their income, not on how the other houses around them are doing or the other departments around them are doing like, residential is all based on comparables and commercial properties are based on income, which is completely different, which is really the ticket to making good money in syndications is by increasing that net operating income, that NOI, and then really driving value to your buildings.
Yeah, I mean, there's great podcasts out there for, for real estate. And there's many people who are coaches, but it depends on what your goals are, I really focus on in my book too on like making sure that you keep track of your Why, like, what is it that you're really trying to do, it's easy to get shiny object syndrome and be like, Oh, I'm going to go take a course in self storage, and then I'm going to become an operator and do this and this. Or do you really want to have more time, so that you can be with your family or do hobbies that you enjoy or go to three days a week at your work or something like that, because those are completely different.
And another thing that's really important is to keep track of what your long term goals are, for example, my long term goal is not to become a real estate syndicator. Because while I will always invest in real estate, I don't want to switch from being a physician to being a full time syndicator. And having a brand new job, a new job where I'm not as skilled as other people, I'm not as young as other people. I have experience, but there are people out there that are much better than me. And so I prefer to stick to my wheelhouse, which is medicine, I'm good at that. And then I earn money, and then I can invest it. And then I can repeat, do it again and again and again, until I'm financially free. And then I can just jump off the treadmill and just sit back with my assets and the passive income that comes from that.
Christopher H. Loo, MD-PhD: I love that just stick to your stick to your trail, don't worry about what other people are doing. I love that mindset. So, and yeah, we've had a great conversation, and how can folks get in contact with you and reach out to you?
Dr. Vanessa Peters, MD: So yeah, you can reach out to me, my website is VMDinvesting.com. And my email address is Vanessa[at]VMDinvesting.com. And I'm happy to chat with folks, I have a calendar link, if you want to pop on and we can chat about your goals. I do have an opportunity for you to pick up a free roadmap to financial freedom. It's a spreadsheet that you can access and it allows you to plug in how much you want to invest per year. And if you reinvest all of your dividends, where you'll be at with your passive income over time. It’s VMDinvesting.com/roadmap. And so I would look forward to hearing from anybody.
Christopher H. Loo, MD-PhD: Awesome. Thanks so much, and we look forward to having you on future episodes.
Dr. Vanessa Peters, MD: Thank you, Christopher.
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.