Summary: The goal of our Investor Spotlight series is to provide you with stories of real physicians and professionals who are at different points in their journey to financial freedom through real estate investing. At Semi-Retired MD, we love to share many perspectives and learn from others’ experiences along the way. Today’s spotlight is on Larry, a radiation oncologist in Anchorage, AK, and his wife, Prairie. This is an example of why REPS status can help you.
Larry and Prairie moved to Alaska in 2014 to fulfill Larry’s lifelong dream of running the Iditarod. In Anchorage, Larry practices as a radiation oncologist and Prairie directs elementary-age girls as a Singers Company franchise owner. Together they enjoy traveling and raising their five kids.
In January 2020 they bought their first investment property. By the end of the year, they plan to have 20 units in their portfolio. Prairie will have real estate professional (REPS) status.
Investing became even more important to them when the owners of Larry’s practice declared bankruptcy this year. In three years, they plan to replace his clinical income through real estate investing so he can practice on his own terms.
How did you become interested in real estate investing in the first place?
I’ve always enjoyed the process of shopping for a home. I like the game of negotiating. But my wife Prairie and I never had any intention of owning investment real estate. I was hook, line, and sinker on the White Coat Investor strategy — I paid off my loans as fast as I could and my philosophy was, “good investing is boring investing.” I would have a good retirement at the age of 60 or 65.
It was actually The White Coat Investor advertising for Peter Kim’s conference in 2019 that led me to go to Los Angeles. I was starting to feel a little nervous about having all of my investments in the stock market.
When I heard about real estate professional status (REPS), and the idea that I could cash flow right now from my investments and save so much money in taxes — my mind was just blown. Even before I started Zero to Freedom, I was under contract on the first fourplex.
What was your first purchase?
Our first property, a detached fourplex, was a real surprise to me. It was a brand-new construction. The four units were all separately metered, so I didn’t have to worry about utilities. Driving up to it, I felt like, “this is a place I could live.” It turned out to be a phenomenal first purchase.
When we bought it, it had been on the market for over a year. The builder built it as a spec property, then got stuck with it in the wintertime and dropped the price. I remember closing on it and wondering, “am I making a big mistake? Other investors have taken a pass on this.” We paid pretty close to asking in January. Yet it’s exceeded all of our expectations and been our best-performing property.
What type of properties make up your portfolio (SHF, multifamily, etc)? Were they in-state/out-of-state? Has what you’ve bought changed over time or, if it hasn’t, do you plan on it changing in the future?
When my wife and I signed up for the course, we intended to start investing out of state. But although we don’t have a booming population and lots of job growth, historically, Alaska is a pretty stable market. There’s a lot of deals that look better when you run the numbers up here. And there are some programs that make it a little easier to get commercial lending — you can get into a commercial property for just 20% down.
Our first purchase was essentially a brand-new property. The other two were a little bit older. We’re completely redoing two of our units right now, including kitchens, bathrooms, and flooring. We also chose to rehab our basement in our primary residence and make that an AirBnB.
We now have 10 units, two fourplexes, and one duplex. Our goal is 20 units in 2020. We’re putting in an offer on a 10-plex today.
How did you balance your investing with student loans? Did you wait until after you paid them off or did you start investing while you still had loans?
I paid off my loans before I started investing. For me, my student loans felt like a millstone around my neck, and it felt like, until I paid those off, I would be a prisoner to the system. Some people can overcome that mindset by seeing the bigger picture, but I’m not sure I could’ve gotten there.
I’m really glad my loans are totally off my plate. I feel like it allows me to be singularly focused on real estate without the stress of this other big debt.
How do you and your partner divide up work and responsibilities? Any insights as to how a couple can successfully work together in growing a real estate business?
My wife, Prairie, is getting real estate professional (REPS) status this year. We manage all 10 units ourselves.
It’s frustrating at times figuring out who’s supposed to do what, so carving out what our roles and responsibilities are for each unit has been a good process for us. I do more of the finding and vetting of properties and Prairie does most of the management and maintenance management once we acquire them.
Prairie had great success finding a contractor with the Thumbtack app. She posted the work we needed and found a contractor who bid on the job and started the next day. She’s worked closely with him ever since, updating units as they turn over and doing the maintenance work.
Now, my wife manages six of the units and I manage four of them. She does most of the day-to-day stuff and logs her hours and I help. It’s been a really good thing for us personally, to have something that we’re both so invested in and excited about.
What has been your biggest challenge? What did you learn from it?
We learned the hard way that Leti and Kenji’s approach is the right one, especially in terms of doing things in the right order and getting a team in place. We still don’t have all our team members in place, even though we’ve been through three purchases now. They emphasized REPS and Prairie went after it.
How has real estate investing affected your lives? The good and the bad.
We have some months that are more stressful than others. I’m the gung-ho, swing-for-the-fences guy and Prairie is a little bit more tempered. It’s been really good for our marriage — and at times really stressful too — but both of us have been excited about what this could mean for our financial future. Prairie having REPS status has helped.
Where are you now in your journey? Where do you want to be in 1 year, 5 years, or 10 years from now?
My 3-year goal is to completely replace my clinical income and be financially independent from real estate investing. COVID has been a wake-up call.
I’m an employed physician, and the owners of my practice went into bankruptcy this year. I’ve had massive changes at work when it comes to my salary and time off — talk about just putting an exclamation point on wanting to have total control over your life and your career.
I have a great job, I love it, and I appreciate it, but I can’t say I’m totally on my own terms anymore. I want to be in a position where, if I wanted to be part-time, I could.
Any final words of advice for doctors interested in starting out in real estate?
Zero to Freedom was honestly life-changing. It’s been so empowering to take control of my own destiny and so liberating to be able to learn these skills. The model works. If you follow it, hopefully, you will find success in the way that we have.
Don’t forget download our Quick Guide to Real Estate Professional Status!
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